India's landless poor: Post-liberalisation era brought in wealth to a stressed economy but did little to end rural poverty

Editor's Note: Landlessness is increasingly becoming endemic in India's rural belt, as over 56 percent of the rural population has no landholdings. For decades, there has hardly been any attempt to bring in land reforms in India, even as this critical index affects income, social security, health and education, among other factors that impact households. This two-part series attempts to study the gravity of the situation and suggest ways to address it. This is the second and final part of the series.

In June 2016, three top economists of the International Monetary Fund (IMF) — proponent of the neo-liberal economic policy — created a brouhaha among the economists world over by writing an article in their flagship magazine which said that there may be much to cheer about ‘neoliberal agenda’ but some neoliberal policies 'increased inequality' instead of delivering economic growth.

Provocatively headlined Neoliberalism: Oversold? the article said the economists looked at two neoliberal policies — removing restrictions on the movement of capital and fiscal consolidation — and came to 'disquieting conclusions' that these policies increased inequality, which in turn hurt the level and sustainability of growth and therefore, attention must be paid to 'distributional effects'.

Indias landless poor: Post-liberalisation era brought in wealth to a stressed economy but did little to end rural poverty

Representational image. Reuters

Economists agree that inequality hurts growth and that ‘trickle down’ may not necessarily happen. In fact, a 2015 IMF study concluded that contrary to the ‘trickle down’ economics, “the benefits do not trickle down”. It said an increase in the income share of the rich leads to the decrease in GDP growth while that of the poor brings higher GDP growth. Therefore, it asked policymakers to focus on the poor and the middle class. Yet another IMF discussion paper of 2014 dismissed the argument that redistributing incomes is self-defeating by asserting that “lower net inequality is robustly correlated with faster and more durable growth” – that is, inequality drags down growth.

French economists Thomas Piketty and Lucas Chancel who are known for their seminal work on inequality, published their study on India in 2017 — Indian income inequality, 1922-2015: From British Raj to Billionaire Raj? — saying that India is more unequal now than any time since the British Raj and that this increase happened in the mid-1980s “when pro-business, market deregulation policies were implemented”. They said, “The top 1 percent of earners captured less than 21 percent of total income in the late 1930s, before dropping to 6 percent in the early 1980s and rising to 22 percent today”, concluding that “much can be done to promote more inclusive growth in India.”

In 2016, former prime minister Manmohan Singh, who ushered in liberalisation in 1991, admitted that growth alone may not reduce poverty or trickle down unless explicit policy interventions were made to create jobs, raise income of weaker sections or prioritise investment in health and education. He did try to promote ‘inclusive growth’ during his tenure. He was successful in legislating the Forest Rights Act of 2006 giving the tribals rights to forest land and resources and replacing the old land acquisition law with a new one in 2013 giving legal rights to fair compensation, resettlement and rehabilitation to those who lost their land to development projects. But he failed to push his 2013 ‘draft’ National Land Reform Policy which intended to work on the unfinished agenda of land reforms or introduce 26 percent stakes to the displaced in the mining companies the Mines and Minerals (Development and Regulation) Act of 2011.

In fact, land reform became a victim to the new economic thinking in the post-liberalisation era in which development paradigm overtook redistributive justice, as the 2009 report of the Committee on State Agrarian Relations and Unfinished Task of Land Reforms had observed.

Land reform was a major policy thrust area in the first three decades after Independence during which zamindari was abolished, a land ceiling was imposed and surplus and wasteland were distributed among the landless, though implementation was patchy except for West Bengal, Kerala and Jammu and Kashmir. Even the bulk of the Bhoodan land remained undistributed. Property right ceased to be a fundamental right in the late 1970s and since then, there has been no champion of the landless.

In 2007, the National Commission on Farmers took a baby step of considering both landowning cultivators and landless agricultural workers as ‘farmers’ but made no specific recommendations. Taking it further, the Ashok Dalwai panel, set up in August 2017 to look into ‘doubling farmers’ income’, made a valiant attempt to recommend extending all government supports meant for farmers to the landless as well admitting that it had no mandate but asserting that the landless were far too large to be ignored.

A similar suggestion was made in 2016 by the Niti Aayog’s Expert Committee on Land Leasing, led by T Haque. It proposed a ‘model agricultural land leasing law’ for the states which would help the landless, among others, to access land, institutional credit, insurance and other government support services.

While the Dalwai committee’s formulation requires a statutory definition of the landless as farmers, that of the Haque committee entirely depends on the state governments since some states have banned leasing while many others have imposed several restrictions on land lease. Even if fully implemented, which is very doubtful, these are minor tinkering with a major economic challenge with serious political implications.

The Forest Rights Act, which has the potential to make a significant change in the social and economic status of the tribals, has been poorly implemented and significantly diluted in recent years. It is imperative, therefore, that the issue of landlessness is addressed holistically with the seriousness it deserves. There should be a national debate with the intent to develop appropriate policy and legislative response. Else, the issue will keep surfacing every now and then.

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Updated Date: Oct 08, 2018 18:58:53 IST

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