Reverse Tenancy in Punjab Agriculture: Impact of Technological Change

Author(s): Iqbal Singh

Source: Economic and Political Weekly, Vol. 24, No. 25 (Jun. 24, 1989), pp. A86-A92
Published by: Economic and Political Weekly
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Reverse

Tenancy
in
Punjab
Agriculture
Impact of Technological Change
Iqbal Singh

The present paper seeks to analyse the impact of technological transformation on tenancy relations in Punjab.
The paper is divided into three parts. In Section I the author sets out the broader possibilities of interaction of
technology and tenancy structure. In Section II an attempt is made to analyse the impact of technological changes
on lease patterns and tenurial conditions on the basis offleld data collectedfrom two technologically heterogeneous
regions of the Punjab. Section III deals with the questions of mode of production and future prospects of tenancy.
It is argued that the nature of tenancy relations is different under different technological conditions and tenants
in developed areas, in general, are capitalist tenants. The study concludes that, in the peculiar conditions of industrial development in India where land is still the mainstay of a large majority of people; there is little likelihood
for further decline in area under tenancy.
I
Introduction
SINCE the mid-sixties, some parts of India
have experienced a rapid technological
change in their agriculture. Certain new
materialinputs and machines have been introduced.With high irrigationaridrelatively
better institutional and infrastructural
facilities,at the time of introductionof HYV
seeds, the Punjab experienced very rapid
transformationin its agriculturaleconomy.
Since 1965-66 till 1982-83, fertiliser consumption increased almost fifteen times,
consumption of electricity in agriculture
more than six times, and area irrigated by
wells and tubewellsmore than doubled.' By
1982-83,area irrigatedby all sourceswas 84
per centof the net sown area.Similarly,there
was a tremendousincreasein the use of agricultural implements and machinery. The
numberof tractorsincreasedby 11times and
that of tubewellsby about 13 times during
1966 to 1981. In 1981,there were nearly 29
tractorsand about 146 tubewells per thousand hectaresof net sown area. The increased use of these inputs with new HYV seeds
led to a fast growth of agriculturalproduction in the Punjab. Increase in production
was very fast in case of wheat and rice.
Wheat productionrose by 4.8 times and that
of rice by around 14 times during 1965-66
to 1982-83.Punjab took the lead over other
states in the use of almost all components
of new technology.2Initial combination of
irrigation-HYV seeds-fertiliser was supplemented by large-scale introduction of
tractors, threshers and other mechanical
inputs.
TECHNOLOGYAND TENANCY

A technological transformationwith this

magnitudeis bouud to have a profound impact on the tenancy structureof the state.
Therearebroadlytwo differentviewsamong
the scholars regarding the interaction of
technology and tenancy structure. Proponents of the one view [Bhaduri, 1973;
Prasad, 1974; Chandra, 1974; San, 1975]
consider that in labour tenancy relations,
A-86

wherelandlordsexploittheirtenantsthrough
rent and usury, tend to perpetuate agricultural backwardnessby obstructing productive investment. It is because landlords
think that developmentof agricultureis likely to improvethe economic condition of the
'semi-proletariat'tenants who could thereby
free themselvesfrom debt 'bondage. So the
landlordsconsciously withhold innovations
to maintain their exploitative hold over
share-tenants.
The above conclusion is based on the
assumption that the tenant's share in the
produce will remain unchanged. Once this
assumption is discarded, a landlord being
a dominant party (as is considered by the
proponents of above view), can take away
the extra output produced by the new innovation, by increasinghis sharein output.
As he can enhance his income in this way,
the landlordshould be interestedin the new
innovations (given that there are no other
structuralconstraints). Secondly, there is a
limit to the exqloitation of small and poor
peasants. For sheer survivalthey haveto get
a minimum subsistence income. On the
other hand, when the new technology increases the profitability of agriculture
substantially,evenwith the same sharegoing
to the tenant, the landowner'sshare in the
total income under a new technology may
turn out to be more than his combined income from usury and rent enjoyed by him
before the technologicalchange.On this account too, the landownerswill have a strong
incentive to modernise agriculture.
In contrast to the above studies, some
other researchers hold the view that the
modern technology with mechanisation of
agricultural operations has led to the
elimination of tenants [Day, 1967; Bhalla,
1977; Byres, 1981]. A notable (theoretical)
contribution in this context is by Pearce
[1983]. He visualises that sharecroppingis
a transitory phenomenon in the sense that
with 'capitalist accumulation' productive
forces revolutioniselabour productivityand
requirescale of production and level of investment such that the existing system of
sharecroppingbecomes a constraint. The
gradual reduction of sharecroppersto the

