Q) Briefly explain the links between agrarian structure and agricultural growth in India, in a historical perspective. Why is it argued that agrarian reforms are critical to agricultural growth? What has been the record of implementation of agrarian reforms in India as a whole?

Ans: Colonialism was quite burdensome for Indian agriculture and affected it adversely, both in social and economic terms. From the self sufficient units villages in India were, until the advent of the British, it made Indian villages dependent on each other and on the state. Earlier villages raised crops, both food and non-food, that served their needs. But the British mandated, in certain areas, that only crops needed for British industries, like cash crops- opium, indigo and cotton- be grown and discouraged others. This changed the nature of agricultural produce from primary goods to manufactured goods, and though it served the selfish ends of the colonial government, it heavily bore down on Indian agriculture.

The British also introduced sweeping changes in the land revenue system, like the permanent settlement system, also called the zamindari system. Earlier zamindars in Bengal, Bihar & Orissa had been functionaries who merely held the right to collect revenue on behalf of the Mughal emperor and his representative. After the Permanent Settlement of Bengal in 1793, the question of incentivisation became central and the security of tenure of landlords was guaranteed; in short, the former landholders and revenue intermediaries were conferred proprietorial rights to the land they held. In addition, the land tax was fixed in perpetuity, so as to minimize the tendency by British administrators to amass a small fortune in sluiced-away revenue. Smallholders were no longer permitted to sell their land, though they could not be expropriated by their new landlords. By ensuring that zamindars’ lands were held in perpetuity and with a fixed tax burden they became a very desirable commodity, and in a way, the Permanent Settlement led to a commercialization of land and agriculture.

The monetization of the economy was in practice even before colonialism, but the British accelerated and accentuated the process and brought some fundamental changes in the wake, both in the production and consumption patterns.

Before the Britsh came to India, land was held jointly by communities or villages, and peasants enjoyed some sort of security of tenure with their land. But the British, with their two pronged strategy of extracting maximum possible revenue from agricultural land and produce, and also ensuring a steady supply of raw material for its industries back in England, found this system untenable to their goals and introduced the Zamindari, Mahalwari, and Ryotwari systems of land revenue.

The Zamindari system, mostly prevalent in erstwhile Bengal, Orissa and Bihar, made the collection of revenue the responsibility of a few big landlords, who came to be known as Zamindars. The Zamindars were to collect specific amounts of revenue, fixed through the Permanent Settlement system, and according to the size of the land holding, on behalf of the State and pass on such revenues to the State. This saved the British the trouble of administration, as all issues related to the collection of revenues were looked after by the Zamindars. This also led to the Zamindars becoming very powerful figures who enjoyed the patronage of the State and exacted whimsical amounts of revenue from the poor tillers (this practice of collecting abnormally high amounts of tax is called rack-renting). They also started subletting land to tenants, thereby introducing several levels of intermediaries. As a result, the tiller of the land had to pay almost 80%-90% of his produce as rent, and even then, had no security of lease over the land.

Under the Mahalwari system, land revenue was collected and paid by a circle of villages or a village as a whole.

The Ryotwari system, which was seen in large parts of Tamil Nadu, Punjab, etc, meant that the settlement was done separately for each plot of land, and every farmer had to pay individually and directly to the British. For instance, in the Vidarbha region, the average holding size was 60-70 acres, and owing to such large sizes, the British, after surveying the land, decided to sublet the land to landless tillers, again giving rise to intermediaries.

Now, the common features of all these three systems of land revenue were:

  1. Tenancy

  2. High rents

  3. Insecurity of tenure

However, a post independence review shows that Ryotwari regions have developed the most while Zamindari owned places have remained the most backward. This speaks volumes about the need and good of allowing the tiller to own the land, as only then, would he invest in and develop his land. On the other hand, the greater the number of intermediaries, the greater is the devolution of responsibility and the resulting devastation of the land. Non permanency of land tenure created a major disincentive to invest in agricultural implements, seeds, fertilizers, etc and this resulted in drastic reduction in productivity. Even soil fertility declined significantly.

