Summary

Economics Class 35

THE CLASS STARTED WITH A BRIEF OVERVIEW OF THE PREVIOUS TOPICS (05:03 PM)

TENANCY REFORMS, REGULATION OF RENT (05:16 PM)

In the pre-independence period the rent charged by the zamindars was high.
The British government was only interested in the share and therefore it gave unlimited powers of suppression to the zamindars.
It has been estimated that in Punjab as much as 80% of the produce was paid as rent, In Bombay, It was around 40%-60%.
The first five-year plan stated that the maximum rent should be fixed at 1/4 or 1/5 of the total produce, except the states like Punjab, Haryana, Jammu and Kashmir, and Andhra areas of Andhra Pradesh this limit was followed by most of the states.
However, the Legislature fixing the maximum limit of rent has often been violated because of the strong socio-economic and political hold of the landowners, in the rural areas.
This is partly because, in some of the areas, sharecroppers were not aware of the legal provisions but more importantly they are socially and economically weaker as compared to the landlord and therefore not in a position to assert their rights.
Even though the law provides for the security of tenure most of the leases are oral and informal.
Security of Tenure:
Legislations related to the security of tenure focused on the following:
1) Tenant should not be ejected, except in accordance with the provisions of the law.
2) Land may be resumed by the owner only for personal cultivation.
3) In the event of reassumption of the land, the tenant is assured of minimum prescribed areas.
The implementation of the law depends upon the following:
1) Definition of the Tenant.
2) Status of the land record.
3) Definition of the term personal cultivation.
4) The circumstances in which the land owners are allowed to resume the tenanted land for cultivation.
In all tenancy laws of the country, persons cultivating land of others on payment of rent either in cash or kind or both are treated as tenants.
However, in some states like UP, sharecroppers were not regarded as tenants thus all laws aiming at tenants are not applicable.
The right of resumption combined with flaws in the definition of personal cultivation has made tenants insecure i.e. the landlord could eject any tenant on the plea of personal cultivation.
It was on account of this fact that the fourth five-year plan recommended that all tenancy should be declared non-resumable and permanent except in the case of landholders who are serving in the defense or suffering from a specific disability.
Another serious problem is related to voluntary surrender, many landlords compel the tenants to give up tenancy on their own accord and no laws can help the tenants if they give up their rights voluntarily.
Laws relating to the security of tenure can be implemented effectively only if current and up-to-date land records are available.
A person can claim to be a tenant only if his name appears as such in the land records, however, it has been observed that in many states either no records of tenancy exist or they are incomplete and outdated.
Ownership rights for Tenants:
It has been repeatedly emphasized in the plan documents that ownership rights have to be given to the tenants.
Accordingly some states have passed legislation to confer the rights of ownership on tenants.
However, the process has been very unsatisfactory and it was envisaged in the sixth FYP, to confer ownership rights to all owners by the year 1982, but many tenants did not exercise their rights due to reasons like:
1) Many tenants could not afford to pay the purchase price.
2) Many were unwilling to purchase the land, reflecting the dominant controlling power of the land owners.
Reasons for the success of land reforms in India:
1) Collapse of feudal structure.
2) Tenancy reforms were highly successful in communist states like Kerala and West Bengal.
Operation Barga: In West Bengal Operation Barga was launched in 1978, with the objective of achieving the registration of sharecroppers and providing them permanent occupancy and heritable rights.
3) Cooperative and community development programs of the government.
4) Bhoodan and Gramdan movements.
5) Kisan Sabhas and farmer associations also helped farmers organize themselves and raise their demands.
6) Most of the laws that are included in the Ninth Schedule of the constitution, which insulated them beyond any challenge in the court.
7) Land Ceiling Rules 1972, which provided fewer exemptions and retrospective application of land ceiling acts, to declare benami Transactions null and void.

LAND CEILING (06:10 PM)

Ceiling on agricultural holding means a statutory absolute limit on the amount of land that an individual may hold.
Imposing the ceiling has two aspects:
1) Ceiling on future acquisitions.
2) Ceiling on existing holding.
The first Five-year plan favored the farmers to avoid administrative conflicts.
The second five-year plan recommended ceilings on existing agricultural holdings.
The plan proposed that the ceiling should apply to all future acquisitions and all existing agricultural holdings held under personal cultivation.
The second plan proposed exemptions for the following:
1) Tea, coffee, and rubber plantation.
2) Sugarcane farm operated by sugar factories.
3) Farms where heavy investment was already made.
4) Specialized farmers engaged in cattle breeding, dairying, etc.
The second five-year plan also suggested measures related to preventing malafide transfers of land, compensations to be paid, and redistributing the acquired land.
These guidelines laid down by the second plan were endorsed by the subsequent plans but have not been implemented uniformly across all states.
To bring uniformity in different policies regarding the imposition of ceilings, a conference was held in 1972, based on which a new policy on land ceilings was evolved.
The Main features of the policy are as follows:
1) Fewer exemptions from the ceiling to the change over to family rather than the individual as the unit for determining land holding.
2) Retrospective application of the Land Ceiling Act or rules for declaring benami transactions null and void.
3) Most of these laws were included in the ninth schedule of the constitution.
4) According to the 12th FYP, only around 3 million hectares have been declared surplus which is hardly two percent of the net sown area of India.
5) About 30% of this land has not been distributed due to litigations, as correctly pointed out by the 12th FYP, The balance of power in rural India is so heavily weighed against the land less and poor that implementing land ceiling laws is difficult in certain states like Karnataka the industry and large farmers are being exempted from ceiling laws without seeking permission from government of India clearly indicating problems in implementation.

