"Land" does not get you votes,

"No Land" does

06 April 2015

Opinion
investrekk@gmail.com

It's not the one you are looking for

Caught in traffic jam caused by Congress party workers over the Land Bill
issue, I decided to give up and join the small but spirited group. It was nice to
be treated with some tea and snacks after a round of sloganeering. The
slogans were mostly uninspiring and targeted to please the party President
rather than farmers. The usual Sonia ji sangharsh karo hum tumhare saath
hain (Sonia ji we are with you in your struggle) appeared rather trite.
An impromptu discussion with some workers from Haryana and Punjab during
the tea break was quite revealing. None of the 10 young demonstrators, all
from farmer families, had any clue what they were protesting about! Three of
them had political ambitions and the rest just tagged along.

Thought for the day

""The water in a vessel is
sparkling; the water in the
sea is dark. The small truth
has words which are
clear; the great truth has
great silence."
-

Rabindranath Tagore
(Indian, 1861-1941)

After spending well over two hours, I could make out that Congress is
dissipating its scarce energy on something that may not yield any electoral
dividend for it. To the contrary, by making the land acquisition issue a
platform for comeback the party may actually be helping the regional
opponents like JDU, SP, TMC, TRS, TDP, Shiv Sena, NC and BJD.
The agitation over land acquisition may have temporarily created some poor
sentiments against the NDA government in rural areas, but the Congress Party
is in no position to capitalize on it.
The data prima facie suggests that the segment potentially aggrieved by the
land law is relatively much smaller to cause material electoral reverses at
national level in 2019 general elections. In my sense, for making a comeback,
the Congress Party needs a substantial issue that could touch at least 50% of
the households and then vigorously pursue it for the next four years.
A stroll back in history would tell the Congress Party that regime changes in
India have occurred when the ruling party/group got disconnected with the
bottom of the pyramid in pursuit of faster economic growth (or personal
ambitions) and opposition could rake in an emotional issue to fill the chasm. It
was Mrs. Indira Gandhi (and emergency) Rajiv Gandhi (and Bofors),
Narsimha Rao (and JMM bribery case) Atal Bihari Vajpayee (and Aam
Aadmi) and Manmohan Singh (and 2G and Coalgate).

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07 March 2015

2009 victory of Congress party despite all economic mess, occurred due to
MNREGA that kept it connected with the poorest amongst poor. The issues
like FDI in retail, multiple scams which were seen as pro rich allowed BJP to
make an entry on traditional turf and afforded the Congress Party its worst
ever defeat in 2014.
The way BJP is going, I believe material improvement in macroeconomic
conditions & governance standards, and direct connectivity of leadership
with masses, will leave an extremely thin crack for the Congress Party to
sneak in. The Congress Party would therefore need an explosive issue to
widen the crack; which the land acquisition is certainly not the one.
I will delve a little more on the land acquisition issue in next couple of days,
before I leave for a 10day trip to central India to assess the feelings of
villagers and tribal people about new land acquisition and mining laws.
Continuing from yesterday, I would like to draw attention of the people, who
are feeling deeply aggrieved by the likely pain the latest Land Acquisition Bill
will cause to the farmers, to the following simple points:
(a) As per 2013 NSSO survey about 83% (80% in 2003) of the total farming
households in India are either landless or marginal (holding less than 1
hectare or 2.47 acres cultivable land).
The total cultivable land in India shrank to 92mn hectare in 2013
(average 0.6hectare per farmer household) from 107mn hectare in 2003
(0.72hectare per farmer household).
In 2013 the landless and marginal farmers owned 30% of the total
cultivable land in the country up from 23% in 2003. This is due to further
fragmentation of the land, or lower conversion of their land holdings.
(b) On the contrary, percentage of medium and large farmer household
(owning more than 4 hectares) shrank from 3.5% in 2003 to 2.17% in 2003.
The cultivable land owned by these medium and large farmer
households shrank from ~35% in 2003 to 24% 2013.
These are the farmers who sell land to industry and infrastructure projects.
And these are the farmers who actually do not cultivate their land
themselves. They lease the land to landless or small farmers. These are
the farmers who stand to gain or lose from the land acquisition laws.
Remember, the compensation under the LARR is given to the owner of
the land and to the person who is actually cultivating that land. These
people lose their employment irrespective of the consent, compensation
amount and environment impact.
(c) From political perspective, 130mn farming households are marginal or
landless against just 3mn farmer households are medium to large land
owners.

