Tenancy reforms vs open market leasing – what would serve the poor better?

landBy Accommodation Times News Services

Dr. N.C. Saxena
Former Secretary, Planning Commission

A ban on leasing was imposed after Independence in almost all states to encourage owner-cultivation and to give security of tenure to sharecroppers and tenants. While such laws should continue in areas characterised by semi-feudal mode of production and may even be strengthened in tribal areas where agricultural markets are not well developed, in green revolution areas where the mode of production has become capitalist there is a need to liberalise and free leasing-in of land by the landless and marginal farmers from all government controls. However, such liberalisation should be only to permit small and marginal farmers and agricultural labour to lease-in land either from other small farmers or from big farmers. Reverse tenancy should not be encouraged, nor tenancy reforms be diluted in backward areas.
The new National Agricultural Policy
The new draft National Agricultural Policy states that its approach on land reforms will focus on ‘development of lease market for increasing the size of the holdings by making legal provisions for giving private lands on lease for cultivation and agri-business’. It also advocates, ‘private sector participation will be promoted through contract farming and land leasing arrangements to allow accelerated technology transfer, capital inflow and assured markets for crop production, especially of oilseeds, cotton and horticultural crops’. In other words, the Policy associates viability and higher productivity with large farms and infusion of capital, and would like to create operational holdings above the prescribed ceiling limits by permitting rich farmers and agri-business to lease-in lands from other farmers. Since this Policy runs counter to the land reforms and tenancy reforms policy of the first nine Five Year Plans, it is important to discuss the implications of the draft policy for equity, productivity and sustainability.
History of tenancy reforms
In India where 70 per cent of the population is dependent on agriculture, relations between various categories of people like landlords, small and marginal farmers, share croppers and agricultural labourers on the one hand, and the nature of their respective control over land on the other is of paramount importance. Any strategy for increasing agricultural production and alleviating rural poverty cannot overlook these structural questions.
Tenancy reform has always been a subject fraught with controversy — intellectually as well as politically. The idea of turning over land and its management to uneducated peasants was seen in the pre-independence period as the road to disaster. Landlords were quick to point out the dire consequences of such a policy — peasants will produce only for their own needs, food prices will soar, economic growth would be arrested, etc. Yet this position is contradicted by historical experience. Confidence in the ability of peasants to rise to the challenge has usually been well placed. However the development of this latent human potential requires an appropriate institutional environment. The creation of such an environment is what land reform is all about.
At the time of Independence, almost half of the arable land was cultivated by tenants (In this paper tenants refer to all such land operators who are not in direct relationship with the state, but pay rent either in cash or kind to the landowner. Tenancies may be recorded or unrecorded, short term for only a crop or extending over life time, and legal or illegal) and sharecroppers who paid rent to the landowner. Almost all such tenancies were long-term, often hereditary. Although the colonial government had provided some security of tenure in law, often in actual practice tenancies were subject to threat to eviction and coercive action by the landlord, who otherwise were parasites living off the labour of the tenants. In addition, there were sub-tenants who paid rent to tenants. Such multiplicity of operators on land were more common in eastern India, a region characterised by high population density, acute poverty and fertile lands. Sub-tenants enjoyed no security of tenure even in law.
The Directive Principles of State Policy enshrined in the Indian Constitution enjoin that: ‘The state shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of national life.’Articles 39 and 49 state that ownership and control of the material resources of the community should be so distributed as best to subserve the common good, and that the operation of the economic system does not result in the concentration of wealth and means of production.
The Indian Economic Plans too right from the First Five Year Plan have laid considerable emphasis on land reforms. As set forth in the national plans, the objectives of the land policy have been, firstly to remove such motivational impediments to agricultural production as arise from the agrarian structure inherited from the past, and secondly, to eliminate all elements of exploitation and social injustice with the agrarian system so as to ensure equality of status and opportunity to all sections of the population.
The discrepancy between the ownership and operation of land was regarded as one of the basic maladies of agrarian structure that acted as a ‘built-in-depressor’. It led to not only inefficient utilisation of given scarce resources but also stood in the way of augmenting these resources. Thus in every state the policy of abolishing all intermediary interests and giving land to the recorded tenants was adopted soon after independence. It was envisaged that conferment of ownership right to tenants would lead to a more equitious distribution of land, increase employment per unit of land and improve consumption standards of the rural poor, thus enlarging the size of the market for consumer products. It will improve the world view of the poorest and will make them invest in their future.
Impact of reforms
Tenancy reforms during the first two decades after Independence aimed at giving the tenants permanent rights to the land they cultivate subject to a limited right of resumption to the landowners; and at ending the landlord tenant relationship by conferring ownership rights on tenants in respect of non-resumable lands. This resulted in a dramatic fall in the area under tenancy, from 23.34% during the year 1952-53 to 10.7% in 1961-62 and then to 7.18% in 1982. Reduction in the area under tenancy was because of two diverse factors. First, the law that conferred ownership rights to erstwhile tenants. And second, evictions and resumptions by the land owners, first during the 1960s and the then in the wake of green revolution when profits from self cultivation of land increased, may also explain the decline in area under tenancy. The 45thNSS round puts the percentage of area leased-in to total operated area at 5% in 1992, thus showing further decline since 1982. However, the NSS data may be an under-estimate due to concealment of tenancy and the practice of oral leasing. What would be a realistic estimate of area under tenancy today? And more important, did the poor emerge as net gainers because of conferment of ownership rights or net losers due to eviction and resumption?
Appu, an authority on land reforms, observes, ‘Though the implementation of the tenancy laws led to only a small percentage of the tenants acquiring ownership rights, it had undoubtedly resulted in a sharp fall in the area under tenancy …. Making allowance for the fact that the NSS data do not reflect fully the extent of concealed tenancies, it may be estimated that at present the leased-out land may constitute no more than 15% of the operated area. Thus from about one half of the operated area at the time of independence, tenancy has dwindled to a small fraction of the operated area. Tenants acquired ownership rights in only about 4% of the total operated area. Thus in the course of the last five decades the rural poor have been deprived of access to some 30% of the operated area. We do not know how many tenants lost access to land in the course of the enactment and implementation of the laws aimed at reforming tenancy’.
It is clear that tenancy reform has not led to the desired results. The incidence of tenancy continues to be substantial, though not in terms of area but the number of people involved. The banning of tenancy and various lease restrictions has only pushed the phenomenon underground, rendering the tenants’ position even more precarious. Even when law provides protection to sharecroppers against eviction, it is only corrupt bureaucracy that gains and no gains accrue to the poor sharecropper.
For instance, in Purnea (Bihar) in 1972-73 about 40% of the land in Purnea was under share-cropping. The percentage of land under sharecropping has come down since then, but still it is probably not less than 25%. Though under the law share-croppers are entitled to security of tenure and the share of the landowner is limited to 25% of the gross produce, in practice the protection granted to share-croppers is illusory. Since the tenancies are oral and the share-croppers are weak politically, economically and socially, they seldom succeed in securing the rights to which they are entitled under the law. They have only a tenuous hold on the land they cultivate and invariably they have to hand over to the land owner one half or more of the produce. The landowner in turn has to bribe the revenue officials for looking the other way and not recording the tenancy arrangements. The powerful landowner also shuffles his tenants so that no rights are claimed on the basis of long-term cultivation.
In such a situation the tenant has no incentive to make any long term investments in the land or cultivate it efficiently by providing higher levels of purchased inputs and applying larger does of his own labour. Though theoretically both the landlord and the share-cropper stand to gain by sharing the cost of cultivation and cultivating the land more efficiently, such a practice has not been adopted on any significant scale in Purnea. The landlords do not look upon the land as a productive asset that should be operated efficiently to maximize their income. To them land is essentially a store of value, a hedge against inflation, an instrument for appropriating the large unearned increments accruing from the huge public investments in irrigation and, most importantly, the very foundation of political and economic power and social status. They are reluctant to take any steps that may lead to the strengthening of the economic conditions of the share-croppers. In such areas there is still need to bring about a change through stringent laws and better implementation of such laws.
Absence of political will
However, it is doubtful if any tangible progress can be expected now in the field of greater tenurial security to unrecorded tenants in the absence of requisite political will, which is demonstrated by the large gaps between policy and legislation and between law and its implementation. To quote Appu again, ‘In no sphere of public activity in our country since Independence has the hiatus between precept and practice, between policy-pronouncements and actual execution, been as great as in the domain of land reform. With resolute and unambiguous political will all the other shortcomings and difficulties could have been overcome; in the absence of such will even minor obstacles became formidable road blocks in the path of Indian land reform. Considering the character of the political power structure obtaining in the country it was only natural that the required political will was not forthcoming.’If political will was weak in the 1960’s and 1970’s, it is even weaker now in the wake of economic liberalisation policies. The general climate in the country today is against distributive policies, which require strong and honest implementation machinery and also clear directions from the political masters.
The change in the mode of production that has been brought about in the last 15 years and emergence of capitalism in agriculture has further taken the force out of the old arguments favouring tenancy reforms. During the first decade of planning it was easier for the Government to eliminate a functionless parasitic class of Zamindars who were economically isolated from the production system. Now in the changed context of capitalist agriculture appropriation of land from the rich farmers (who continue to be leasing out most of the tenanted lands) amounts to not only an attack on the principle of private property but it also goes against the principle of income earned through enterprise in agriculture. It offends the property instinct as also the commercial drive of big farmers. Unless the land hunger of the poor is mobilised into a militant movement to neutralise the property instinct of the rich farmers, long-term security in law to tenants does not seem feasible. Unlike landed gentry that lived in towns and took no interest in cultivation the present rural elite is enterprising and very much rooted in the socio-political system and so as much more difficult to hurt. Thus changes in technology and in the mode of production may have greater explanatory power to describe the absence or otherwise of political will rather than the nature of the State in implementing land reforms.
In the prevailing political system and taking into account changes in the nature of forces of production, is there a way out to help poor tenants? Are there win-win strategies that are in tune with the present market oriented policies and do not require socially committed bureaucracy? To look for solutions we should first examine the changes that have taken place in the nature of tenancy in the last twenty years. These are briefly described below.
Changes in the nature of tenancy
Less leasing now– The new agricultural technology has substantially changed the nature and extent of tenancy. Table 1 shows that the total area under tenancy has been reduced to only 5% of the the total area owned.
Table 1: Estimates on leasing out and leasing in of land by households from various rounds of NSS
All India figures for rural households
Items 1971-72 (26th Rd.) 1982 (37th Rd.) 1992 (48th Rd.)
Percentage of households leasing in land 25% 18% 15%
Percentage of area leased-in to total area owned 12% 7% 9%
Percentage of area leased-out to total area owned 6% 4% 5%