position of wage workerscoupled with the

emergenceof capitalist farming, he argues,
is the expected pattern and one which has
much historical precedent.
Pearce'sconclusion is based on the (implicit) assumption that share-tenancy is
synonymouswith small-scalepeasant farming, and technological development and
mechanisationrequiresa large-scalefarming
hence sharecroppingsystem is incompatible
with capitalist agriculture.In most cases it
may be true that share-tenantsare small and
poor peasants. But technological developments and introduction of machines in
agricultureis likely to give rise to new type
of entrepreneurialfarmerswho may leasein land to increasethe unit of their cultivation with a view to utilise more adequately
their modern mechanical inputs. Some
studies on tenancy in India also point out
the emergence of such entrepreneurial
tenants [Vyas, 1970; Bharadwaj and Das,
1975; Nadkarni, 1978]. These tenants,
themselvesthe productof the technological
development,will not be incompatiblewith
capitalist development.
In fact the impactof technologicalchange
on tenancy structurewill depend upon the
precise nature of technology adopted, i e,
whether it is labour absorbing or labour
displacing;whetherit increasesor decreases
uncertaintyinvestmentrequirementsof the
'new technology'; divisibility of the new inputs; profitabilityof 'new technology'.and
so on.
The new agriculturaltechnology adopted
in Punjab (as also in some other parts of
India) is a package of certain biochemical
and mechanical inputs. There exists complementarityin the use of inputs. Increased
irrigation intensity and quickly maturing
HYV crops, which have paved the way for
increasing cropping intensity has also increased importance of timeliness of field
crop operation.Tractors,threshers,combine
harvestersand other mechanicalinputs tend
to reduce this time constraint.
Some of these inputs such as fertilisers,
seeds, insecticides,pesticides,etc, are divisible and can be used irrespectiveof farmsize

Economic and Political Weeklv

June 24, 1989

But even in these cases resourceconstraint

may hinder the use of these inputs in case
of small farmers. On the other hand, certain other inputs such as tractors,tubewells,
threshersand combineharvesters,etc, are indivisiblein natureand requirelumpy investment. These are generally owned by large
farmers.Alternativebefore small farmersis
hiringof servicesof these mechanicalinputs.
In case of tubewell,its fixed naturerestricts
its utilisation for custom services. Custom
services in Punjab are common in case of
threshersand combine harvestorsbut less
common in case of tractors. Net result of
this may be that large farmers having better access to capital assets and financial
resourcesnow will be in a more favourable
position vis-a-vis small farmers. This may

even lead to the dominance of lease-market

by this well-off section of the peasantry.
Even some of the small peasants, lacking
capital,may also lease out theirland to these
farmers.
There are differencesof opinion over the
labourdisplacementaspectof new machines.
But most researchersagreethat though tractors and other machines displace human
labour in individual operations, yet as a
result of increased cropping intensity,
changes in croppingpattern, rising production and intensive use of modern material
inputs, the overall impact of the total
technology package (at present level of
mechanisationof operations), is labour absorbing. This could increasethe bargaining
power of small peasants-relatively better
equipped with family labour-in the lease
market. But on the other hand, increased
labour productivityand standardisationof
work with machinescould enablethe bigger
farmersto cultivateleased-inland profitably
with hired labour.

Keepingthe aboveperspectivein mind, an

attempt will be made, in the following sections, to analysethe impactof technological
changes on tenancy structureon the basis
of field data (pertaining to the crop year
1979-80)collectedpurposivelyfrom two differentregionsof the Punjab which stand at
two different levels of agricultural technology. Region I (sub-mountainousparts of
the state) representsa scenario of relatively
backwardagriculturaltechnology wherethe
use of moderninputs and machinesis fairly
modest. In Region II (central Punjab) due
to the availability of cheap and sufficient
tubewellwater,the use of all modern inputs
is fairlywidespread.3Since ane of these two
is technologically backward, its tenancy
structurehas been comparedwith that of the
developed region. It is hoped, this comparison would broadly capture the impact
of technological transformation on the
structure of agricultural tenancy. We set
before us the following questions:
(i) What are the differencesbetween lease

patterns of developed and backward

regions?
(ii) Whetherterms and conditions of lease
contracts differ between tenants of
developed and backward regions?
(iii) How do we characterise tenancy?
Whether it is a semi-feudal institution
or is it compatible with capitalist
agriculture?
(iv) What are the prospects 'of further
changes in the area under tenancy?
Section II which follows deals with the
first two questions whereaswe have tried to
answer the other two in Section III.

II
Changing Character of Lease
Patterns
In order to identify the differences betweenthe tenantsof backwardand developed
regions,we havedividedtheminto threesizegroups of operational holdings. These
groups are: (a) small tenants operating up

TABLE 2: DISTRIBUTIONOF TENANTS, AREA LEASED-IN,AVERAGEOPERATIONALHOLDINGS

AND RATIOOF HIRED-IN LABOURON THE BASIS OF THE OWNERSHIPOF TRACTORS(REGION II)*

Tenants

Number

Owning Tractors

20
(45.50)
24
(54.50)
44
(100.00)

Other tenants
All tenants
Notes:

Area Leased-in Average Area

(Acres)
Leased-in
(Acres)

208.50
(69.62)
91.00
(30.38)
299.50
(100.00)

Average
Operational
Holding
(Acres)

Ratio of
Hired-in
Labour to
Total Labour
(Per Cent)

10.43

21.73

76.50

3.79

7.92

32.85

6.81

14.19

61. 95

There is no tractor in backward Region I.

