The Need for Land Leasing Reforms in Punjab’s Agricultural Sector

Complex and layered procedures, coupled with archaic laws and systemic inefficiencies, are a barrier to any reform in the agricultural sector in the state.

In a recent meeting with the chief secretaries, Prime Minister Narendra Modi called upon them “to focus on ending mindless compliances and outdated laws” and said that “there is no scope for over-regulation and mindless restrictions”.

Punjab’s agricultural sector is mired in archaic laws, systemic inefficiencies, and ill-conceived, outdated, and inefficient bureaucratic structures. I present three examples of outdated laws and norms that are a barrier to any reform in the agricultural sector.

First is legalising land leasing for the benefit of both landlords and tenants. It gives absolute right of ownership to the landlord and provides protection to the tenant, legalising their right to state-provided compensation from crop damage, and some guarantee of continuity of leasing.

The NITI Aayog had set up an expert committee under former Commission for Agricultural Costs and Prices chairman, T, Haque, in 2015 to prepare a model agricultural land leasing legislation that the states could adopt with minor modifications to suit their individual conditions.

This draft law is absolutely clear and simple in defending the rights of both the landowners as well as the tenants, with simplified mechanisms for drafting as well as implementing the leasing agreements.

I had written a piece for the Tribune, titled ‘Punjab needs structural reforms‘, on October 18, 2017, highlighting the need to adopt the recommendations of the Haque committee. Around the same time, the government had constituted the Revenue Commission to propose reforms to outdated laws in the agricultural sector.

A draft land leasing law was submitted to the chief minister in January 2019 but nothing came of it. Apparently, there was some opposition to it from ‘influential’ officials and politicians.

The elephant in the room was that the Revenue Commission omitted to recognise the issue of ‘benami’ land holdings. This is a well-known status of agricultural landholdings in the Malwa region, particularly in Sri Muktsar Sahib, Faridkot, and Ferozepur.

‘Benami’ lands refer to those lands that are under the possession of the landlords whose lands are beyond the state’s ceiling limits – in order to retain possession, the lands are transferred to the names of relatives, unknown persons, etc. The ‘girdawri’ (a legal document which specifies land and crop details) is retained in the real owner’s name so as to allow him the rights of possession.

If a ‘girdawri’ is done away with, the original owner will lose any rights over the land. Besides, if you are not the owner on record, you cannot enter into a land leasing agreement.

Related issues such as direct payments to land owners for crops sold can also not be implemented if the land is ‘benami’.

With the digitisation of revenue records, this situation raises several problems. In particular, in the long term, only possession can be retained but the land cannot be sold, so it becomes an economic baggage offering little or no choice to the landholders.

‘Girdawri’ has also been used as a means of avoiding registration fees for land sales. Prioritising possession over ownership, which supports the big landlords, has also led to unauthorised land grabs, which in turn supports needless litigation, rampant corruption, and criminal land grabbing.

The more viable option would be to increase the ceiling limit to a feasible amount, for instance, 50 acres per person, provide a time limit of six months to a year, within which the landholders may update their records, and provide a reduction in registration fees during this period as an incentive.

Lands for which records cannot be updated for whatever reason, the government may consider other options, such as auctioning it off. The government taking possession of the ‘benami’ land to allot it to the landless may seem like a politically popular solution but it is non-viable. From an economic perspective, very small landholdings not only do not support agriculture modernisation due to lack of affordability, they also are a dead weight around the necks of the people to whom the land is allotted.

Small landholders are already heavy in debt, and landholdings that provide minimum survival incomes will only make situations worse and act as a deterrent to the youth to educate themselves to explore more profitable means of income.

Also read: 88% Of Over 9,000 Punjab Farmers Who Died by Suicide in 18 Years Were Debt-Ridden: Study

One hitch in taking a decision on the issue of ‘benami’ lands would be the Prohibition of Benami Property Transaction Act, 1988. The revenue records would, therefore, require some fine scrutiny. Any lands purchased after the Act came into force can be exempted from regularisation because the potential of illegalities related to corruption and avoidance of tax laws is more likely.

The regularisation should apply to older records whereby lands were transferred to avoid acquisitions due to land ceilings. This aspect will require some fine reviews that nonetheless need to be carried out to resolve the ‘benami’ land holding issue.

Another agriculture-related issue is of the electric motor connections for irrigation. The electric motors are linked to khasra, or field numbers, and the records are maintained in the office of the Punjab State Power Corporation Ltd (PSPCL). Since electricity for the motors was made free in 1997, no bills were prepared. So the need to keep track of the motors ceased to exist. The motors are stolen, uprooted, moved, and illegally operated.

Motor ownerships continue in the names of the persons long-deceased and records linking them to khasra numbers cannot be found – they are either lost, destroyed, or just lie in piles of files that have gathered dust.

To rectify this mess, claiming ownership, and holding the wrong doers accountable is a herculean task. The procedures are complex and layered.

And the guilty often enjoys political and bureaucratic protection. The solution is simple: link the irrigation motor khasra numbers to revenue records in the jamabandis (a records of rights containing information about land). It would then be easy to locate and identify ownership, and impossible to steal and relocate.

The process of changing ownership of irrigation motor connections is quite absurd. Since land has to be in the name of the owner, a mutual exchange of land is required to change ownership. After three years, the motor maybe transferred in the name of the ‘new owner’ and the land re-transferred. This procedure is needlessly complicated.

Again, the solution is simple: if a person has a motor connection that he/she no longer needs, it should be made possible to switch ownership at whatever cost is agreed between the seller and the buyer with a fixed registration fee per motor. Once the sale is done, the revenue records should be suitably updated. This would resolve the unnecessary illegalities associated with motor connections while providing the government with revenues from registrations.

Another major issue now is an established norm of ‘black money’ or under the table payments for the sale of agricultural land. The ‘collector’ rate is well below the market rate but the registration fees are linked to the ‘collector’ rate. So all sale registrations are done as per the ‘collector’ rate, and the difference in sale price is paid in cash.

The economic implications of black money in the economy are well known. The solution is again quite simple: apply the current per acre ‘collector’ rate registration fee to all sales and let the buyer and seller decide on the price. The government loses nothing, but the incentive for black money payments will be eliminated.

These issues present the Aam Aadmi Party government an opportunity to clean out the mess in the agricultural sector, simplify procedures, reduce the scope of violence and unnecessary litigation, and eliminate opportunities for corruption.

Sukhdeep Brar is a former IAS officer, recently retired from the World Bank.