Q) Briefly explain the links between agrarian structure and agricultural growth in

India, in a historical perspective. Why is it argued that agrarian reforms are critical
to agricultural growth? What has been the record of implementation of agrarian
reforms in India as a whole?

Ans: Colonialism was quite burdensome for Indian agriculture and affected it adversely,
both in social and economic terms. From the self sufficient units villages in India were,
until the advent of the British, it made Indian villages dependent on each other and on the
state. Earlier villages raised crops, both food and non-food, that served their needs. But
the British mandated, in certain areas, that only crops needed for British industries, like
cash crops- opium, indigo and cotton- be grown and discouraged others. This changed
the nature of agricultural produce from primary goods to manufactured goods, and
though it served the selfish ends of the colonial government, it heavily bore down on
Indian agriculture.

The British also introduced sweeping changes in the land revenue system, like the
permanent settlement system, also called the zamindari system. Earlier zamindars in
Bengal, Bihar & Orissa had been functionaries who merely held the right to collect
revenue on behalf of the Mughal emperor and his representative. After the Permanent
Settlement of Bengal in 1793, the question of incentivisation became central and the
security of tenure of landlords was guaranteed; in short, the former landholders and
revenue intermediaries were conferred proprietorial rights to the land they held. In
addition, the land tax was fixed in perpetuity. By ensuring that zamindars' lands were
held in perpetuity and with a fixed tax burden they became a very desirable commodity,
and in a way, the Permanent Settlement led to a commercialization of land and
agriculture.

The monetization of the economy was in practice even before colonialism, but the British
accelerated and accentuated the process and brought some fundamental changes in the
wake, both in the production and consumption patterns.

Before the Britsh came to India, land was held jointly by communities or villages, and
peasants enjoyed some sort of security of tenure with their land. But the British, with
their two pronged strategy of extracting maximum possible revenue from agricultural
land and produce, and also ensuring a steady supply of raw material for its industries
back in England, found this system untenable to their goals and introduced the
Zamindari, Mahalwari, and Ryotwari systems of land revenue.

The Zamindari system, mostly prevalent in erstwhile Bengal, Orissa and Bihar, made the
collection of revenue the responsibility of a few big landlords, who came to be known as
Zamindars. The Zamindars were to collect specific amounts of revenue, fixed through the
Permanent Settlement system, and according to the size of the land holding, on behalf of
the State and pass on such revenues to the State. This saved the British the trouble of
administration, as all issues related to the collection of revenues were looked after by the
Zamindars. This also led to the Zamindars becoming very powerful figures who enjoyed
the patronage of the State and exacted whimsical amounts of revenue from the poor tillers
(this practice of collecting abnormally high amounts of tax is called rack-renting). They
also started subletting land to tenants, thereby introducing several levels of
intermediaries. As a result, the tiller of the land had to pay almost 80%-90% of his
produce as rent, and even then, had no security of lease over the land.

Under the Mahalwari system, land revenue was collected and paid by a circle of villages
or a village as a whole.

The Ryotwari system, which was seen in large parts of Tamil Nadu, Punjab, etc, meant
that the settlement was done separately for each plot of land, and every farmer had to pay
individually and directly to the British. For instance, in the Vidarbha region, the average
holding size was 60-70 acres, and owing to such large sizes, the British, after surveying
the land, decided to sublet the land to landless tillers, again giving rise to intermediaries.

Now, the common features of all these three systems of land revenue were:

1. Tenancy
2. High rents
3. Insecurity of tenure

However, a post independence review shows that Ryotwari regions have developed the
most while Zamindari owned places have remained the most backward. This speaks
volumes about the need and good of allowing the tiller to own the land, as only then,
would he invest in and develop his land. On the other hand, the greater the number of
intermediaries, the greater is the devolution of responsibility and the resulting devastation
of the land. Non permanency of land tenure created a major disincentive to invest in
agricultural implements, seeds, fertilizers, etc and this resulted in drastic reduction in
productivity. Even soil fertility declined significantly.