BENEFITS OF LAND CEILING (06:52 PM)

1) Social Justice: It is socially unjust to allow a small number of people to hold a large proportion of land thereby subjugating the interests of millions of labourers to the interests of a handful of minorities.
2) According to the FPO, redistribution of 5% of farmland in India coupled with increased access to water could reduce rural poverty by almost 30%.
3) Employment generation, According to some economists small farms are less capital-intensive and therefore can be considered efficient in a situation of widespread unemployment and under-employment in the country.
4) Inculcating the spirit of cooperation, It has been argued that once the surplus land is distributed among the beneficiaries, they can form cooperatives for its cultivation and management. It will enable the small peasants to learn the techniques of soil management and joint cultivation on one hand and also enable them to realize the benefits of large-scale farming.
Negatives of Land Ceiling:
1) The economic efficiency of the farm is adversely affected.
2) The growth of output and employment also slow down in the long run due to a reduction of savings and investments, as small farmers consume away a large proportion of their income.
3) Modern technology can not be used due to fragmented landholdings.
The causes of fragmentation of land holding:
1) Laws of inheritance.
2) Decline of joint family system.
3) Population pressure.
4) Psychological attachment to land.
Disadvantages of Fragmentation:
1) Difficulty in modernization.
2) Wastage of land.
3) Disputes over boundaries.
4) Low productivity, etc.

CONSOLIDATION OF LANDHOLDINGS (07:04 PM)

As fragmentation of landholding is still a major bottleneck to reap the benefits of large-scale farming.
The process of consolidation is seen as a solution to reduce the fragmentation of landholdings.
Consolidation is the process of land rearrangement and readjustment of land parcels and their ownerships to form large holdings for the benefit of the agrarian economy.
Through legislation by state, the standard area was fixed as the basis of consolidation.
However, as per the available data only around 46 percent of total cultivated land has been consolidated.
Land consolidation is successful in the states of Haryana, Punjab, and UP.
Currently average landholding is around 1.8 hectares and 86% of the land is below two hectares making it difficult to increase agricultural productivity.
Co-operative farming:
To reap the benefits of economies of scale, Cooperative farming provides an alternative to consolidation.
Farmers were not able to motivate cooperative farming despite various incentives and subsidies given to cooperative farms by the government.
Report of Gadgil committee on co-operative farming stated that only 1/3 of these formed societies attended their goals and requirements.
Reasons for failure:
1) Societies are mainly formed by large farmers to receive certain benefits from the government.
2) Societies lacked professional and management skills.
3) Corrupt practices.
Model Agricultural Land Leasing Act, 2016
It seeks to permit and facilitate the leasing of agricultural land.
Legalize land leasing activity.
The leaseholder may receive an Agricultural loan, disaster relief, etc.
This will improve agricultural productivity along with occupational mobility.
To improve agricultural efficiency and equity.
The act makes sure that tenant farmers are not exploited.
Reduce informal tenancy practices
To resolve the disputes between the landlord and the leaseholder the provision of a special land tribunal has been made.
Concerns/ challenges of the Act:
The act will prevent the redistribution of land through the transfer of ownership as people living outside the area will prefer leasing instead of selling.
Lack of uniformity: Since agriculture is a state subject, multiple laws at the state level create confusion.
The Act is also silent on whether the land under lease agreement can be mortgaged or not.
When the contract is signed, there is no specific mention of rent or time period-related aspects and it is left it to the concerned parties in the land lease market.
The diversion of the land can create food security issues.

FOOD PROCESSING SECTOR (07:30 PM)

What is processed food?
It pertains to the following two processes,
1) Manufactured process: If any product of agriculture, animal husbandry, or fisheries is transformed through a process involving machines, power, etc. in such a way that its original physical properties undergo a change and if the transformed product is edible and has commercial value, then it is termed as processed food.
2) Other value-added processes, if there is significant value addition in terms of increased shelf life or ready for consumption such produce also comes under processed food, Even if it does not undergo manufacturing processes.
The size of the food processing industry in India is estimated to reach over half a trillion dollars by 2025 and the industry can be broadly divided into fruits and vegetables, milk and milk products, meat and poultry, marine products, grain processing, and consumer food including packaged food, aerated drinks, alcoholic beverages, etc.

THE TOPIC FOR THE NEXT CLASS: FOOD PROCESSING SECTOR (To be Continued)