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Liberalise norms to facilitate industrialisation: Panagariya

NITI Aayog deputy chairperson urges states to create a win-win situation.

By: ENS Economic Bureau | New Delhi | Published: July 14, 2015 1:37 am

The states should liberalise their norms for use of farm land to facilitate industrialisation and pave the way for a win-win situation for the land owners and the tenants, NITI Aayog deputy chairperson Arvind Panagariya said on Monday.

“In the context of the difficulties in land acquisition under the 2013 land acquisition law, states wishing to facilitate industrialisation can further benefit from liberal land leasing if they simultaneously liberalise the use of agricultural land for non-agricultural purposes,” Panagariya said in his blog post on the Aayog’s website. His views come as the NDA government’s land acquisition bill is slated to be debated again in the impending Monsoon session of the Parliament. The Opposition has so far refused to endorse the legislation and passage of the bill is stalled. Panagariya argued that the original intent of the restrictive tenancy laws has become irrelevant and on the contrary have detrimental effects on not only the tenant for whose protection the laws were originally enacted but also on the landowner and implementation of public policy.

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Under the present system, the tenant lacks security of tenure that she would have if laws permitted her and the landowner to freely write transparent contracts. “In turn, this discourages her from making long-term investments in land and also leaves her feeling perpetually insecure about continuing to maintain cultivation rights,” the Aayog deputy chairperson contended.  While this system deprives potential access to credit to the tenant by virtue of being a cultivator, the landowner also feels insecured while leasing land.

He reasoned that introduction of transparent land leasing laws that allow the potential tenant or sharecropper to engage in written contracts with the landowner is a “win-win” reform. This is because the tenant will have an incentive to make investment in improvement of land, while the landowner will be able to lease land without fear of losing it to the tenant …,” he wrote in his blog.

Citing that converting farm land for non-agricultural use requires permission authority, which consumes a long time, Panagariya suggested that state governments can address this barrier by either amending the law to allow non-agricultural use or by introduction of time-bound clearances of applications for the conversion of agricultural land use in the implementing regulations.

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