Examine the relationship between the size of the land holding and the productivity.

Published: October 24, 2018

Almost 50% of Indian population is dependent on the agriculture for their livelihood. Hence productivity of the agriculture is a vital factor for the Indian economy. The productivity must be accessed in the light of the continued fragmentation of land holdings to address the structural constraints of Indian agriculture.

Interrelationship between the size of the landholding and the productivity

  • There is an inverse relationship between farm size and agricultural productivity per hectare.
  • The national sample survey data of 2011 confirms that smallholdings in Indian agriculture still exhibit higher productivity than large holdings. But it also shows that there is lower per capita productivity of smallholdings and widespread incidence of poverty.
  • The 2013 situation assessment survey shows that only to farmers with landholdings of more than one hectare has a positive net monthly income. Net monthly income is the difference between income from all sources and consumption expenditure.
  • Marginal holdings of less than one hectare are too small to provide farmer households with sufficient incomes.

Addressing the structural constraints due to fragmentation of landholdings

The increasing fragmentation is indicative of the intensification of the agrarian distress. The structural constraints has to be addressed through

  • Consolidation of the operational holdings through reforms so as to enable the economies of scale to operate in farming.
  • Legalizing tenancy, liberalisation of lease markets, and the setting up of land banks can be the ways for consolidating the land holdings.
  • Cooperative farming or organising small and marginal farmers into producer companies.

The biggest bottleneck in consolidating the land holdings is the dearth of accurate land records. The state has a key role to play here by updating the land records. The state needs to play the role of facilitator in the consolidation process by taking up the land reforms 2.0.

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