The princely states too paid astronomical sums of money to the colonial government as
tribute, and they transferred this burden to the peasants in the form of high taxes, but
reforms were introduced in some places as early as the 19 th century too. Even then,
development pattern remained highly uneven across the country. With oppressive land
revenue systems, came debt bondage, usury (lending money at very high interest rates),
child labor, bonded labor, etc.

Traditional occupations declined and artisans lost their livelihood, resulting in all of them
turning to agriculture for jobs, and thus there was a huge increase in the number of
landless agricultural laborers.

The scenario was worsened by the gaping lack of government investment in health and
education. This led Nehru to comment, in 1933, that the agrarian system had collapsed
and a new organization of society was inevitable. While the growth of foodgrain
production had taken place at 0.1% annually during 1896-1936, the population had grown
at a much faster rate, with the result that annual per capita availability of food grains had
fallen from 200 kg in 1918 to 150 kg in 1946.
POST INDEPENDENCE

Keeping all this in view, the makers of the 1st Five Year Plan agreed that the future of
land ownership and cultivation constituted the fundamental issue for India’s
development. The social and economic reorganization of India would depend on the way
land reform was handled.

The Congress Agrarian Reforms Committee was constituted in 1948, headed by J.C.
Kumarappa. It recommended the elimination of intermediaries between the State and the
tiller, it sought to specify the size of land holdings for future acquisitions, it specified the
need for cooperative and joint farming, it endorsed collective farming on reclaimed land.
But in the whole process, it failed to provide a concrete framework for agrarian reform, in
as much as its recommendations and policies were rooted in assumptions rather than
being based on solid evidence.

Unfortunately however, the leaders of Independent India worked within the ideational
and legislative framework defined by the colonial rulers. At best, there were only
incremental changes effected. This led to the continuation of the shortsightedness
displayed by the British in ignoring the link between agrarian development and agrarian
reform.

Constitutionally, agriculture is a state subject, and the Centre only lays down broad
principles and the framework, while the implementation details are left to the individual
states. This gave rise to regional differences, political and otherwise, in the way land
reform and agricultural reform were addressed by the states. In the states, the dominant
political class were big land owners, and hence, there was considerable opposition to any
changes suggested in the size of the land holdings. As a result, land reforms were never
really implemented. Till 1992, less than 2% of the total land had been redistributed,
This has acted as a major deterrent for agricultural growth in the country, and is an
equally big drag on advancements in human development.

The 1st Five Year Plan emphasized on increasing investment in irrigation projects and on
developing community development programs. Action however was hard to come by and
after the Plan, irrigation investment dropped from 25% to 10% of the total Plan outlay.
From the 2nd Plan onwards, the P.C. Mahalanobis influence started getting more and
more pronounced and there was a total shift in emphasis towards heavy industries with a
view to ensuring rapid economic progress.

But with the first major drought in mid 1950s, it became clear that current agricultural
growth investments would not be sustainable and there was need for more reforms. The
Govt invited the Ford Foundation to problem and offer recommendations to lift the status
quo. The Foundation’s report, “India’s Food Crisis and Steps to Meet it”, outlined the
following recommendations:
 1. Identify crops and areas with potential to grow and concentrate efforts and
investment in those crops and areas.
2. Technological solutions like High Yielding Variety (HYV) seeds, hybrid seeds,
that would give rise to crops that had a shorter sowing and harvesting duration,
that were short stemmed and hence stronger, photo insensitive and fertilizer
sensitive.

The Ford Foundation advanced these suggestions without any reference to changes in
land holding size. This made the recommendations easier to implement, and the
Government, in doing so, brought forth the “Green Revolution” in the mid 1960s.

While this initiative was afoot, the country fell to two major droughts in1965-66 and
1966-67, which drove the introduction of new agricultural packages.

Till then, India received food aid from the US through a scheme called the PL-480. There
was no food security and plus, the food aid was being used by the US as a strong political
tool to further its free market policies. The US engaged in arm-twisting tactics by
threatening to stop this aid from time to time.

