Land Reforms for India

By pjain      Published July 6, 2020, 8:07 p.m. in blog Humanities-History-Blog   

India Land Reforms Key Factors

Lessons from Success in Other Countries

China Land Reforms and Industrial Development

India Land Reforms Timeline

Land Reforms helps small, contract farmers, hurts large wealthy farmers

Land reforms have always been a tricky subject for the Congress—the party needs to balance it across the spectrum of its support base.

In Nehru days, ??

Big "Yadava" traditional Hindu farmers

Absentee Landowners

Moneylenders with Liens on Land

Muslims

Backward Castes

How and Whom would Land reforms help

1970 Andhra Pradesh - PV Narasimha Rao CM's Reform

1974 Karnataka Reforms by C.M. D. Devaraj Urs of Congress

His policies dispossessed four million absentee landlords, but built a new vote bank for the Congress. Urs executed major land reforms in Karnataka in 1974, when he gave land to the tillers and banned non-agriculturists from buying agricultural land. Urs had imposed fixed ceiling on land holdings, enforced by tribunals packed with Congressmen. Obviously this was subject to great corruption.

However, Karnataka became a state where those who had non-agricultural income over a modest threshold could not buy agricultural land without special approval from the state government. As large numbers of migrants, high income entrepreneurs migrated to Karnataka, these helped keep the real estate wealth in "local" hands.

By 1978, this helped both his return to power and Indira Gandhi’s stunning political comeback in 1978.

1991 PVNRao Reforms

India's Nehru-era tryst with Fabian socialism that was continued through Indira Gandhi and her son Rajiv Gandhi was just not working out even 45 years of independence.

Rao was all set to retire from public life and move back to South India – he had not even stood for the 1991 polls when Rajiv Gandhi's assassination inadvertently thrust the PM mantle of a weak coalition minority Congress government on him. India till 1991 was distinctly different on a narrow diet of socialism-laced mixed economy, CIA, America and capitalism. Ironically, Rao was a party-line loyalist to Indira as well as her son Rajiv, with his staunch protectionist, socialist credentials.

The economic situation was really bad. The balance of payments situation was bad; even the GDP growth of 3 per cent or so was tapering off and the foreign exchange reserves had virtually dried up. The two years of unstable coalition governments made matters worse. India had no other option but to change tracks and go in for a dramatic restructuring of its economy.

Throughout Rao faced threats of instability of his minority government, Babri demolition aftermath, the rise of the BJP, repercussions of the Gulf War over Kuwait, Bombay blasts fallout, the rise of terrorism in Kashmir and even the needling challenge thrown at him constantly from within his own Congress party.

The 1991 reforms were prepared for earlier Chandrashekar government but never implemented. They actually were based on the revolutionary Congress manifesto prepared for former prime minister Rajiv Gandhi—who had been assassinated in the middle of the elections.

  • progressively dismantling the licence raj system
  • devaluation of the Indian rupee
  • In 1992, open Indian stock markets for a boom (and a whole lot of scams, too).
  • 1994 set up the National Stock Exchange
  • Progressively reduced limits on FDI and areas where foreign investors could come in - rose from mere $132m to $5300m five years later
  • cutting taxes
  • raising foreign investment in Indian business and economy
  • removing restrictions on import and export

Rao picked Manmohan Singh, as the scapegoat if things failed. Singh was an Harvard trained economist but ultra-soft-spoken "weak" and a political novice, to be the face of the dramatic liberalisation.

The 1991 reforms clicked because they were timely as the global economy was in a healthy state, actually coming roaring back after 1987 Japan crash with a slight dip in 1992 - but not for India - which thrived.

The success was rapid, with pent up industrial growth led by outsourcing to India, western-style consumerism, liberalized channels like MTV and Star Plus on the new satellite TV platforms, malls, mobiles and multiplexes.

Directly helped pull up hundreds of millions up the poor into cities and the middle class as opportunities sprouted, incomes ballooned, business boomed and the GDP went up.

In 2015, India outran China to become the fastest growing major economy in the world

However there were problems too. - Seeds for Oligarchs grabing bulk of PSU loans and growing wealth - Free trade led to under-invoicing and over-invoicing as plants were built with "public money" often in USD loans. This helped these billionaires accumulate fortunes abroad. - income gaps widened - the rural population not seemingly getting their due,

Late 90s Vajpayee

The nations politics were transformed after Congress party's defeat in the 1996 elections - but liberalization was not altered.

There was only minor land reforms from the A.B. Vajpayee-Yashwant Sinha-Murasoli Maran team.

2000s-2014 Rao to Manmohan Singh

Change was much more incremental than under the dynamic team of Rao-Manmohan Singh-P. Chidambaram

2014 - Stagnation - No progress on Land Reform under Narendra Modi

2020 Freeing up Reforms in Agriculture and Labor to speed up C19

States Started rapid Labor Reforms - but pulled back

The pandemic situation has seen the BJP-ruled governments in Uttar Pradesh, MP, and Congress Rajasthan promise to rush labor reforms to help migrants and restore growth post C19.

But strong protests from trade unions and lukewarm response of employers, the governments did little to implement the decision to extend working hours and suspend major labour laws.

Unlike the 1991 reforms which hit a global sweet spot, making India more competitive, the current 2020 reforms face the headwinds unleashed by a global economic slowdown in Covid-19.

Maharashtra and TN promised labor reforms after C19 stabilized.

Karnataka BJP-led Reforms Redone

However in 2020, this has been dismantled during this pandemic period as the BJP’s B.S. Yediyurappa, has been stung by a series of land-scam allegations during his first term as Karnataka chief minister.

Yediyurappa has now taken the plunge to junk the land laws of Urs, and allow free land purchase for individuals and companies. These land reforms seem to rhyme well with the Centre’s decision to loosen the Essential Commodities Act, allowing free trade of many agricultural commodities across the country. A huge edifice of Urs' 50 year old laws is being junked to make rural land a free-trade commodity.

The Congress in opposition says it is a counter-reform which will dispossess farmers of agricultural lands. The party also alleges that this will lead to monopoly holdings.

1991 PV Narasimha Rao rebooted Indian Economy


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