07 March 2015

The politically aided agitation over the land acquisition issue has three clear
dimensions:
1

It has provided a common cause to parties and politicians who have

been struggling to regain the ground they have yielded to Narendra
Modi led BJP in recent times.

2.

It has provided an opportunity to the medium and large farmers to seek

maximization of compensation in lieu of their land which is not
commercially viable for agriculture due to miniscule yield as compared
to current land prices.

3.

It threatens to expose politicians who have indulged in "insider trading" in

land acquisition in past.
Prior to 2013 LARR Act, land acquisition used to be a surprise for the land
owners. They would usually come to know about it when the statutory
notification was published.
The "insiders" who would get to know the project details much in
advance would accumulate the land in surrounding areas, and sell at
much higher prices once the project and the land acquisition was
notified. This had been a cause of discontent amongst farmers who were
tricked to sell their land cheaper just before the road or industrial project
was announced. Barmer in Rajasthan, NOIDA/Mathura in UP, and
Gurgaon/Jhhajar in Haryana could just be some small case studies of this
phenomenon.

Let me explain the economics of agriculture in India to explain my point:

(a) The average cultivable land price in 50-100km radius of a city or large
industrial project is about Rs5lac/acre, It may though vary between Rs. 1
lac to Rs. 5crore/acre depending upon the location.
The crop on the land yields less than Rs75000/year for a medium and
large farmer. Assuming 2 crops every year, for a small and marginal
farmer the yield is Rs25000 to Rs50000 per acre/year, excluding the cost
of self labor.
3

07 March 2015
Pertinent to note here is that a typical landless, marginal or small farmer
household deploys 3-4 adults for 6 months in the farm. At ~Rs3000/month
minimum wage rate the cost of self labor itself comes to about Rs5500075000/year.
If we adjust the yield for one crop loss every three year, lease rent and
18-24% interest that small and marginal farmer pays, agriculture is usually
unviable business.
If we factor in rising labor cost, lower subsidy in input prices (fertilizer,
electricity, diesel and water) and slower rise in MSP, the viability gap will
likely only increase going forward.
(b) A large majority of farmer households in India are landless or marginal.
Many of these farmers take land on lease. The rent varies from
Rs5000/acre to 50% of produce. A lost crop puts such farmers in a debt
trap that may take minimum 3years to get out.
Many of these farmers do agriculture for sustenance. They grow wheat or
rice for self consumption only.
A proper implementation of Food Security Law will ensure food for them
at minimal cost. In such a scenario, they will anyway have no motivation
to engage in land cultivation.
Remember, the Gen X of these farmers is no longer enamored by the
feeling of Dharti Meri Mata Hai (my land is my mother). The next
generation of landless, marginal and small farmers is therefore least likely
to prefer agriculture over construction or industrial labor.(Availability of
agriculture labor is likely to shrink even further from the current alarming
levels).
(c) Given the low returns, the current generation of medium and large
farmers is also not much interested in taking up farming as occupation.
Most would want to sell the land or convert it into non-agriculture land.
So, as we can see the reason for farmers' agitation is not that they do not
want to sell their land. It is the quantum of compensation that is the issue.
Fighting for this cause could have yielded dividend for AAP in Delhi, because
here the farmers are large and rich. Extrapolating this to national level may
not work. In fact it may prove counterproductive as this will only alienate the
agriculture labor. A better electoral agenda for the welfare of rural
population might therefore be, inter alia:
(a) Faster and full implementation of food security law.
(b) Higher wages under MNREGA.
(c) Better faculties and wages for migrant construction and industrial labor.
(d) Stringent enforcement of Banami Transcations law to unearth Benami
agriculture land in violation of Land ceiling laws.
(e) Mandatory requirement of employment to landless farmers displaced by
the project under consideration.

07 March 2015

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