N.B. Estimates for 26th and 37th rounds are taken from NSS Reports No.215 and 330 respectively.
Source: “Some Aspects of Household Ownership Holdings”,NSS Forty Eighth Round (Jan-Dec 1992), NSSO, Department of Statistics, Ministry of Planning &Programme Implementation, Govt. of India (Mimeo), 1995
This decline is observed in all states and is because the new technology favours owner-operation, requires personal supervision, and compels owner-operators to take quick entrepreneurial decisions. Therefore after the new technology has taken roots there is no risk of a drastic increase in the tendency to lease out lands on a long term basis and revert to zamindari culture of the feudal era, even if the ban on leasing is lifted in a phased manner.
Hanumantharao and Gulati (EPW Dec. 31, 1994) write, ‘The proportion of area held under tenancy, specially pure tenancy, has declined because the land has been resumed by owners for self cultivation. This resumption of farming was induced by technological change and impelled by tenancy legislation. This explains the rise in the concentration of operational holdings, although this concentration is still lower than in ownership holdings because small and marginal farmers still lease in more area than they lease out and large holdings lease out more area than they lease in’.
Higher supervision and capital investment by the landowner- Owners are now more involved in the operations and cost-sharing as a part of the tenancy contract. In U.P. and W.B. two-thirds of the cases report some cost sharing. Very similar results have been reported from Andhra Pradesh. This phenomenon is most common in the more “advanced” villages where there has been a large-scale adoption of new seeds, fertilisers and tubewell irrigation.[2]
In green revolution areas, where market awareness is widespread even among the poor, experience suggests that freeing the lease market for land many contribute to equity as well as efficiency of resource use. The nature of tenancies in these areas is very different from regions characterised by semi-feudal labour relations. The new forms of sharecropping arrangements in these regions involve high cost and output shares for the land-owner, and a high degree of control by the landlord over the process of production. Like traditional leasing, the tenant participating in these arrangements is a small peasant, who is responsible for all manual tasks, but is not required to own any means of production, which are supplied by the land-owner[3]. The tenant is virtually a piece-rated labourer, but his involvement helps the land-owner save on supervision. `From leasing as a means of rental appropriation, landlords have moved to leasing as a means of control over labour power, the appropriation of its produce, and as a means of further accumulation'[4].
Leasing-in by the poor in such areas should be seen as a mechanism of
resource adjustment
credit system, whereby the poor take land on credit, and repay in kind
sharing of risk and entrepreneurship
avoiding transaction costs
leasing out by the poor in favour of those poor who have bullock power because of its indivisibility,  and
leasing out of distant plots and leasing in of conveniently located ones.
Seasonal rather than life-long and crop-specific– Leasing out is no longer due to cultural factors. Medium and large farmers manage labour intensive crops such as paddy and potato by hiring tenants to do specific jobs, but indulge in self-cultivation for labour extensive crops, such as sugarcane. Thus tenants are located for a short period, who rotate from one farmer to others like casual labour.
Table 2: Percent of holdings with leased-in land and % of operated area leased in

