OPINION: Millions of Indian farmers benefit from formalized land leasing law | Land Portal

Restrictions on land leasing in India have made it more difficult for marginal farmers to access land and finances, pushing them into informal leases that heighten their insecurity

Farming is a way of life in Uttar Pradesh, India’s most populous state, where three-quarters of the state’s 200 million people live in rural areas.

Earlier this year, the state took an important step forward in strengthening land rights for an estimated 23.3 million tenant farmers by easing its restrictions on agricultural land leasing, allowing landlords and farmers to create leases for up to 15 years.

Restrictions on land leasing in India date to the period immediately following independence, when state governments either restricted or banned agricultural land leasing in an effort to protect tenant farmers from being exploited by wealthy landlords.

The Uttar Pradesh Zamindari Abolition and Land Reforms Act of 1950 prohibited leasing of land except in special circumstances, such as leasing by widows, minors, or persons with a physical infirmity.

But rather than protect tenant farmers from exploitation, subsequent research has revealed that leasing prohibitions have had overwhelmingly negative effects on agricultural growth, social equity and investment in rural development.

Importantly, restrictions on land leasing make it much more difficult for landless and land-poor marginal farmers to access land, pushing many to seek land through informal leases that heighten their land insecurity.

Tenant farmers who hold informal leases are not able to avail themselves of credit and financing, crop insurance, and other agricultural support services. Because their lease agreement is informal and not legally binding, they reasonably fear that they could be evicted if the land owner has a change of heart.  And since their status is unprotected, they lack the incentive to care for the land in ways that can boost productivity and conserve resources.

In a study conducted by Landesa across nine districts in Uttar Pradesh, we found that despite restrictions, informal leasing is rampant in the state.

Many informal tenants reported that they are typically not able to access credit or government input subsidies and cannot demand the minimum support price when they sell their crop. And if the crop fails, they do not have the benefit of crop insurance. All such benefits usually go to the person who owns land, and these are typically not passed to the tenant.

Limitations on land leasing have also posed challenges for landowners.

Past governments in Uttar Pradesh pursued policies that, under certain conditions, would allow tenants to claim ownership of land they cultivate, wresting it from the control of the landlord.  Other Indian states currently enforce such laws.  Understandably, Uttar Pradesh landlords were reluctant to allow tenants to develop any written record of their tenancy. 

Landesa’s survey revealed many landowners who wanted to take up employment outside agriculture but feared losing land to tenants if they leased it out and moved to the city. Other land owners admitted leaving their land fallow or under-utilized because of their fear to rent it out through informal (and therefore illegal) arrangements. 

Resistance to land leasing has begun to soften in India in recent years.

In 2016, the national policy-making body, NITI Aayog, prepared a Model Land Leasing Act, and encouraged states to adopt it. The proposal’s authors noted that an estimated 36% of India’s tenant farmers were completely landless, and 56% owned less than one hectare of land.

That same year, Uttar Pradesh expanded the allowable leasing period to three years, an important first step in adopting leasing laws.

The latest amendments go much further by establishing 15-year lease terms. Longer-term leases mean greater security and stability for tenant farmers. The law also clarifies that a lessee cannot use the agreement to establish permanent rights over leased land.

These clauses give agricultural landowners the confidence that they can lease out their land for short or long periods without risk of losing control over land at the end of the lease period. It gives tenants the confidence that they can enjoy full possession and use of the land during the agreed lease period, but not beyond. Together, this should promote beneficial leasing and support agricultural growth.

However, it is extremely important for the state to follow these positive amendments with additional steps to give tenants legal status that enables them to access credit, insurance and other agricultural inputs.

Equally important, Uttar Pradesh should commit resources to building awareness about these changes, using methods likely to reach both agricultural landlords and tenants.

Dr. T. Haque, who authored NITI Aayog’s 2016 model leasing act, is encouraged by the change and says it is a commendable step by the Uttar Pradesh government. As he says: "This can be a game changer for the transformation of the rural economy and will help improve farm incomes and also occupational mobility of the farmers."

We hope so.

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