The princely states too paid astronomical sums of money to the colonial government as tribute, and they transferred this burden to the peasants in the form of high taxes, but reforms were introduced in some places as early as the 19th century too. Even then, development pattern remained highly uneven across the country. With oppressive land revenue systems, came debt bondage, usury (lending money at very high interest rates), child labor, bonded labor, etc. Traditional occupations declined and artisans lost their livelihood, resulting in all of them turning to agriculture for jobs, and thus there was a huge increase in the number of landless agricultural laborers.

The scenario was worsened by the gaping lack of government investment in health and education. Even where government options were available, there were fiscal constraints. This led Nehru to comment, in 1933, that the agrarian system had collapsed and a new organization of society was inevitable. While the growth of foodgrain production had taken place at 0.1% annually during 1896-1936, the population had grown at a much faster rate, with the result that annual per capita availability of food grains had fallen from 200 kg in 1918 to 150 kg in 1946.

POST INDEPENDENCE

Keeping all this in view, the makers of the 1st Five Year Plan agreed that the future of land ownership and cultivation constituted the fundamental issue for India’s development. The social and economic reorganization of India would depend on the way land reform was handled. And towards this end, the mobilization of land tenants was required so as to remove the politics involved in the envisaged land reforms.

The Congress Agrarian Reforms Committee was constituted in 1948, headed by J.C. Kumarappa. It recommended the elimination of intermediaries between the State and the tiller, it sought to specify the size of land holdings for future acquisitions, it specified the need for cooperative and joint farming, it endorsed collective farming on reclaimed land. But in the whole process, it failed to provide a concrete framework for agrarian reform, in as much as its recommendations and policies were rooted in assumptions rather than being based on solid evidence.

Unfortunately however, the leaders of Independent India worked within the ideational and legislative framework defined by the colonial rulers. At best, there were only incremental changes effected. This led to the continuation of the shortsightedness displayed by the British in ignoring the link between agrarian development and agrarian reform.

Constitutionally, agriculture is a state subject, and the Centre only lays down broad principles and the framework, while the implementation details are left to the individual states. This gave rise to regional differences, political and otherwise, in the way land reform and agricultural reform were addressed by the states. In the states, the dominant political class were big land owners, and hence, there was considerable opposition to any changes suggested in the size of the land holdings. As a result, land reforms were never really implemented. Till 1992, less than 2% of the total land had been redistributed, and if we leave out Kerala, West Bengal and Karnataka, that figure dwindles to less than 1%. Only about 3.8% of the total operated land saw tenants being given permanent occupancy rights.

This has acted as a major deterrent for agricultural growth in the country, and is an equally big drag on advancements in human development.

The 1st Five Year Plan emphasized on increasing investment in irrigation projects and on developing community development programs. Action however was hard to come by and after the Plan, irrigation investment dropped from 25% to 10% of the total Plan outlay. From the 2nd Plan onwards, the P.C. Mahalanobis influence started getting more and more pronounced and there was a total shift in emphasis towards heavy industries with a view to ensuring rapid economic progress.

But with the first major drought in mid 1950s, it became clear that current agricultural growth investments would not be sustainable and there was need for more reforms. The Govt invited the Ford Foundation to problem and offer recommendations to lift the status quo. The Foundation’s report, “India’s Food Crisis and Steps to Meet it”, outlined the following recommendations:

  1. Identify crops and areas with potential to grow and concentrate efforts and investment in those crops and areas.

  2. Technological solutions like High Yielding Variety (HYV) seeds, hybrid seeds, that would give rise to crops that had a shorter sowing and harvesting duration, that were short stemmed and hence stronger, photo insensitive and fertilizer sensitive.

The Ford Foundation advanced these suggestions without any reference to changes in land holding size. This made the recommendations easier to implement, and the Government, in doing so, brought forth the “Green Revolution” in the mid 1960s. Intensive Agricultural District Program (IADP) and Intensive Agricultural Area Program (IAAP) became buzzwords in the country.

While this initiative was afoot, the country fell to two major droughts in1965-66 and 1966-67, which drove the introduction of new agricultural packages.

