Land Leasing Big Win-Win Reform For States: Arvind Panagariya

13 July, New Delhi

Vice-chairman of NITI Aayog Arvind Panagariya today said, land leasing is a big win-win reform for states. He said states wishing to facilitate industrialization can further benefit from liberal land leasing if they simultaneously liberalize the use of agricultural land for non-agricultural purposes.

He shared the views with the people in his blog published on the website of NITI Aayog Monday.

He said, land leasing laws relating to rural agricultural land in Indian states were overwhelmingly enacted during decades immediately following the independence.

Panagariya said, top leadership of the day saw tenancy and sub-tenancy as integral to the feudal land arrangements that India had inherited from the British.

He said, many large states including Telangana, Bihar, Karnataka, Madhya Pradesh and Uttar Pradesh ban land leasing with exceptions granted to landowners among widows, minors, disabled and defence personnel.

Kerala has for long banned tenancy, permitting only recently self-help groups to lease land. Some states including Punjab, Haryana, Gujarat, Maharashtra and Assam do not ban leasing but the tenant acquires a right to purchase the leased land from the owner after a specified period of tenancy. Only the states of Andhra Pradesh, Tamil Nadu, Rajasthan and West Bengal have liberal tenancy laws with the last one limiting tenancy to sharecroppers.

Expressing concern that fertilizer subsidy today is subject to vast leakages and sales of subsidized fertilizer in the black market, Panagariya said these leakages could be sharply curtailed by the introduction of direct benefit transfer (DBT) using Aadhar seeded bank accounts along the lines of the cooking gas subsidy transfer.

He said, state governments must seriously consider revisiting their land leasing laws to determine if they could bring about these simple but powerful changes to enhance productivity and welfare all around.