Figures in brackets are percentages.

TABLE1: DISrRIBUTION
OFTENANTS,THEIRLEASED-IN,
ANDOPERATED
AREA,ANDRATIOOFHIRED-INLABOUR
ONTHEBASIsOF
OPERATIONAL
HOLDINGS
Region

I Backward
Region

II Developed
Region

Notes:

Size-Group
(Acres)

Number of
Tenants

Number of
Pure Tenants*

Area
Operated
(Acres)

Leased-in
Area (Acres)

0.01-5.00
(small tenants)
5.01-15.00
(middle tenants)
Above 15.00
acres (big
tenants)
All tenants

76
(83.5)
15
(16.5)

39
(90.7)
4
(9.3)

174.21
(60.0)
116.38
(40.0)

116.71
(58.8)
81.88
(41.2)

0.01-5.00
(small tenants)
5.01-15.00
(middle tenants)
Above 15.00
acres (big
tenants)
All tenants

91
(100.0)
8
(18.2)
21
(47.7)
15
(34.1)
44
(100.0)

43
(100.0)
3
(50.0)
3
(50.0)
-

6
(100.0)

290.59
(100.0)
26.00
(4.2)
216.25
(34.6)

198.59
(100.0)
13.00
(4.3)
103.00
(34.4)

382.00
(61.2)
624.25
(100.0)

183.50
(61.3)
299.50
(100.0)

Average Area (Acres)

Operated
Leased-in

Ratio of
Hired-in
Labour to
Total Labour
(Per Cent)

2.29

1.54

5.32

7.76

5.46

8.91

3.19

2.18

6.60

3.25

1.63

14.14

10.30

4.90

43.56

25.47

'12.23

75.31

14.19

6.81

61.95

,Tenants not owning any land.

Figures in brackets are percentages.

Economic and Political Weekly

June 24, 1989

A-87

to 5 acres;(b) middle tenants with operated

areabetween5.01 to 15.00acres;and (c) big
tenantswith operatedland above 15.00acres.
Information presented in Thb!e 1 and
Table 2 is based on the above mentioned
sample of tenant households from Region I
(backwardregion)and Region II (developed
region). It emergesfrom these tables that in
backward region, tenants are small cultivatorsand almost half of them are landless.
No tenantcultivatedmore than 15 acresand
there was none with tractor in this region.
Averageoperatedarea as well as proportion
of hired to total labour employed was also
very low. On the other hand when we move
from the backwardto the developed region
we observe:(a) a declineof puretenancyand
an increasein the numberof owner tenants;
(b) a growing tendency among the bigger
cultivators,owningtractors,to lease-inland;
(c) a concentrationof rented-inland with the
big, tractorowning tenants; and (d) dependence of. these tractor-owningbig tenants
mainly on hired labour. This picture from
a developingagriculturalregion,is completely in contrast with the usual description of
tenants as small and poor peasants.
Another important aspect which should
be looked into is the caste background of
the tenants.In India, the ownershipof landed propertyis also associatedwith the caste
statusof the people.Those at the lowestrung
in the caste hierarchyare either landless or
verysmall ownersin the village.This economic inequality,thus, furtherstrengthensthe
social inequality.Analysisof our data brings
out that in the backwardregion, around 43
per cent tenants are from scheduled castes
and another around 19 per cent from
backward castes. Most of the upper caste
tenants4in this backwardregion own small
plots of land, whereas, scheduled caste
tenants are mainly landless tenants. On the
other hand, around 91 per cent tenants in
developed region are upper caste tenants.
This shows a shift from landless, scheduled
caste and backwardcaste tenants to upper
caste middle and big tenantswhen one compares the backward region with that of
developed one.
Lessors in both the regions belong to all
size-groups(small, middle and big lessors)
of ownershipholdings(see Thble3). Around
44 per cent in backwardregion and nearly
52 per cent in developed region are small
owners owning up to 5 acre of land.
However,in both the regions, contribution
to the leased-out area is higher in the case
of middle and big lessors. Our sample data
shows that only 1 out of the 36 lessors in
Region I and 3 out of 52 lessorsin Region II
are from backwardcastes, all others being
from upper castes.
To ascertain whether the present tenants
are new entrants or old ones, we have collectedinformationabout their total leasingin period (including their parents). In
backwardregionmost of the tenants(81 per
cent) are old tenants leasing-in from more
than 20 years each. But in the developed
A-88