State % of households
leasing in land in 1981 % of operated area leased in
1981 1961
Haryana 25.89 18.22 —
Tamil Nadu 24.66 10.92 16.55
West Bengal 23.08 12.34 17.65
Punjab 21.29 16.07 35.39
Uttar Pradesh 20.45 10.24 8.06
Bihar 19.73 10.27 10.25
Orissa 18.19 9.92 10.75

ALL INDIA 15.85 7.18 10.70

Andhra Pradesh 13.76 6.23 9.15
Karnataka 10.73 6.04 18.16
Maharashtra 10.59 5.20 8.74
Madhya Pradesh 7.98 3.56 6.40
Rajasthan 7.14 4.31 4.87
Kerala 6.68 2.05 15.30
Gujarat 4.85 1.95 5.83

Bi-modal pattern– Table 2 shows that higher percentage of leased out to owned land is no longer the preserve of backward states, such as Bihar or Orissa, but progressive states like Punjab, Haryana and Tamil Nadu report large percentage of area under tenancy arrangements. Partly the reason is that in Haryana and Punjab leasing out is legally permitted, hence reporting is free from fear. But perhaps the more important factor could be the new labour intensive technology that compels farmers to seek reduction in transaction costs for labour, especially in areas where labour is not abundant. Owners are able to reduce the costs and risk involved in searching, negotiating with casual labour and supervising their work by hiring a poor family to provide labour on a seasonal basis and ensuring high quality of labour input by giving a share in output as wages.
Tenancy is lowest in the western states of Rajasthan, Gujarat, Maharashtra, and Gujarat. These states are characterised by (i) low percentage of irrigated area; (ii) higher per capita availability of land; (iii) lower proportion of landless labourers; (iv) higher percentage of area under commercial crops; and (v) higher production risk.
The data in Table 2 show us that the magnitude of tenancy is bimodal, high in states such as Haryana and Punjab, on the one hand, and states such as West Bengal, Tamil Nadu, on the other.
Reverse tenancy– Although there has emerged a trend after green revolution whereby the small landowner leases out to a large landowner, on the whole leasing in is still resorted by the small landowner. The new technology is both capital and labour intensive. Where wages and the rate of mechanisation are high, the medium farmers who are leasing-in area would be able to make a fuller use of their fixed equipment. However, the area involved in reverse tenancy is rather insignificant, as the advantage of cheap family labour favours the poor to lease-in land. In such cases the pure tenants as well as the small and marginal farmers would be able to augment their operational holdings by leasing-in area. This may also contribute to the more efficient use of land, labour and other resources. Socially it is a desirable trend, as smaller holdings maximise output per unit of capital. Even where the marginal farmers lease out, it is often to another marginal farmer. The former gains by leasing out area and taking up non-farm employment, and the latter is able to increase his operational holding, this resulting in gains to both (Hanumantharao and Gulati EPW Dec. 31, 1994).
Summarising his findings on who are the lessors and the lessees, Srivastava[5]writes,
‘In the theoretical literature on tenancy, a strong lessor-weak lessee relationship is often assumed. The historical evolution of tenurial relations in India also gives strong support to this being the pivotal relationship among owners and tenants. Yet, quite early on, the differentiation among proprietors, and the attitudes among even small proprietors in several regions towards agriculture labour and supervision, created the ground for differentiation among lessors. Tenurial reforms created a further category of marginal and small holders unable to cultivate land due to lack of cash inputs.
The fact that with the increasing penetration of capitalism in agriculture, the form of tenancy has been subject to change, is incontrovertible. The emergency of the small lessor-large lessee relationship, described above as the ‘phenomenon’of reverse tenancy is clearly an important aspect of this change. Yet in the country as a whole, as well as in several large regions, the typical lessee continued to be the small/landless cultivator and a large number of landless and poor peasants continued to lease in small plots of land under conditions of severe under-employment and pressure on land. According to the NSS 26thRound Survey, 27 million households or 27.02 per cent of the rural households leased in some land. 22 million of these households were marginal cultivators, owning less than 2.5 acres of land, comprising 32 per cent such cultivators. Again in the case of small cultivators leasing in land, 30 per cent such cultivators lease in land. These cultivators together formed 91 per cent of the total cultivators leasing in land.
Further, the proportion of area leased in to area owned is extremely high for the smallest size classes, showing the dependence of these classes on leased land for livelihood. Thus, for cultivators owning between 0.01-0.49, 0.50-0.99, 1 – 1.24 and 1.25 – 2.49 acres, according to the NSS 26thRound Survey, the proportion of area leased in to area owned was 365.77 per cent, 56.09 per cent, 34.24 per cent and 21.71 per cent’.
Table 3: Percentage of Area Leased in to Area Owned By Size Class of Ownership Holding

Size Class of Ownership Holding (acres) Percentage of leaded in land to owned land
Nil 3050
0.01-0.49 365.79
0.50-0.99 56.09
1.00-1.24 34.24
1.25-2.49 21.71
2.50-4.99 11.94
5.00-7.49 7.31
7.50-9.99 5.24
10.00-12.49 4.07
12.50-14.99 4.49
15.00-19.99 3.72
20.00-24.99 3.42
25.00-29.99 2.51
30.00-49.99 1.85
50.00-above 1.44
Total 11.25

Source: NSS 26th Round
These changes in the nature of leasing practices are described in the following table:-
Table 4: Changes in the nature of leasing practices in the last thirty years