The Green Revolution saved India from a ‘ship-to-mouth’ existence and helped it onward
on the road to self sufficiency. Nonetheless, there are critics of the Revolution, who point
to the mindless use of fertilizers resulting in soil leaching and increased pollution of the
rivers, but the fact remains that food production rate had to overtake population growth at
any cost. There are others who feel that the Green Revolution led to distortions in
development of agrarian structures, and enormous increases in incomes of large land
holding owners. Many also feel that the program was focused on food crops like rice and
wheat, and other cereals and pulses were ignored. Even area-wise, the Revolution thrived
in irrigated areas and some fertile areas got greater benefits. The Green Revolution was
thus said to be ‘biased across crops, classes and regions’.

The govt then came up with other interventions in the form of price support, cheap credit
and good marketing facilities. The Food Corporation of India (FCI) and the Agricultural
Price Commission were formed in 1965.

Through (Minimum) Support Price, the govt assures farmers of a particular price for their
produce, irrespective of market valuation. And Procurement Price, which is generally
above Support Prices but lower than market prices, is the price at which the govt will
procure, and the farmers will compulsorily have to sell their produce. The govt will then
distribute this to areas of lower production. The Public Distribution System (PDS), also
called Ration system in lay man language, involves a subsidy in procurement,
transportation, storage and distribution.

The govt also subsidized the input side, by giving subsidies on fertilizers, power, diesel,
petrol and irrigation to ensure that the farmers had all accompanying needs fulfilled to
use high yielding variety of seeds.
The nationalization of 14 banks in 1969 also led to proliferation of rural and agricultural
credit. By legislating that the nationalized banks had to lend 40% of all loans to the
priority sector (agriculture, small scale industries, artisans, SC and STs, etc), the govt
ensured that farmers got cheap and regular credit.

It was through all these steps that India was able to gain self sufficiency in food
production, though not in distribution, by 1980s. In the early 1990s, the agriculture policy
came in for severe criticism at the hands of World Bank, IMF and economists, who
opined that the policy was flawed and needed restructuring. They criticized the
unnecessary interventionist role played by the govt in the agriculture, due to which
markets couldn’t function independently and freely. The farmer was deprived of better
prices and at the same time, the govt exchequer was being heavily burdened by subsidies.
They suggested that India could import rice and wheat and hence need not be self
sufficient in food grain production, if it could export its fruits and vegetables.

In the nineties, the rate of growth of food grain production again fell below that of
population growth and per capita consumption of food grains fell, the first time since
colonial times. Alarmed by this, the govt promulgated the new agricultural policy in
1991. To ensure that farmers were not deprived of high prices, the govt followed a more
export oriented policy. World prices were higher than Indian prices of food grains, but
they were also very volatile and control lay in the hands of a few MNCs. Understandably
therefore, when prices fell after the Kuwait war in the mid 90s, Indian prices remained
higher and led to fears of inflation.

To attempt a correction, India signed the WTO Agreement of 1994, that regulated
agricultural trade. Tariffs and quotas for imports were imposed to stress on free trade and
liberalization. Subsidies were withdrawn and credit was made costlier with high interest
rates. This made cultivation extremely costly and left farmers at money-lenders’ mercy.
All these steps have led, over the years, to a worsening scenario of farmers’ conditions
and farmer suicides are only a small manifestation of the overall agrarian crisis in the
country today.

Several think tanks have advanced possible solutions to the crisis. Farmers should be
incentivised to move out of food crops into high value crops like fruits, vegetables and
cash crops and also to non crop food like meat, milk, etc. Support from food crops should
be gradually withdrawn. But this doesn’t take into consideration the shifting consumption
patterns in the country due to change in calorie consumption. Also the ratio of
agricultural exports to total exports has come down over the years, proving that the WTO
policies have indeed failed.

In conclusion, if drastic measures are not taken to improve the rate of growth of
agriculture beyond the sub 1%-2% levels, and to diversify into other crops, India would
become permanently import dependent by 2020.