region,only 11per cent tenants(landlessand

small ownertanants)areold tenantswhereas
leasing-in period for around 86 per cent
tenants varies between 1 to 10 years. This
shows that most of the tenantsin developed
region became tenants only after the introduction of new technology. So there is a
clear-cuttendencythat with the introduction
of new technology, 'old' landless and small
ownertenantsaregiving wayto the relatively
better placed 'new' tenants.5
It seems that the present status of these
big owner tenants is actually a resultof two
phase transformation in their status since
independence.Beforeindependence,most of
the big landownerswerelessors, rentingout
part or whole of their land [Singh, 1985:Ch
IV]. In the first phase, after postindependenceland reformsand development
of irrigation, they started resuming their
land for owner cultivation. In the second
phase, as a result of recent technological
changes and introduction of tractors and
other machines(in additionto the continuation of first phase transformation)some of
the middle and big owners started leasingin land in orderto optimisethe use of capital
resources.
An important difference of agricultural
production process, in contrast to industry,
is that it is spread over a wide space. In the
absence of mechanisation, wide tillage and
sowing of area with teams of bullocks is a
relativelydifficult task to perform. It is difficult to supervise large-scalefarming with
the help of hired labour under backward
technology. Under such conditions, family
labourbased farmsare normallyat a relative
advantage.This explainsthe preponderance
of small family labour based tenants in the
backward region.
In contrast to this, introduction of
machines in agriculture,to a great extent,
standardisethe work and can substantially
bring under control wide areas. With this,
supervision becomes relatively easier.
Secondly, these mechanical inputs such as
tractors,owned by big owners, requirehigh
initial investmentand relativelylow operational cost. This makes it possible for the
ownersof theseinputsto cultivateadditional
(leased-in) plots of land at a lower cost
because of relativelylow marginal cost (as
comparedto averagecost, due to high fixed

cost) of these mechanical inputs for cultivating additional acres. These factors give
an advantageto the tractorowning tenants
vis-a-vis other tenants in competition

for

land. They seek to expand the area under

cultivationwhen theirownedland is not sufficient for the properutilisationof these inputs specially tractors. High land prices is
the main hurdlein the way of mobijisation
of land through purchases. Another alternativeavailableto them is hiring-outof tractor servicesto other land-owners.But, most
of the biggercultivatorsin Punjabown their
own tractors,6and small cultivatorshire-in
tractorrarelyand for a verysmallperiodand
also takingtractorto variousfields for small
assignmentsis not very profitable.Above all
in hiringtractorservices,tractorownersface
the problems of payment7 and arranging
businesswith farmerswho arescatteredover
a wide area and obtaining access to client.
farms [Billings and Singh, 1970]. Under
these conditions leasing-in specially a plot
which is nearby to their own plot or a
relativelylargesized plot, is a more easy way
of better utilisation of these fixed inputs.
This explains the concentration of leasedin area(nearly70 per cent of the total rented
area) with the tractorowning tenants in the
developed region.
TERMS AND CONDITIONSOF LEASE
CONTRACTS

On the basis of mode of rent payment

tenancy contracts can be divided into two
types, i e, fixed rent8and crop sharing contracts. Our sample data brings out that in
backwardregion, only 6.5 per cent area is
under fixed rent tenancy rest being under
sharecontracts.As we havediscussedearlier,
in the backward region the tenants are
landless and small owners. They lease-in
mainlyfor the employmentof familylabour.
For such tenants,avoidanceof risk is an important consideration. That is why they
prefershare contract to fixed rent contract,
where risk is shared with the landowners.
Moreover,in the case of unirrigatedarea,9
tenants are not ready to pay fixed rent
because of highly uncertain nature of
production.
In contrast to this, in developed region
nearly half of the leased-in area is under

OFLESSORS'
HOLDINGS
ANDAREALEASED-OUT
DISTRIBUTION
TABLE3: OWNERSHIP
SIZE-WISE
Size-group

Small lessors (0.01-5.00)

Middle lessors (5.01-15.00)
Big lessors (above 15.00 acres)
Total

Region I (Backward Region) Region II (Developed Region)

Area Leased- Number of
Area LeasedNumber of
out (Acres)
out (Acres)
Lessors
Lessors
16
(44.4)
15
(41.7)
5
(13.9)
36
(100.0)

37.19
(18.7)
99.89
(50.3)
61.50
(31.0)
198.58
(100.0)

27
(51.9)
18
(34.6)
7
(13.5)
52
(100.0)

76.00
(25.4)
131.50
(43.9)
92.00
(30.7)
299.50
(100.0)

Note: Figures in brackets arq percentages.

Economic and Political Weekly

June 24, 1989.

fixed rent tenancy.The new technology has

brought about certain changes because of
whichtenants'preferencefor fixed rentcontract?has increased. Firstly, for thpse who
haveresources,new technologyhas decreased uncertaintyattached to agriculture.The
cultivation of HYV crops (specially wheat
and paddy)'0with short and strong stems,
increasein productivitywith fertilisers,use
of insecticides, pesticides and weedicides,
assured irrigation with tubewells, etc, have
all contributedin decreasinguncertainty.In
addition to it, the use of machines such as
threshersand combine harvesters,by completing operations in less time, has also
reduced the risk of loss of harvested crop
due to rains and storms. Secondly, a new
class of entrepreneurialtenants, who are in
itself a productof new technology,are more
capable of bearing risk and are able to pay
rentsin advance.They preferfixed rentcontracts,because having made sizeable investments, they are interested in reaping the
benefits of their increasedefforts by taking
the whole residualincome after paying fixed rent to the landowners. Thirdly, these
tenantsorganisetheir agriculturelike a firm
and want a free hand in deciding the crops
to be grown and quality and quantity of inputs to be applied. Only through fixed rent
contractsthey can avoid the interferenceof
landowners.
Other terms and conditions of lease contracts also differ between developed and
backwardregions. Table 4 brings out that
tenants, in case of almost half of the contracts,renderunpaid and underpaidlabour
services in backwardregion, whereas only
in one case in the developedregion a (landless) tenantrenderunpaid/underpaidlabour
services.A more or less equal social as well