Semi-feudal[6]tenancy Capitalist[7]tenancy
Period of lease Usually lifelong or for several years Could be only for a crop, esp. labour intensive crop
Supervision by the landowner Negligible; all entrepreneurial decisions are taken by the tenant Intensive, landowner decides the cropping pattern, and timing of application of inputs
Share of landowner in investment Negligible, seed, animal power and labour is provided by the tenant Most capital cost is borne by the land owner, the tenant provides family labour and animal power
Share of landowner in output Traditionally 50% 75 to 85%, depending upon capital costs
Identification of lessee with the plot Very high, as tenancy is life long, often hereditary Nil, as sub-tenant keeps changing his plot
Total investment in agriculture Restricted to labour and home grown inputs, little capital Cash investment could be between 50 to 70 % of the total investment
Opportunities of employment outside agriculture Little, and demand for land is very acute leading to high rents Increasing opportunities for employment outside land, leading to more land coming to the market and stabilisation of demand for land
Productivity of land Higher on marginal holdings as family labour is free on such holdings Marginal holdings seem to lose the advantage and productivity seems to be highest on small-medium size holdings, however marginal holdings maximise production per unit of capital

Empirical studies
It is thus clear that the institution of tenancy, particularly in the wake of the spread of commercial agriculture based on improved technologies, has undergone many changes. It is now more in the nature of a risk-sharing mechanism, which also reduces transactions costs. Hence, it would be wrong to continue labelling it as a wholly undesirable institution. Several empirical studies have supported the case for open leasing policy.
Parthasarathy,[8]in his study in the Andhra Delta found that the lease market facilitates a shift of control of land to the small-holders and tenants. Big owners are found to lease out and the resultant distribution of operational area is less uneven than the ownership pattern. Thus the lease market enabled the landless to gain access to land.
Chadha (IJAE, July Sept. 1994) noted that in Meerut, the leasing in and leasing out are resorted to, in a big way, by the marginal and small farmers; about half of the marginal farmers lease out to become landless and the other half lease in to become small farmers. In areas experiencing technological change and high growth, where population pressure on land is low and wages are high, the marginal farmers may thus gain by leasing out their area and taking up non- farm employment. Consequently, the small farmers become the biggest group, both in numbers and area operated.
In Orissa however, the leasing in is resorted to more heavily by the marginal farmers than others. The big farmers prefer to lease out to the landless and marginal farmers. This helps them to preserve their hold in land-labour inter-lockings. To them the need for such inter-lockings is more daunting in irrigated areas, thanks to time exigencies imposed by new agricultural technologies.
According to Professor Thimmaiah,[9]‘ another interesting development that has occurred after the abolition of tenancy is that large tracts of land owned by persons engaged in non-agricultural occupations have been left uncultivated. ‘Those persons engaged in non-agricultural occupations owning very small pieces of land through inheritance have left them fallow because they would lose them if they leased them out to tenants. Though they own the asset, they do not derive any income from it. From the social point of view, so much land, which is an important asset, is being wasted’.
Extensive field studies by Pranab Bardhan and Ashok Rudra in West Bengal, Bihar, Orissa and Uttar Pradesh show that it would be wrong to equate tenancy with feudalism. It was found that entrepreneur farmers who are landowners in their own right lease a substantial proportion area under tenancy. There was also a notable absence of the appropriation of surplus in the form of unpaid labour services through extra economic coercion, commonly regarded as one of the essential features of a feudal relationship. Unpaid and obligatory services by the tenant were found to be quite uncommon as was the tying of individual tenants to a particular landlord. Nor did the study find much evidence of debt bondage. There was active participation by the landlords in many aspects of managerial decision-making, i.e. regarding inputs, choice of seeds etc. This was more pronounced in areas where high yielding varieties and other improved technologies were being used.
Some analysts, such as Ashok Gulati have argued that the production efficiency in tenant holdings even in eastern states is no longer hampered since now landlords generally participate in the production plans and give advances for inputs. On the other hand, Srivastava has argued that, ‘It is true that landlords do occasionally dictate cropping patterns to the tenants, share a small fraction of the cost of inputs, and sometimes give advances with or without interest to the tenants. But it is not clear whether this goes far enough to remove allocative inefficiency altogether. Moreover, landlords’ability to extract a major chunk of the tenant’s produce as rent/and or interest, and the complete insecurity of the tenant has dynamic implications for long term production efficiency and investment, not fully analyzed within the framework of static allocative efficiency.’
Without entering into the merits of these arguments, it may be stated that one may not change the policy in all states in one go. Therefore a change in ‘no leasing’ policy is not being advocated for eastern states. But in progressive states, as argued by Srivastava, ‘with the growth of capitalism, the large lessor-small lessee relationship has undergone several associated changes: a shortening in the period of lease including the emergence of seasonal leases; a higher say in decision-making on tenanted land by the landlord; a higher proportion of cost-sharing; and finally, a higher proportion of output appropriated as rent. Thus landlords tend to assume greater risks and accountability in the process of production. Tenants may no longer be required to own any means of production (this is also the case in labour service arrangements prevalent in more traditional agriculture where landlords play little role in determining production arrangements on tenant holdings). The focus shifts from rental appropriation to appropriation of tenant’s family labour (also using interlocked relationships) and sidestepping of labour and transactions cost’. In such cases, lifting the ban on leasing and making tenancy to be controlled by market forces would be to the advantage of small operators who would be able to lease-in more land. It will also facilitate labour mobility, as small owners would be able to lease out without fear.
Arguments against indiscriminate leasing
If leasing would help the poor in certain agriculturally advanced regions, why wouldn’t it be beneficial to the poor in backward regions? Secondly, why should one not support reverse leasing? How would it affect productivity and equity? These issues are being discussed below.
Markets and equity
Would freeing the land markets of government control help the poor in all regions, improve their incomes either through greater mobility or through better access to land, and lead to greater efficiency in the allocation of scarce resources?  Or would they lose control over their land and become destitutes in some regions? There are no clear answers. One is tempted here to suggest referring to the “trickle-down”literature (see for instance, Gough and Sharma 1974 and Lipton 1990 for exposition of two contradictory views on the impact of Green Revolution on the poor in India), which inter alia had examined whether faster economic growth helps the poor in the short run or worsens their relative position. As regards peasant economy, there is also evidence on the impact of injection of new capital on subsistence agriculture, which we would like to review here in brief.
Agrarian structure and commercialisation- The issue whether commercialisation benefits small producers or leaves them worse was at the centre stage of all controversies in agriculture three decades back, as there was evidence to support contradictory positions. Box 1 describes how introduction of sugarcane affected farmers in two adjoining regions in UP in the 19th century. The conclusion is inescapable, that markets can do both – help and harm the small producer – and the outcome depends on several variables, such as agrarian structure, nature of markets, relative bargaining power, and government policy. Different agrarian classes tend to market through different intermediaries, in different locations, and under different contractual conditions, and thus tend to receive different prices for their factors of production, both labour and land. This difference gets accentuated in the regions where markets are distorted.
