Addressing Tenant Farming

What is the issue?

It is vital to cover the vulnerable section of tenant farmers with credit and insurance, alongside other farming issues, for an inclusive policy outlook.

How prevalent is tenant farming?

• Tenant farmers are those who undertake farming on rented land.
• Tenant farming was 20.6% of the operating area according to 8th round of NSSO Report in 1953-54.
• In 2002-03, it fell sharply to just 6.6% of the operating area.
• Policymakers focused on abolition of feudal/semi-feudal agrarian structure, with tenancy reforms aimed at conferring ownership right to tenants.
• But post liberalisation, during 2003-13, tenancy increased to 10.4%.
• Andhra Pradesh (35.7%), Bihar (22.7%), Haryana (14.8%), Odisha (16.9 %), TN (13.5%) and WB (14.7%) lead the tenancy league, far above the all-India average of 10.4%.

What are the policy shortfalls?

• Tenant farmers account for 80% of farmers’ suicides in the country.
• Tenant farmers rarely get bank credit and they do not get any subsidies.
• Even with Kisan Credit Cards (KCC) and JLGs (Joint liability groups-‘Bhoomi Heen Kisan’) in place, tenant farmers receive barely 3% of total farm credit.
• Loan waivers have not helped tenant farmers as a significant number of crop loans are availed by the land owners even when they are not the actual cultivators.
• Tenant farmers with no documentary evidence become ineligible for crop insurance under PM Fasal Bima Yojana.
• State level panel data of NABARD indicates that a 10% increase in agricultural growth leads to a 2.1% rise in GDP.
• But uneconomic holdings, lack of adequate credit flow and poor insurance cover to the tenant farmers prevent such growth.

What are the notable state models in lending?

• Kerala is the only State that enacted the Money Lending Act, protecting borrowers from high rates of interest and tenants from excesses in private debt.
• The AP government has adopted and refined the implementation process under the AP Licensed Cultivators’ Act 2011.
• It undertook digitisation of land records and created a webland portal.
• Loan Eligibility Cards (LEC) or a Certification of Cultivation (CoC) is issued by the designated authority of revenue or agriculture department.
• A standard operating procedure has been put in place for the banks to record the crop loans issued to all farmers including tenants, on the webland portal.
• Telangana did not annul the AP law, but took up a massive drive for digitisation.
• It revised the land records under the Dharani project (Telangana Land Records Management System).
• This is being implemented for direct transfer of Rs. 4,000 per owner-farmer per acre per crop season to meet the input needs.
• Besides, farmers are entitled to Rs. 5 lakh insurance with the LIC, with the State paying the same.
• Tenant farmers are, however, not eligible.

How does the future look?

• As the Indian economy becomes mature and inclusive, tenancy is likely to increase further.
• Urbanisation has made inroads into the rural landscape, and with land being scarce there is severe demand for it.
• Tenancy and sharecropping have become livelihood options in agriculture, to supplement incomes arising out of lesser availability of land.

What could be done?

• An inclusive growth agenda requires that tenant farmers’ issues of both debt and insurance be tackled.
• Agricultural insurance needs to be decoupled from crop loans.
• Farmers’ assets (crop husbandry, animal husbandry, poultry, horticulture and family assets) need to be insured irrespective of owned or leased-in.
• Other relevant measures for tenant farming may include -

1. creating a legal framework for the States
2. issuance of loan eligibility cards
3. ensuring that banks lend to cultivators and not owners
4. creation of web-based land portals after digitising land records
5. setting targets for short-term production credit for tenant farmers
6. formation of JLGs

• Direct cash transfer to tenant farmers following an affidavit of self-declared tenancy conditions and crop(s) grown can help significantly.
• NABARD can set up a Tenant Farmers Development Fund to refinance short-term credit.
• It can also assist JLGs, SHGs, FPOs (Farmer Producer Organizations), and pay crop insurance premium for crop loans less than Rs. 1 lakh, besides providing skilling and calamity relief.

Source: BusinessLine