developed region has improved their position vis-a-vis lessors as compared with

backward region.
RETURNS FROM RENTED AREA

own capital employed by the tenants from

their share in the returns,they show losses.
The small and poor tenants in this region
with surplus family labour and unsatisfactory non-farm employment conditions and
also facing the threat of eviction from the
lessors, employ their labour much beyond
the point where their share in the marginal
product is equal to the market wage rate.
This results in a lower averageearning per
manday employed than market wage rate.
This excludesthe possibility of existenceof
capitalisttenantsdependingon hiredlabour
under such conditions of backward
technology.

Most important for the lessees as well as

lessorsis theirsharein the 'totalreturns'and
profit. We have calculated 'total returns'by
deductingcosts, other than wages for family
labour, rent on land and interest on own
capital, from the value of gross produce.
Rent in the case of share-rentedplots is arrivedat after deductingthe lessor'sshareof
costs from his share in the gross produce.
For calculating profit of the tenants, imputed intereston own capital and wages for
On the other hand, an intensive use of
family labour utilised by them are deducted modern technology in the developedregion
from 'total returns'.Family labour here in- has led to substantialincreasesin output and
cludes family 'mandays'll utilised in crop thereby made agriculturea profitable proproductionand maintenanceof draughtcat- position even for the tenantscultivatingwith
tle. Interest deducted from the returns is hired labour. Akble 5 reveals that on an
chargedat the rate of 10.5 per cent per an- average, tenants in developed region get
num, which was the interestratechargedfor highershare(48 per cent) of the total returns
short-term lending by the co-operative as compared with the backwardregion (35
societies in the state during 1979-80.
per cent). In fact the big tenants are able to
secureeven more than half (54 per cent) of
Table 512 compares the distribution of
the total returnswhereasit is just 37 per cent
total returnsbetween lessors and lessees of
Region I (backwardregion) and Region II in the case of 'smalland middle (see note 12)
(developedregion). In the backwardregion, tenants. Tenants' average earnings (after
small tenantsearnjust one-thirdof the total deducting interest on owned capital) per
returns, two-thirds going to the lessors as manday for both the groups is higher than
rent. Tenant'sshare is slightly higher (i e, the marketwage rate(Rs 8.86) in this region.
around 38 per cent) in the case of middle In the case of big tenants it is much higher
tenants. But the most important aspect (around Rs 67) than the market wage rate.
which emerges from the table is that in the Interestingly,big tenants in this region are
backwardregion tenant's returnsper famly able to earnaverageprofitof Rs 845 per acre
manday employed for all tenants is just after deducting all costs including imputed
Rs 4.07 which is almost half of the average wagesfor familylabourand intereston ownmarket wage rate per day (Rs 8.03)13 ed capital. If we include intereston owned
prevailingin the regionduring1979-80.Even capitalas part of the surplusaccruingto the
in the case of middle tenants (Rs 5.63) it is tenants then it comes out to be Rs 1,126per
as economic status of the tenants vis-a-vis
substantially lower than the market wage acre (more than the rent of the landowners)
theirlessors has resultedin almost complete rate. That is why if we deduct the imputed in the case of big tenants. With the effective
elimination of 'begar' in the developed, wages for the family labour and intereston
use of moderntechnologybig tenantsin this
agriculturalregion. Tenantsof the developed
region are also better placed with regardto
CONDITIONS
the recordingto their rights as cultivators TABLE 4: DISTRIBUTION OF LEASE CONTRACTS ON THE BASIS OF DIFFERENT LEASE
in
the
decision-making
and participation
Region II (Developed
Region I (Backward
SI No Particulars of Contracts
process (see Table 4).
RcgiqnI
Region)
Althoughin both the regions,lessorsshare
Per Cent
No
Per Cent
No
costs with tenants, yet in the backward
feras
such
shared,
which
are
region,inputs
100.00
65
100.00
109
1 Total number of contracts*
tilisers, irrigation expenditure,insecticides
2 Whether lessor or lessee is
and pesticides are relativelyless important
recorded as cultivator
73.85
48
92.66
101
speciallyin case of unirrigatedand partially
(a) Lessor
26.15
17
7.34
8
(b) Lessee
irrigatedplots. The other important inputs
3 No of contracts -in -Whichtenants
areseed and humanand bullocklabour.The
render unpaid/underpaid labour
costs of these in this regionareentirelyborne
1.54
1
48.62
53
services
by the tenants. On the other hand, in
as
such
fertilisers,
inputs
Only
Tenants
region,
developed
For Share
insecticides/pesticide, irrigation and seed,
4 Total No of share
100.00
36
etc, which are sharedby the lessors form an
100.00
92
contracts
important part of the total input structure.
5 Decisions regarding crops grown
Relative proportion of costs (including all
and inputs used taken by
operational costs except human labour)
80.43
74
(a) Lessor
borne by the lessors is around 22 per cent
2.78
1
8.70
8
(b) Lessee
97.22
in the backwardregionwhich is much lower
35
10.87
10
(c) Both
as comparedto the developedregion where
it is 37 per cent. Thus, it seems that the Note: * Total number of lease-contracts are more than the number of tenants in each region
because some of the tenants enter into contract with more than one lessor.
presence of relatively well off tenants in
Economic and Political Weekly

