What will the liberalised farmland market in Karnataka mean?

One of the last remnants of the era of land reforms in India is all set to disappear as the Karnataka Government recently decided to lift certain restrictions on the purchase of agricultural land, by amending its Land Reforms Act. While other states have removed similar regulations over the years, Karnataka has used the time of Covid-19 crisis to fall in line, triggering a debate about its possible consequences.

Post-Independence land reforms in India saw the imposition of three broad types of restrictions on the ownership of agricultural land. Some states like Karnataka expressly banned purchase of farmland by non-agriculturists, while a few other states such as Maharashtra allowed only those from within the state to buy it. Almost all states also imposed a ceiling on the quantum of privately-owned farmland. Karnataka made these regulations more stringent by mandating that even an agriculturist cannot buy more agricultural land in case his family income from non-agricultural sources exceeded a prescribed limit. Similarly, Gujarat until 1995 did not allow farmers to buy land beyond an 8-km radius of their place of residence. These restrictions aimed at (i) retaining farmland with farmers and preventing small farmers from falling prey to the lure of big money (ii) preserving agricultural land for agriculture to achieve food self-sufficiency, and (iii) preventing the concentration of land in the hands of a few.

While land redistribution and agricultural development dictated land policies in the era of land reforms, the post-1991 liberalisation policies shifted priorities gradually toward real estate and industries as economically competitive use of land. In agriculture, this new imagination of development, which caught the fancy of all state governments cutting across party affiliation, sidestepped the redistributive concerns of the yesteryears, and prioritised large-scale mechanised farming by corporates and high-volume land transactions. This prompted the states to lift the ban on the purchase of farmland by non-agriculturists. The domicile clause was the next to go, along with other barriers such as income limit. Only ceiling restrictions continue to hold the old land reforms legacy, and India’s farmland market stands more deregulated now than ever before.

Karnataka’s amendments, too, seek to retain land ceiling but at a relatively higher level. The state has thus swung from being the most regulated to the most liberalised regime for farmland transactions. Although the government has asserted that it will restrict the purchase of agricultural land by non-agriculturists for only agricultural and allied purposes, the exact legal position about this is not clear. It is also not clear how the state is going to prevent speculative buying of farmland, which will result in such land falling fallow.

A fresh boom in agriculture, which the government thinks is now possible with a shift of urban professionals to farming, seems naive. Farmers who anyway do not cultivate their land may take advantage of the new policy to dispose of their land. The resulting buoyancy in farmland market can push the land prices up, making it difficult for the existing small farmers to buy more land. Similarly, since the move in Karnataka comes at a time when a large number of migrant workers from cities have returned to villages in the aftermath of Covid-19, those among them who own some land may resort to distress selling. Effective relief measures for the returned migrants is essential to prevent this.

As the amendments primarily intend to provide for fresh consolidation of holdings to facilitate large-scale farming and unhindered land transactions in rural areas, a gradual transformation in the land holding patterns and land-use practices is bound to take place. Many observers fear that the emerging land holding patterns will result in a widespread deprivation of land among poor farmers in Karnataka. While this seems plausible, no clearly documented evidence about such a consequence is available from other states, which adopted similar policies earlier.

The regulatory gaze of the government should now focus on the damage that the land-use changes that the new policy would trigger can cause to ecological balance. That at least is the lesson from Kerala where the absence of any regulation on farmland market had resulted in a massive diversion of paddy land and wetland for commercial crops and real-estate projects. When this threatened the fragile ecology and food security of the coastal state, the government had to adopt a restrictive land use policy. Karnataka has nine of its districts in the eco-sensitive Western Ghats region. In many other parts of the state, the groundwater table is fast depleting. Commercial cultivation of cash crops on mega farms that the amendments seek to promote may further threaten the state’s local ecosystems.

Apart from ecological concerns, that the Indian farming has been scale-neutral and that it still absorbs the maximum labour force must also inform these neo-liberal policy shifts. Small-scale farming in India is known for both productivity efficiency and conservation of agrobiodiversity. In a social and farming context similar to that in India, redistributive reforms and small farms in East Asia have demonstrated higher and more sustainable agricultural growth. Large-scale corporate farming that amendments to land reform laws seek to achieve, thus, need not be the best available solution to the problems in agriculture.

(Choudhury is founder and coordinator of NRMC Centre for Land Governance, New Delhi; Narayana teaches Public Policy at Azim Premji University, Bengaluru)