Till then, India received food aid from the US through a scheme called the PL-480. There was no food security and plus, the food aid was being used by the US as a strong political tool to further its free market policies. The US engaged in arm-twisting tactics by threatening to stop this aid from time to time.

The Green Revolution saved India from a ‘ship-to-mouth’ existence and helped it onward on the road to self sufficiency. Nonetheless, there are critics of the Revolution, who point to the mindless use of fertilizers resulting in soil leaching and increased pollution of the rivers, but the fact remains that food production rate had to overtake population growth at any cost. There are others who feel that the Green Revolution led to distortions in development of agrarian structures, and enormous increases in incomes of large land holding owners. Many also feel that the program was focused on food crops like rice and wheat, and other cereals and pulses were ignored. Even area-wise, the Revolution thrived in irrigated areas and some fertile areas got greater benefits. The Green Revolution was thus said to be ‘biased across crops, classes and regions’.

The govt then came up with other interventions in the form of price support, cheap credit and good marketing facilities. The Food Corporation of India (FCI) and the Agricultural Price Commission were formed in 1965.

Through (Minimum) Support Price, the govt assures farmers of a particular price for their produce, irrespective of market valuation. And Procurement Price, which is generally above Support Prices but lower than market prices, is the price at which the govt will procure, and the farmers will compulsorily have to sell their produce. The govt will then distribute this to areas of lower production. The Public Distribution System (PDS), also called Ration system in lay man language, involves a subsidy in procurement, transportation, storage and distribution.

The govt also subsidized the input side, by giving subsidies on fertilizers, power, diesel, petrol and irrigation to ensure that the farmers had all accompanying needs fulfilled to use high yielding variety of seeds.

The nationalization of 14 banks in 1969 also led to proliferation of rural and agricultural credit. By legislating that the nationalized banks had to lend 40% of all loans to the priority sector (agriculture, small scale industries, artisans, SC and STs, etc), the govt ensured that farmers got cheap and regular credit.

It was through all these steps that India was able to gain self sufficiency in food production, though not in distribution, by 1980s. In the early 1990s, the agriculture policy came in for severe criticism at the hands of World Bank, IMF and economists, who opined that the policy was flawed and needed restructuring. They criticized the unnecessary interventionist role played by the govt in the agriculture, due to which markets couldn’t function independently and freely. The farmer was deprived of better prices and at the same time, the govt exchequer was being heavily burdened by subsidies. They suggested that India could import rice and wheat and hence need not be self sufficient in food grain production, if it could export its fruits and vegetables.

In the nineties, the rate of growth of food grain production again fell below that of population growth and per capita consumption of food grains fell, the first time since colonial times. Alarmed by this, the govt promulgated the new agricultural policy in 1991. To ensure that farmers were not deprived of high prices, the govt followed a more export oriented policy. World prices were higher than Indian prices of food grains, but they were also very volatile and control lay in the hands of a few MNCs. Understandably therefore, when prices fell after the Kuwait war in the mid 90s, Indian prices remained higher and led to fears of inflation.

To attempt a correction, India signed the WTO Agreement of 1994, that regulated agricultural trade. Tariffs and quotas for imports were imposed to stress on free trade and liberalization. Subsidies were withdrawn and credit was made costlier with high interest rates. This made cultivation extremely costly and left farmers at money-lenders’ mercy. All these steps have led, over the years, to a worsening scenario of farmers’ conditions and farmer suicides are only a small manifestation of the overall agrarian crisis in the country today.

Several think tanks have advanced possible solutions to the crisis. Farmers should be incentivised to move out of food crops into high value crops like fruits, vegetables and cash crops and also to non crop food like meat, milk, etc. Support from food crops should be gradually withdrawn. But this doesn’t take into consideration the shifting consumption patterns in the country due to change in calorie consumption. Also the ratio of agricultural exports to total exports has come down over the years, proving that the WTO policies have indeed failed.

In conclusion, if drastic measures are not taken to improve the rate of growth of agriculture beyond the sub 1%-2% levels, and to diversify into other crops, India would become permanently import dependent by 2020.