June 24, 1989

A-89

regionareable to recordsubstantiallyhigher
earnings than the small farms even after
paying quite high rents (comparedwith the
backwardregion). This scenario is likely to
lead to increasing domination of lease
market by the big tenants.
III

Tenancy and the Mode of

Production
Landlord-tenantrelations are generally
characterisedas semi-feudalproductionrelations [for references see Thorner, 1982].
Most of the studies on the mode of production in Indian agriculture,take area under
tenancycultivation as one of the indicators
of pre-capitalist production relations.
Decreasing tenant cultivated area is consideredas an importantmanifestationof the
capitalist development in agriculture.Our
experience shows that in backward areas,
tenants are from lower castes and operate
small holdingsmainly with family resources
and around half of them are landless. In
contrast to this, in the developed region,
nearly three-fourths of the rented area is
leased-in by the tenants owning tractors.
Thus with the technological change a new
class of tenants has emerged.The natureof
tenancyrelationsundersuch conditions are
strikingly different than those under backward agriculture.
Mode of productionis determinedby the
nature of inputs utilised to undertakeproduction and mutual relations into which
people enter in producing and exchanging
the products. In this context, the degree of
development of market forces, or in other
wordsthe level of the disintegrationof selfsufficientsubsistenceeconomy,is one of the
criteria,for estimatingthe extentof capitalist
development. In order to assess the degree
TABLE

5:

of developmentof capitalismin agriculture

it is essential to see the sources and nature
of inputs utilised in the productionprocess
as also the natureof disposition of output.
One of the indicatorsof marketrelations
is the degree of dependence of cultivating
households on hired labour. As observed
earlier, in developed region, a very large
share of the total labour employed by the
tenant cultivators is hired labour. In fact,
tractor owning tenants in the region (cultivating nearly 70 per cent of the rentedarea)
hire-inmorethan three-fourthsof the labour
requiredfor cultivation. Further,the use of
material inputs and machines is quite high
in advancedareascomparedwith the backward areas and their weight in the total input structurehas also increased.Capital intensification is also taking place in the advanced areas. Comparisonof the backward
area with that of advancedarea of the state
shows that average capital assets (mainly
used for agriculturalpurposes) per tenant
holdingare nearlyRs 27,500in the developed
regioncomparedwith aroundRs 1,100in the
case of backwardregion. Above all, nearly
four-fifths of the gross produce (which
worksout to Rs 41,000per tenanthousehold
at 1979-80 prices) in the developed region
is marketed by the tenant households
throughopen commercialchannels at competitive prices. Obviously these tenant
cultivators are not family based selfsufficient subsistence farmers.
An importantfeatureof tenancyrelations,
accordingto the proponentsof semi-feudal
mode of production[Bhaduri,1973;Prasad,
19741tenants are perpetually indebted to
their landowners and cannot leave them
unless they pay back the whole amount
which generallythey are not able to do. Our
data for the backwardand developedregions
of the Punjab state shows that no such

A-90

Another characteristic which differentiates between the capitalist and the precapitalist relationsis the natureof the division of surplus between landowners and
tenants. Pre-capitalist rent contains the
whole of the surplus whereas surplus product is divided between profit of the entrepreneurial tenants and rent of the landownersundercapitalistmode of production.
We have examined that in the backward
region, the shareof the tenants in the 'total
returns' is not even equal to the imputed
wagesof theirfamilylabourwhencalculated
at the market wage rate and whole of the
surplusproductas well as a partof the wages
(necessary product) of the tenants is appropriatedby the landowners.In contrastto
this, in the developed region the surplus
(afterdeductingwagesat the marketratefor
the family labour from the 'total returns')
is divided between the profit of the tenants
and rent of the landowners. In fact, big
tenants are able to earn averageprofit (including interest on their own capital) of
Rs 1,126 per acre which is higher than the
rent in their case. This furtherconfirms our
conclusion that tenancy cannot be branded

DISTRIBUTION OF TorAL RETURNS BETWEEN LESSORS AND TENANTS

SI No Item

I
2
3

tendencyof providingconsumptionloans by
the lessors to their tenants is found among
the lessors. Moreover, in the developed
region, the tenants take a large proportion
(about 94 per cent)'4of the total loans from
banks and other institutions, utilise these
loans for productivepurposesand pay relativelylowerinterestrates.This revealsthe increasingconnections of the tenantswith the
moderncapitalmarketand its utilisationfor
the advancementof productiveforces. The
increased use of inputs in developed areas
has increasedthe role of subsidisedinstitutional creditwhich in turn has increasedthe
productivecapacity of the farmersin these
areas.