Box 1: Impact of commercialisation on farmers
The northern province in India, called U.P., has two distinct agrarian regions, western and eastern. The western region is characterised today by larger holdings, secure means of irrigation, a long history of owner cultivation and cash crops, higher surpluses and its re-investment in agriculture, a higher risk-bearing capacity, and better enterprise. On the other hand, the agrarian structure of the eastern U.P. is characterised by dense population, land hunger, economic stagnation, extreme inequality, heavy dependence on grain production, smaller holdings, low overall incomes, a less marketed surplus, imperfect credit markets, more dependence on the village merchant for marketing the small surplus, inter-locked credit and output markets, less monetisation, less diversity of rural incomes, greater debt bondage, a less developed infrastructure for the supply of agriculture inputs, greater insecurity of land tenure, and on the whole poor human capital as far as enterprise is concerned. These characteristics have remained unchanged for almost a century upto 1970’s.
The response of the two regions to the introduction of sugarcane in the late nineteenth century was a direct consequence of differences in their agrarian structure.
In the eastern region, sugarcane cultivation put many cultivators at the mercy of landlords and merchants (Amin 1984), and therefore commercialisation further impoverished them. The cane-growing peasantry in east U.P. did not benefit from the increased volume of trade in the early 20th century. The sugar mill owners did not create new channels of communication with their peasant suppliers, they hardly altered either the existing marketing or production relations. In fact they strengthened the backward capitalism and traditional relationship, through buying cane from village merchants and middlemen, thus allowing them to increase their stranglehold on the peasantry.
But the cultivators of the western region were comparatively speaking independent decision makers. They seized on new opportunities, and exploited new markets and technologies bringing prosperity to themselves (Attwood 1987). Canal irrigation introduced into western U.P. in the 19th century benefited even the landless in a number of ways: new lands were brought under cultivation, the double cropped area increased, and sugarcane was more labour intensive than millets. Stone cites (1984: 278-279) that by the 1870s Chamars(a low labouring caste) had almost emerged from their former state of serfdom and were able to select their own masters either in their own village or elsewhere. Another official reported in 1882 that in many villages `Chamarsutterly refused to do begari(unpaid work), and demanded a full wage for a day’s work'(Stokes 1978). This new assertiveness was because they also benefited from the new prosperity, and the demand for labour that it had produced.
In the wake of commercialisation in the west came the development of infrastructural facilities in the form of marketing and transport, and faster growth of allied occupations and off-farm employment (Parthasarthy 1991). A further aspect of commercialisation was the greater strength of institutional lenders such as primary cooperative societies. This is in contrast with the weak infrastructural facilities and credit institutions in the east (Clift 1977).
Thus the differences in agrarian structure accounted for the two regions responding differently to sugarcane in the late nineteenth and early twentieth century.
Efficiency vs. equity- Farming systems and production conditions vary a great deal from region to region in India, and so does the level of information among the peasantry, their political clout, and infrastructure for marketing. Markets in eastern and central regions, which are subsistence-oriented and where most tribals are located, are relatively underdeveloped as compared to markets in the commercialised wheat or cash crop growing regions. Underdeveloped markets play a retrogressive role by coercing producers to sell at a low price through monopsony, interlocked contracts, fraud, credit and withholding of information. In such a case if land markets are freed, the poor may lose control over land, not because they are inefficient but because they are powerless, and indebted to the rich.
Markets in general perform two functions, allocative and exploitative. To the extent markets facilitate commodity production, and integrate producing regions with consuming regions, they help the producers in choosing the most profitable use of factors of production. Farmers allocate their resources in commodity production on the basis of signals they receive from markets. But markets may also play a exploitative role by transferring resources from the weak to the strong. In such a case commercialisation may take place either without increase in production, or without increase in consumption of the poor.
Thus markets could behave in two different directions; these may harm the poor where factor and output markets are interlocked, and at some other place markets may be competitive, sensitive to the laws of supply and demand, and giving undistorted stimuli to farmers and consumers. Under certain conditions markets help those who can use resources more efficiently[1], but under other conditions these help the powerful, who may not be efficient users of resources, but are able to coerce the poor in appropriating their land as well as labour power.
Conditions when producers are generally in a weak bargaining position vis-a-vis the traders, and markets are underdeveloped may include:-
1. Extreme poverty– In some regions, most small producers are poor, chronically indebted to middlemen or landowners, and are thus not in control over their labour. They have absolutely no control on the prices or other terms of trade. This may be due to interlocking of credit and output markets forcing the poor to sell to the moneylender. They would stagnate at the subsistence level, and have no freedom of action, unless they get out of their serfdom.
2. Market information– Poor peoples information and awareness in certain regions about buyers, the prevailing market price, and government rules may be inadequate. In a competitive and efficient market information should circulate freely.
3. Market access– The contact of a small producer is generally limited to the village buyer alone, whereas in a competitive and efficient system there should be a large number of buyers and sellers. The poor in semi-feudal areas seldom ever bring their produce to the town. They are uncertain about the price they would get in the town for their produce in relation to the costs and risks of transporting the produce. Thus, although their products ultimately reach a very large market, the market is geographically limited as far as they are concerned. The limited access to markets and the dependence on intermediaries have a direct effect on prices that they get.
4. Distortion caused by government regulations – Restrictions imposed on storage, movement, processing of farm products, and uncertainty associated with such laws also cause market distortions which inhibit development of competitive markets, and thus force the traders to increase their margins. This also acts against the interests of the poor.
Therefore, to sum up, as a precautionary measure, one should consider freeing of lease market only in those regions where agricultural markets are relatively well developed. One may however argue that it is not easy to clearly delineate regions and districts where markets are well developed from those where distortions are rampant. Therefore a practical way out would be to select only one or two districts in a state, such as Muzaffarnagar and Meerut in UP, where leasing-in by the poor may be allowed for a period of five years. The experience gained from such districts may decide the pace of such reforms for other districts.
Why not reverse tenancy?
There is a general feeling among policy makers that larger holdings are more efficient and viable, and therefore leasing-in by the medium and large farmers would boost agricultural production and ultimately employment in the long run. In the context of a ‘liberalised’ economy, leasing is also being advocated in favour of agri-business under an assumption that such an enterprise would capture the advantages of economies of scale.
However, agriculture and industry operate under different technologies and the laws of industrial production do not necessarily govern agriculture, just as economies of scale regarding the latter are not the same as for Dairy Development and Poultry. Some of the essential differences between industry and agriculture that should prompt the planners to discourage creation of large operational holdings are as follows:
Land cannot be created whereas urban wealth can be created indefinitely. Rationing is imposed on such goods that are in short supply but there is no need to put a ceiling on the number of animals in a family or on the number of birds that can be kept in a poultry farm, because the supply of these goods can be increased indefinitely. Land however is limited. For instance, it has been estimated that investment in irrigation in the next 50 years will increase the gross cropped area only at the rate of quarter per cent per year. Thus the total available land is likely to remain constant in the coming decades. In such a situation, larger holdings can be created only through depriving the poor of their means of ownership.
Despite industrialisation the percentage of people dependent on agriculture in the country has declined in the last 80 years from 70% to about 65% only, and is likely to remain above 60% in future too. Employment generation in the secondary and tertiary sectors of the economy can barely absorb the additional urban labour force and the scope of rural work force finding meaningful employment in the urban sector is limited. As would be clear from the following calculation, if pressure on land is not to increase, a fantastic growth rate of 23 per cent per year of the non-agricultural sector will be necessary to absorb the increase in manpower.
Assume the total labour force to be 100 in the year 2000 (and all employed) and its growth rate 2 per cent every year. If 65 were dependent on agriculture in 2000 either as landowners or agricultural labourers and this number is to remain unchanged in absolute terms in 2001, the rest 35 plus 2 should find jobs in the non-agricultural sector. Thus employment in this sector should rise at the rate of (2)x100/35 = 5.8 per cent every year. If income elasticity of employment in the non-agricultural sector is assumed to be 0.25 (this may further decline due to liberalisation whereby less people are required to do the same job) the required growth rate of the urban sector should be 5.8/0.25 = 23%. Since this growth rate is not feasible it is idle to talk of reducing pressure on agricultural land by diversification of the economy alone. The hard reality is that the dependence on land of 65 per cent of the total population is likely to continue in the present century also, unless economic growth in urban areas is predominantly labour intensive. Thus the argument that ‘if people are deprived of their tiny holdings they would find other meaningful jobs’ makes no sense. Destitution on a large scale would escalate social tensions and crime in the urban area on an unprecedented scale. If nothing else, at least in the interest of harmony and peace in urban areas, our policy should be to tie the rural people to their tiny holdings in the villages and keep them busy there rather than make them landless and push them to towns through proletarianisation.
Industry operates under conditions of increasing returns to scale whereas agriculture has so far operated under diminishing returns to scale. Thus both output and employment per unit of capital invested increase in industry with the increase in the size of its operation. But the reverse happens in agriculture. Smaller holdings produce more and generate more employment for each unit of capital employed. For each unit of land too, the small farmers saturate their holdings with family labour and thus use more labour than capital for each unit of output. One may however argue that per unit of land small farmers no longer produce more than large farmers, a point that we take up in the next section. In other words, if steel is in short supply it is much better to give it to one unit rather than create five extra units and keep their capacities under-utilised but if fertiliser is in short supply extensive rather than intensive use will be more advisable in the interest of higher production. Contrary to received wisdom, small farms thus are not unviable.
A programme of transfer of control over land from the big to the small via leasing will also increase overall consumption. Better distribution of land and control over land by sharecroppers and tenants will not only increase employment per unit of land but it will also improve consumption standards of the rural poor, thus enlarging the size of the market for consumer products. It will improve the world view of the poorest and will make them invest in their future. It will also minimise the chances of social tensions and conflicts that are showing signs of increase in states where the landless constitute a substantial proportion in rural society.
The objective of programmes included in rural development is fourfold. To increase production, to reduce unemployment and under-employment, to secure an appreciable rise in the standard of living of the poorest section and, fourthly, to reduce disparities in income and wealth between various classes in the rural areas. Except for the first objective better distribution of land and improving the size of operational holdings of the small farmers through permitting them to lease-in land would help in furthering the other three objectives of rural development.
In so far as production per unit of land is concerned, the relationship between equitable distribution of land and productivity has become a subject of controversy. There are some economists who believe that inverse relationship between farm-size and productivity is still valid. The small farmer cultivates his land more intensely and puts in more labour per unit of land. The quality of supervision as well as of land and irrigation is also better on smaller holdings. Since the new technology is size-neutral and it is both labour and capital intensive, there is no reason why the small farmers cannot fully exploit the HYV technology, provided capital is made available to them at a reasonable rate of interest.
It is also argued that, other factors of production remaining constant, caste plays an important role in determining productivity. In India, best farmers are not the high caste people despite the fact that they are most favourably endowed in land and material resources. The traditional agriculturist castes (also called intermediate or backward castes) like the Jats, Koris, Kammas, Patidars, Marathas, Vokkaligas, etc. have always been better cultivators. It is not only in their attitude to manual work that the non-working Brahman or Rajput cultivators differ from the traditional agriculturists. There are significant differences in enterprise, thrift, mobility and readiness to exploit economic opportunities. The intermediate castes having more intense knowledge of the practices of cultivation have always given higher yields. Therefore reducing the holding of non-cultivating castes will improve overall production, provided they are not permitted to lease-in.
On the other hand it is argued by some other economists that the new technology may be size neutral but is certainly not resource neutral. In many parts of the country the cultivating castes are also the big and medium land holders. Through better access to credit and other material resources they have shown better results in agriculture than the poor farmers. The small farmers have lost their traditional yield advantage because of inferior access to on-farm surplus, cheap credit, non-crop incomes (which increase risk bearing capacity) and private tubewells. Thus the findings on the relationship between farm-size and output may not be unequivocal, but there is agreement that small farmers utilize capital and use labour in a more socially desirable manner. On the other hand, large farmers invest more capital increasing the cost of cultivation, and thus demand higher price for their produce forcing the government to push the Minimum Support Price upwards.
Lastly, allowing agri-business to lease-in land would invite a lot of criticism from the press and academics, and would be seen as hurting the interest of the poor.
Policy implications
This paper has argued in favour of removing restrictions of law in developed regions on leasing of land so as to enable the poor to rent land from others and increase the size of their holdings. The fear about big land owners forcibly taking over the land of small owners, because of restoration of tenancy as a legal institution, are unrealistic and unwarranted. After all, even now it is open to the big landowners to expand their holdings up to the ceiling limit by purchasing outright the land of small owners. In fact, the legal restrictions on leasing operate to the disadvantage of small owners and poor tenants. Firstly because the leasing is illegal, the rent that he gets is less than the market rent. Secondly, in some places he runs the risk of losing his land if the tenancy is detected. Tenancy restrictions have also hampered the mobility of labour from the rural to the urban areas because small holders are increasingly reluctant to lease out lands under the present terms. The possibility of such mobility are not insubstantial in regions of capitalist agriculture. However, it is not the intention to legalise reverse tenancies. Only agricultural labour, marginal and small farmers are being proposed to be permitted leasing-in of land from both small and big farmers, as the basic purpose of legislation is to improve their control over land.
Table 6: Incidence of tenancy for 17 major states

