Rural India

1 INTRODUCTION

Access to land is of fundamental importance in rural India. The incidence of poverty is highly correlated with lack of access to land, although the direction of causality in this relationship is not clear.

Households that depend on agricultural wage labor account for less than a third of all rural households but make up almost half of those living below the poverty line.

Many of these households also own some land, but in holdings that are so small or unproductive that their owners derive a greater share of their livelihoods from their own labor than from their own land.

Land plays a dual role in rural India: aside from its value as a productive factor, land ownership confers collateral in credit markets, security in the event of natural hazards or life contingencies, and social status. Those who control land tend to exert a disproportionate influence over other rural institutions, including labor and credit markets.

The international evidence now strongly endorses a rural growth strategy based on the dynamism of economically viable, family farms.

In the Indian context, in which growing numbers of rural inhabitants are net consumers rather than producers of food, the equity gains will come as much from the higher demand for labor than from direct land transfers to the poorest

While India's agrarian systems have not prevented the poor from taking advantage of new opportunities presented by the Green Revolution, the gains from technological innovation remain unequally distributed between those with access to land, water and inputs, and those without.

There is broad consensus that the main causes of rural poverty lie in low rates of agricultural growth and factor productivity and that the key to raising productivity in agriculture lies largely in the deregulation of the policy environment together with measures to broaden access to land and complementary inputs.

More equitable distribution of operational land holdings would create more equitable patterns of demand, which in turn would enhance growth in the rural non-farm sector and remove some of the biases in credit, marketing and research institutions that arise from the unequal distribution of assets and power This is supported by recent evidence which suggests that countries with more equal land distribution experience higher rates of economic growth (Deininger and Squire 1996).This approach is consistent with the World Bank's overall strategy for rural development, its Country Assistance Strategy (CAS) for India, and the Government of India's own policies under

the Ninth Plan.

The Bank's rural development strategy, resting on the demonstrated efficiency of family farms, includes a renewed emphasis on access to land and the promotion of secure land rights, particularly for the rural poor and socially excluded.

Restrictions on land rentals, for example, are discouraged as they hurt the poor by restricting the supply of land to rent. Where land distribution is highly unequal, land reform is called for, and lessons from experience suggest that negotiated, decentralized and participatory approaches to land reform hold considerable promise.

Improving access to land by women is among the priority areas envisaged for Bank support to redress gender inequities, particularly in North India. Attention was widely drawn to the importance of land rights of the poor, women, and tribals, in the context of poverty reduction strategies.

Land reforms are a major policy focus of the Government of India's Department of Rural Development under the Ninth Plan (1997-2002), following recent reassessment of India's post- Independence land reform experience.

State-initiated land reforms are conventionally believed to have been unsuccessful in getting land to the poor in India although it is widely acknowledged that they have been successful in creating the conditions for agricultural growth by consolidating the position of small and medium farmers.

However, recent evidence suggests that much more redistribution has been achieved than is often supposed1.

In short, policy instruments and mechanisms that improve access to land for the rural poor and socially excluded are of high priority in bringing about efficient, equitable, sustainable, and poverty-reducing patterns of economic growth in rural India.

Socially perceived to be legitimate?

Yes

* Ownership rights, acquired through inheritance or sale/ purchase market

(although tenure security for those with little power/ voice may be

vulnerable, particularly where rights unrecorded in land records)

* Customary use rights over village commons (may not effectively be

exercised in practice if land heavily degraded or encroached upon)

* Legally protected tenancies underliberalized land-lease market (social

legitimacy may be ambiguous) * Women's right to own land independently (usually does not

translate into effective control over land, given high opportunity cost to an

individual woman in pressing her legal claim)

* Legally protected tenancies? (may not locally be perceived as legitimate if

markets for credit and labor highly interlinked with those for land to rent)

Strictly legal?

No

* Concealed tenancies under oral contracts in which rent exceeds legal

maximum, and where length of actual occupancy entitles tenant to acquire

legal occupancy rights (most likely to prevail where factor markets highly

interlinked)

* 'Illegalised', customary use rights (e.g. cultivation rights of tribal

communities on forest land, forbidden under 1980 Forest Conservation Act)

* Encroachment on commons (whether or not this translates into effective

control over land depends on relative bargaining power/ voice: e.g. more

powerful