Gross output per acre (Rs)

Total returns per acre (Rs)
Tenants' part in total returns:
(a) Per acre (Rs)
(b) Per cent of the total
(c) Per family manday employed (Rs)
(d) Returns after deducting wages
for family labour
(per acre, Rs)
(e) Returns after deducting
interest on owned captial:
(i) per acre (Rs)
(ii) per family manday
employed (Rs)
(f) Returns (or profit) after
deducting interest as well as
wages for family labour
(per acre, Rs)
(a) Lessors rent (per acre, Rs)
(b) Rent as per cent of total returns

Small
Tenants

Region I
Middle
Tenants

All
Tenants

Small and
Middle
Tenants

985.90
669.07

837.67
560.19

924.78
624.18

224.63
33.57
3.45

212.68
37.97
5.63

-229.00

-90.36

Region II
Big
Tenants

All
Tenants

3140.12
1926.19

4041.87
2321.06

3693.21
2168.13

219.70
35.20
4.07

720.98
37.43
16.85

1255.27
54.08
86.77

1048.31
48.35
41.20.

-213.05

341.74

1126.73

822.85

176.39

171.23

174.36

492.65

974.10

787.61

2.71

4.53

3.23

11.51

67.34

30.95

-374.24
444.44
66.43

-131.81
347.51
62.03

-258.49
404.48
64.80

113.42
1205.22
62.57

845.55
1065.79
45.92

562.15
1119.81
51.65

Economic and Political Weekly

June 24, 1989

as pre-capitalist institution under all circumstances.Availableinformation with us,

although not very comprehensive,indicates
that tenants in developed areas, in general,
-arecapitalist tenants. They produce for the
market with the help of hired labour and
other modern inputs and reinvest their
surplusin agriculturefor extendingthe level
of production.
In RegionI, wherethe new technologyhas
yet to show its impact,the tenantsare family
basedcultivatorsand cultivatetheirholdings
with little capital assets. In most cases they
are landless from lower castes and are
dominatedby theirlandlords.But one thing
which should be kept in mind is that this
foothill pocketof the Punjab(which we call
backwardregion) adjoining the Himachal
Pradesh,representsa very small area of the
state. Here, because of the fact that a very
substantial part of the land is covered by
'chos' (rivulets) and small hills, even less
than half of the total geographical area is
reportedundercultivationas comparedwith
over 80 per cent in the whole state. Even the
large part of the cultivated area in our
backwardregionis unlevelledand this is one
of the main reasons for low level of irrigation in this area.Landholdingsin this region
are not only small but also fragmented.Probably this is the only part in the state where
some areais yet to be consolidated.The rest

Kirloskar

Prod

of the Punjab has nearly perfectly levelled they still maintaintheir house in the village.
land, consolidated holdings and very high Reasons for leasing out in many other cases
irrigationintensity.Though all areas in rest are lack of manpowerin the household due
of the state are not equally developed to widowhood or some other physical or
their technological level is more akin to our mental handicaps. In still other cases
developed region than to the backward smallnessof the plot constitutesa reasonfor
region. So the tenancyrelationsof the small the supply of land on rent. In almost all the
foot-hill region are in fact an exception cases, some or the other constraint on the
whereasgeneral tendency is representedby lessorsis responsiblefor leasingout of land.
It seems that those large owners who were
our developed region.
previouslyleasing out because of non-profitability of owner cultivation with hired
FUTURE PROSPECTh OF TENANCY
labourhad alreadyresumedtheirland in the
CULTIVATION
wake of land reforms and of technological
What are the futureprospectsof tenancy change. Most of the present lessors are not
in fast developing areas? Will the revolu- likelyto resumeland for self-cultivationwith
tionising of the productive forces lead to family and/or hired labour.Another alterresumptionof land by the lessors and elimi- nativewith them (otherthan leasingout and
nate the tenancy cultivation? What is the personalcultivation),speciallyfor those who
future of remaining small tenants in these are not evenstayingin the village,is disposal
developingareas?These are some of the im- of land throughsale. But becauseof peculiar
portant questions which are briefly con- conditions of industrial development in
India (as well as in most other third world
sidered below.
countrieswho are late comersin the process
Our informationfrom the most advanced of development), land is still the mainstay
region brings out that on the supply side, of a largemajorityof people and an impormajority of the lessors lease out because of tant sourceof income for them. The relative
their involvementin some non-agricultural shift of population from land to industryis
jobs and/or business. In fact, most of them almost negligible.In such a situation, those
are doing some middle level jobs in the ter- who shift to other professions do not break
tiarysector.In some cases, these landowners completely with land because of: (a) the
are not even staying in the village but this prevalence of relatively high land rents,
shift from the village is not complete and (b) increasingprices of land, and (c) rent as

ucts

for

Reliabiity

Quality&

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KDS

Nfg

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Economic and Political Weekly

June 24, 1989

Offic:

, nliak
Ragdao:Udyg3Bava

Roaga,

PUNE-41 1016.

