India’s Field to Factory Problem

Why is the Land Acquisition Bill so important? And why should its amendment be supported?

There are two tales regarding the poor Indian farmer and his land. One is cited by those who support the dilution of the original bill. The other is cited by opponents who claim small farmers need greater rights regarding their land.

The problem is that both these narratives are correct. One is a macro story and long-term. The other is a micro story and immediate.

The first story is that farm employment in India is in a crisis that it can never get out of. Never. Millions of agricultural workers must be moved off the land and into factories if they are to survive. But these factories – or cities and towns in general – will never come about if their builders are not provided land.

Consider the numbers.

Between 2000 and 2005, Indians farms hired or employed 21 million more people. Then the numbers began to drop. Between 2004/05 and 2009/10 the number of farm jobs fell 14 million and even in the short period of 2009/10 to 2011/12 an additional 13 million agricultural jobs were lost.

Why is this happening? Because India has simply run out of land.

The number of farms in India is now almost 140 million, a figure nearly double what it was a few decades ago. These land-ownings have shrunk to the point that the average farm-holding size in the country is only 1.6 hectares — barely enough for subsistence living for a family whose average size is five. In densely populated states like West Bengal and Bihar farm sizes are only marginally larger than those of big apartments. And being divided with each subsequent generation.

Polls show that 42 per cent of Indian farmers say they would like to quit their professions..

Various farm subsidies have kept the sector staggering along. And there are pockets of success but largely in large, cash crop farms whose size only aggravates the land problem.

Where, in effect, are these dispossessed farmers or farm labourers going to find jobs?

The answer seems to be a large boom in rural construction and, to a lesser extent, rural manufacturing.

A well-regarded study by Hans Binswanger-Mkhize in Economic and Political Weekly argued the rural non-farm sector was absorbing the workers being shed by the farms. “This has emerged as the largest source of jobs in the Indian economy,” argues Binswanger-Mkhize. Construction alone has seen its share of the total workforce double to 19 per cent since the 1980s and much of this is in rural India.

But construction is arguably the worst and lowest-paid variety of non-farming work and dependent on boom-and-bust cycles in the real estate business.

As had happened in other societies, these farmers should be moving to the cities, working in factories and earning the skills and money to push their families into the next income bracket. That is simply not happening in India because it has an abnormally small manufacturing sector and unusually slow urbanization rates. Among the BRICS countries, India has the smallest manufacturing sector by almost any index.

The second story is the one of Indian farmers being pushed off their land with minimal compensation.

This tale is as truthful as the earlier one. And it is more immediate.

In a practice that goes back to the British Raj and was continued by independent India, particularly virulently during the socialist years, Indian rural land-holders were regularly pushed off the land for infrastructure projects and industrial factories. They were given absurdly low amounts of compensation. Often they were offered alternative land – and were then cheated of this.

While much of the present focus is on the private real estate and highway builders of today, the statistics are pretty clear that the worst perpetrators of this sort of thing were the Indian public-sector firms and the Indian government. West Bengal under communist rule had a remarkably pathetic record in forcible land grabbing.

Unsurprisingly, all this triggered a backlash in a democratic polity like India. And it coincided, also not surprisingly, with the larger land crisis in Indian agriculture. A farmer with a one hectare farmer is already living on the edge. The land is his last asset and he is reluctant to give it up. But here’s the rub, if he sticks to his farm, he will go over the edge anyway as his farm is subdivided by his children or its soil is leached by fertilizers.

In other words, the small Indian farmer needs to be moved from his land into the cities in a manner that reassures him that the transition will actually take place in a manner that will benefit him. As noted, many farmers are ready to leave their fields – they can see there is no future in what they are doing – but they are rightly suspicious given the past 60 years of banditry that was carried out.

Forging this social contract is what the political class in India needs to be working on. If successful, India will make a necessary and inevitable social transformation but in a manner that will avoid enormous social unrest and trauma.

Copyright © 2015 the Hindustan Times

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