% of households reporting
leasing out leasing in
Av. Area leased in per reporting household leased-in area as percent of total area owned
Andhra Pradesh 4.6 15.9 0.47 9.6
Assam 3.9 16.7 0.33 8.0
Bihar 2.4 7.0 0.39 4.3
Gujarat 4.0 10.6 0.56 4.2
Haryana 10.1 18.3 3.17 41.1
Himachal Pradesh 3.4 14.4 0.24 4.4
Jammu &Kashmir 1.0 6.4 0.53 3.4
Karnataka 7.5 13.1 0.99 9.3
Kerala 2.2 9.6 0.10 3.2
Madhya Pradesh 3.9 12.3 1.04 7.4
Maharashtra 4.4 15.8 0.52 5.2
Orissa 6.8 22.3 0.38 11.4
Punjab 8.9 15.2 1.31 18.2
Rajasthan 4.5 10.9 1.43 5.8
Tamil Nadu 5.6 19.5 0.26 12.4
Uttar Pradesh 5.8 16.5 0.59 11.8
West Bengal 4.7 17.8 0.31 12.0
All India 4.8 14.7 0.62 9.0

Source: “Some Aspects of Household Ownership Holdings”, NSS Forty Eighth Round (Jan-Dec.1992), NSSO, Department of Statistics, Ministry of Planning &Programme Implementation, Govt. of India (Mimeo), 1995
In districts with high productivity, rapid agricultural growth and well-developed commercial agriculture, leasing should be freely allowed. Similarly in districts where tenancy reforms have taken place and the old exploitative relations substantially weakened , such as in western states of Rajasthan, Maharashtra, Gujarat, and Karnataka, leasing should be allowed without any restrictions. However, in districts that continue to be feudal with poor agricultural growth and a high degree of inequality, the policy should be to rigorously implement the existing laws. If this is not considered politically desirable, one should wait and watch the results of implementation of liberalisation in other areas.
To put it more precisely, the sections pertaining to the definitions of ‘tenant’, ‘personal cultivation’, ‘resumption” and ‘fair rent’, will have to be amended in selected districts on the basis of indicators, like land holding pattern, degree of concentration of land ownership, agricultural growth, agricultural productivity and existing tenancy arrangements. Sections related to the prohibition of tenancies will have to be deleted in such areas. For example, Section 5 of the Karnataka Land Reforms Act, which prohibits the leasing of land except by soldiers and seamen, will have to be amended to include leasing by all landless agricultural workers and marginal farmers. The result of amending tenancy laws to allow leasing in of land will ensure greater accessibility of the rural poor to agricultural land which in term shall enhance employment opportunities.
Table 7: Percentage distribution of area leased-in by terms of lease for 17 major states

State for fixed money for fixed produce for share of produce other terms all
Andhra Pradesh 32.1 29.2 33.9 4.8 100.0
Assam 23.7 4.7 49.6 22.1 100.0
Bihar 9.2 20.4 57.4 13.0 100.0
Gujarat 19.1 3.2 56.5 21.2 100.0
Haryana 82.2 2.6 14.3 0.9 100.0
Himachal Pradesh 18.1 6.8 9.2 65.9 100.0
Jammu &Kashmir 16.1 27.9 27.6 28.4 100.0
Karnataka 19.7 18.5 47.3 14.5 100.0
Kerala 15.1 – 4.6 80.3 100.0
MP 22.7 30.9 25.1 21.3 100.0
Maharashtra 27.0 10.3 47.3 15.5 100.0
Orissa 12.7 11.9 65.1 10.4 100.0
Punjab 67.1 10.8 15.0 7.1 100.0
Rajasthan 17.7 32.2 37.1 13.0 100.0
Tamilnadu 32.4 26.5 25.3 15.9 100.0
Uttar Pradesh 7.8 18.7 56.3 17.2 100.0
West Bengal 12.4 9.8 67.4 10.4 100.0
All India 29.1 18.0 39.8 13.1 100.0