A-91

a less risky source of income. They prefer

rentingout of land than sellingit away.Since
agriculturalincome is largelytax free, some
of them hold on to land in orderto hide their
income from business under the garb of
non-taxableagriculturalincome.Evenotherwise sellingof land is lawaysresistedat least
by the old generation.Thus, due to these factors supply of land for leasing out may not
fall substantiallyfrom the presentlevel. Further increasein job opportunitiesin the tertiary sectormay actuallyincreasethe supply
of land to some extent.On the demandside,
'new tenants' with modern indivisible
machines will stay on in the lease market.
High land pricesis the main hurdlefor them
to acquire more land through purchases.
With furthermechanisation,the numberof
these tenants will increase thus further
increasing the demand for land.
We have discussed earlier that at the present level of mechanisation the overall demand for labour per net cultivatedacre has
increased. But with further mechanisation
in harvestingand threshingthroughcombine
harvestersand more intensiveuse of tractors
for different operations'5 may reduce the
demand for labour.On the other hand, certain changesin the croppingpatternincrease
in the croppingintensityand more intensive
pursuitof certainfarm operations,etc, may
give rise to higher labour demand. But it
seemsthat with the adventof labourdisplacing mechanisationthe net increasein labour
demand, in future, is likely to be very slow
or may even fall slightly. In such a situation
small tenants will be put in a furtherdisadvantageous position. However,unless they
get better alternativeemployment outside,
they will perforce have to stay on in
agriculture. In order to enhance their
holdings, they would continue to be in the
lease market.Takinginto accountthe nature
and growthof industrialisationin the recent
past and the possibility of no big decline in
population growth rate in the foreseeable
future, there is little hope that in the years
to come, any substantialsection of the small
land owners will get employment outside
agriculture.Thus, it can perhaps be safely
conjectured that further decrease in area
under tenancy, if there is going to be any,
will be small and slow.

Notes
Rrhanksare due to G S Bhalla and G K Chadha
for comments on an earlier draft.]
1 For the data in this paragraph, see Government of Punjab [1978]; Chadha [1986];
Kahlon [1984].
2 For comparison with India, see Bhalla and
Chadha [1983: 4-5].
3 For details about the sampling design of the
study and the villages surveyed from these
regions see Singh [1985: Ch III].
4 Includes all castes other than backward and
scheduled castes. In backward region, people from upper castes associated with lease
market are 'Knatris 'Muslim Rajputs',
'Jats' and 'Sainies'. In developed region, all
upper caste lessees and lessors are 'Jats'
only.
A-92

5 Another inferencewhich can be drawn from

this is that estimation of eviction of tenants
on the basis of decreasein area under tenancy (or number of tenants) actually underestimate the eviction of old (small and poor)
tenants which also takes place due to tenant
switching.
6 As per Agricultural Census of 1980-81 in
the Punjab, operational holdings cultivating
above 10 hectares are 73,941 and between
5 and 10 hectares are 1,64,140 [Government
of Punjab, 1984: 150-51].In 1981,there were
1,20,000 tractors in Punjab [Kahlon, 1984:
30]. Possibly large majority of the farmers
operating 10 hectares and above and many
among those operating between 5 and 10
hectares might be owning tractors.
7 On the other hand, in case of threshing,
where a part of the crop threshed is generally taken as hire charges, payment does not
pose any problem and custom services in
threshing are quite common in Punjab.
8 Fixed rent can further be of two types, i e,
fixed kind rent and fixed cash rent. In case
of our sample data there is no case of fixed
kind rent contract. All fixed rent contracts
are fixed cash rent and rent is paid in
advance.
9 In the backward region only about 15 per
cent of the gross cropped area with the
tenants is properlyirrigatedremainingbeing
either unirrigatedor partially irrigated.Proportion of the properly irrigatedarea in the
case of developed region is around 97 per
cent.
10 Nearly 63 per cent of the gross cropped area
in Punjab in 1982-83 was under wheat and
paddy [Government of Punjab, 1984].
11 Human labour is measured in adult 'mandays' of eight hours each. For this purpose,
all female and child days are converted into
adult male days. The conversion ratios used
for this purpose are calculated by dividing
average wages paid to females and children
by average wage of adult male workers.
Female and child days are multiplied by
their respective ratios and added to adult
male days.
12 Number of observations being small in the
case of 'small' tenant category in the
developed region, we have clubbed small
and middle tenant groups together. In the
case of backward region, where all the 91
tenant holdings are below 15.00 acres, the
original groups have been retained.
13 Averagemarketwage rate per day'separately
in both the regions is calculated by dividing
the total wages (kind and cash) of hired
adult male workersby mandays worked during the crop year by these workers on
cultivated land of the sample households.
14 In 1979-80, outstanding loan per tenant
hoiding was Rs 12,943 in the case of
developed region as compared with just
Rs 439 in the case of backward region.
15 Initially tractor owners buy only a few implements with tractor and use tractor for
limited operations such as ploughing. But
with the increasein tractor accessories, tractor use for varied operations may replace
more labour.

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Economic and Political Weekly

June 24, 1989