In India, most state governments have either put a ban on agricultural land leasing or imposed restrictions on land leasing. Discuss how changes in this policy can help creation of rural jobs and betterment of farm economy in India.

Land is a state subject and the government policy on land leasing differs in the country from state to state. For example, while Kerala has legally prohibited land leasing, Himachal Pradesh, Telangana allow leasing out only by certain categories of land owners such as those suffering from physical or mental disability, widows, unmarried, separated or divorced etc. Further, in some states such as Andhra Pradesh or West Bengal, there is no legal ban on leasing though there are some restrictive clauses.
The restrictive land leasing has several implications such as:

  • It makes tenancy to be informal, insecure and inefficient. Informal tenants are most insecure and inefficient, as they do not have legal sanctity and access to institutional credit, insurance and other support services.
  • It reduces the occupational mobility of many landowners who have interest and ability to take up employment outside agriculture and yet are forced to stay in agriculture due to the fear of losing land if they lease out and migrate.

So, restrictive tenancy laws are anti-growth and some changes in this policy can help creation of rural jobs and betterment of farm economy in India in several ways. Firstly, the Legalization of land leasing results in availability of more land for leasing by the rural poor, such a measure would be highly egalitarian. The landless and marginal farmers would improve their economic viability and social status. Secondly, rural poor would maximize their family income by way of farming on lease, along with access to other farm, off-farm and non-farm employment opportunities. Thirdly, improved access to land on lease by the poor would help reduce their poverty and enhance economic and social status. Fourthly, the legalization of land leasing would encourage large land owners to lease out land without fear of losing their land ownership rights and invest in non-farm enterprises, which is vital for occupational diversification and rapid rural transformation. This will reduce the pressure of population on agriculture and enable small farmers to augment their size of operational holdings by leasing in land.
Also many marginal and small farmers would be better off leasing out their land to more viable farmers for rent, while seeking paid employment within or outside agriculture. This would help them to maximise incomes by way of rentals as well as wage incomes.


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