Source:   “Some Aspects of Household Ownership Holdings”, NSS Forty Eighth Round (Jan- Dec. 1992), NSSO, Department of Statistics, Ministry of Planning &Programme Implementation, Govt. of India (Mimeo), 1995
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Appendix I
Provisions in the State laws regarding prohibition of, or restrictions on, leasing out of land
Andhra Pradesh
Telangana Area
The leasing out of land by large landholders is prohibited. Small holders owning below three family holdings are, however, allowed to lease out land. Minors, females, persons incapable of cultivating the land by reason of any physical or mental infirmity, and persons working in the Defence services and persons prevented by any sufficient reason from cultivating the land are also allowed to lease out land. The lease in such cases shall be for such periods as the Collector may fix. Landholders owning land up to three family holdings may lease out their land for a period of five years and must, subject to a right of resumption, renew it for further periods of five years. The right of resumption is limited to one family holding for each adult member in the landholder’s family. As the family holding ca be a considerable area, the resumption can result in total or substantial dispossession of the tenant who is not guaranteed a minimum area. Thus in reality there is no effective restraint on the leasing out of land nor is the tenant accorded real security of tenure.
Andhra Area
There is no restriction on leasing. The tenancy is subject to the landlord’s right of resumption which might extent up to two-thirds of ceiling area as defined in the land ceiling law. The tenant has, however, to be left with an area not less than one-half of that held by him prior to resumption. While the right of resumption has ended in the case of leases subsisting at the commencement of the Amending Act of 1974, it continues in respect of future leases.
There are no restrictions on leasing out of land. The land owners have a continuing right of resumption if the land is required bona fide by the landlord for his personal cultivation.
Under the Bihar law, leasing out is prohibited except in the case of persons under disability (minors, widows, unmarried divorced or separated women, persons suffering from mental or physical disability, persons in defence services and public servants in receipt of a substantive salary not exceeding Rs.250 p.m.). Tenants of persons under disability can be evicted at the end of the lease period and no rights accrue to them.
Though the ceiling law prohibited leasing, under the Bihar Tenancy Act persons owning less than 5 acres of irrigated land or 10 acres of unirrigated land are allowed to lease out land and such land owners enjoy a continuing right of resumption.
Saurashtra Area
Future tenancies are prohibited except for landowners serving in the armed forces or those who are widows, minors or persons suffering from mental or physical disability. Unauthorised leasing makes the lessor liable to a fine ranging from six to twenty times the assessment and the lessee to summary eviction.  In addition, the tenant is liable to pay a five up to Rs.1000/- because under the law, taking land on lease amounts to abatement of the offence. The provision has led to the concealment of tenancy as neither the landowner nor the tenant is interested in bringing the tenancy to light.
There is no ban on leasing out of land and the tenants do not acquire any rights in the land.
Himachal Pradesh
Leasing is prohibited except by a landowner who is:
a minor, or unmarried women or a women divorced or separated from her husband or
permanently incapable of cultivating the land by reason of any physical or mental infirmity, or
a serving member of the armed forces or
temporarily prevented by some sufficient reason from cultivating the land. All landowners other than permanently disabled ones must make an application for resumption within one year of the cessation of the disability failing which the lessee would acquire proprietary rights.
Jammu &Kashmir
The law prohibits leasing out of land and continuation of tenancies after 1 May, 1973.
Future leasing except by defence personnel, is prohibited.
Future leasing is prohibited and no exemption is given to defence personnel or to any person suffering from any disability.
As in Gujarat, in Maharashtra also, there is no ban on the creation of tenancies, but the tenant acquires the right to purchase the leased land within one year of the commencement of the tenancy. Persons serving in the armed forces or suffering from specified disabilities may lease out the land. These landlords may resume land within one year of the cessation of the disability.
Leasing is prohibited except in the case of defence personnel and persons suffering from specified disabilities. The right to lease ceases with the cessation of the disability, but resumption cannot extent beyond one-half of the lease dland nor can it be such as to leave the tenant with less than one hectare of land.
Leasing is prohibited except in the case of Privileged Raiyats, Defence personnel, small holders and persons suffering from specified disabilities. Privileged Raiyats are co-operative societies, Lord Jagannath, public trusts and public financial institutions. The small holders are those owning less than three standard acres of land.
In Punjab also, as in Haryana, there is no ban on leasing out of land and the tenants do not acquire any rights in the land.
Future leasing is not prohibited. There are, however, some restrictions on leasing. Where a “Khatedar” tenant leases out his land, the term of the lease should not exceed five years at a time and there should be an interval of at least two years between two leases. A “Ghair-Khatedar” tenant can lease out his land for only one year. These restrictions do not apply to persons suffering from special disabilities.
Tamil Nadu
The Tamil Nadu law allows future leasing, but the law stipulates that every tenancy agreement must be in writing and shall be executed in triplicate. The document should show the details of the land and the terms of the tenancy. A copy of the agreement is required to be deposited in the Taluk office. It is left to the parties to decide the duration of the tenancy.
The Tripura Land Revenue and Reforms Act of 1960 laid down that every lease should be for a maximum period of 5 years renewable for a further period of 5 years subject to the landlord’s right of resumption for personal cultivation. The amending Act of 1974 provided that every under-raiyat admitted after the commencement of the Principal Act shall be deemed to hold the land under a lease in perpetuity and is not liable to ejectment except on the ground of non-payment of rent, misuse of the land or sub-letting.
Uttar Pradesh
Future leasing is prohibited except by defence personnel or persons suffering from specified disabilities.
West Bengal
There is no restriction on leasing. By an amendment of 1977, there is a presumption in law that a person lawfully cultivating the land of another person is a bargadar in respect of such land. The barga right is heritable and can be terminated only on certain specified grounds. On resumption, the bargadar has to be left with an aggregate area of not less than one hectare, nor should the land held by the landowner for personal cultivation exceed three hectares.

[1]Comments may kindly be sent to Dr. N.C. Saxena, Secretary, Planning Commission, Yojana Bhawan, New Delhi 110001
[2]Land, Labour and Rural Poverty , Pranab Bardhan, 1986
[3]Rutten, Mario 1986 Social Profile of Agricultural Entrepreneurs: Economic Behaviour and Life-Style of Middle-Large Farmers in Central Gujarat Economic and Political Weekly21(13): A15-A23.
[4]Srivastava, Ravi 1989 Tenancy Contracts During Transition Journal of Peasant Studies16(3): 339-395.
[5]Srivastava, Ravi 1993, Evolution, Changes and Emerging Trends in the Tenurial System in India
[6]Elements of semi-feudal agriculture are considered to be high incidence of share-cropping, indebtedness of the small tenants, concentration of landownership and usury in the same person, and inaccessibility of markets to the tenants.
[7]Capitalist agriculture has several features, such as landowner is the entrepreneur, production is for the market and through wage labour, surplus is generated through production rather than rent, and is reinvested in augmenting production, and free and mobile labour. Many other features of capitalist agriculture such as technology operates under increasing returns to scale, increases in concentration of land, and industrial capital penetrates agricultural sector have not been witnessed in India so far on a significant scale.
[8]G. Parthasarathy, Responses to and Impact of HYV rice…, Developing Economies, 1974.
[9]Thimmaiah G., in Aziz and Krishna, Land Reforms in Karnataka
[1]It would be useful here to elaborate the notion of efficiency. The efficiency of a marketing system is defined in terms of the relation between the consumption utilities created by it (form utility in processing and bulking, time utility in storage, and place utility in transport) and the resources used in its creation. Thus a marketing system is inefficient if the resources used would yield a higher real return elsewhere in the economy.

Tenancy reforms vs open market leasing – what would serve the poor better?

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