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2123 Public Disclosure Authorized POLICY RESEARCH WORKING PAPER 2123 Public Disclosure Authorized To reduce poverty in India through a strategy of rural growth, by increasing the share of farmland operated in smail units, requires making Access to Land land distribution more in RuralIndia equitable.Among policy measures recommended: Selectively deregulating land- Public Disclosure Authorized Robin Mearns lease {rental) markets reducing transaction costs In land markets, critically reassessing land administration and findinc ways to make it more transparent and to improve land administration incentive structures, promoting Public Disclosure Authorized women's independent land rights through policy measures to increase women's bargaining power, and strengthening institutions in civil society to improve awareness, monitoring, ana pressure for reform of policies and procedures that limit access to land. Public Disclosure Authorized The World Bank South Asia Region Rural Development Sector Unit May 1999 POLICY RESEARCH WORKING PAPER 2123 Summary findings Access to land is deeply important in rural India, where Reduce tranisaction costs In land markets, including the incidence of poverty is highly correlated with lack of both official costs and inforonal costs (such as bribes to access to land. Mearns provides a framework for expedite transactions), partly by improving svstems for assessing alternative approaches to improving access to land registration and management of land records. land bv India's rural poor. He considers India's record Critically reassess land administration agrCnciesand implementing land reform and identifies an approach find ways to improve incLentive structures, to reduce rent- that includes incremental reforms in public land seeking and base promotions on pnrfoitauce. administration to reduce transaction costs in land Promote womien's independcint land rights through markets (thereby facilitating land transfers) and to policy measures to increase wornen's bargaining power increase transparency, making information accessible to within the household and in society geneu-ly. the public to ensure that socially excluded groups Improve transparency OL 'and adniinis'rakt ll and benefit. public access to information, to reduce rer-t-se kng ny Reducing constraints on access to land for the rural land administration officers atid t strengitten poor poor and socially excluded requires addressing five key people's land rights (and kl_onv-ledge trh eco') issues: restrictions on lanid-leasemarkets, the Strengthen institutions in ciil society Loprovide the fragmentation of holdings, the widespread failuireto awareness, monitoring, and pressure necde'l fol translate wvomen'slegal rights into practice, poor access successful reformpand to proovidechecks and balances on to (and encroachment on) the commons, and high inappropriate uses of state power. transaction costs for land transfers. In a com.panion paper (WPS 2124) the author Among guidelines for policy reform Mearns suggests: addresses these issues at the level of a particeular state - Selectively deregulate land-lease (rental) nmarkets, Orissa, one of India's poorest states - in an ernpirical because rental markets may be irmportant in giving the study, from a transaction costs perspective, of social poor access to land. exchlsion and land administration. This paper -- a product of the Rural Development Sector UInit,South Asia Region - is part of a large. effort in the r egionl to promote access to land and to foster more demand-driven and sociall, inclusive institLJtions i rural developrment. Copies of the paper are available free from the World Bank. 1818 H Street N', Washington, DC 20433. Please contact Geraldine Burnett, room MCI 0-156, teleplhone 2 0 2-4 5 8-2111, fax 202-522-2420, tnternet address gburnetto woildbank.org. Policy Research Working Papers are also posted on the Web at vww.svr7 rldbankorghrmi 6 l'hlicati0 Workpapers/home.html. The author may be contacted at rmearns(kowki-dboilk.org. MiIay1999 (50 pages). The Policy ResearchWorkirng Paper Series disseminatesthe findinggsof work zoLP;rgr's to encouragethe exchs ge tfidas alo t developmentissues. An objectiveof the seriesis to get the findingsout quickly,even fthe prusentatios are lessthou/iily P(jiohel"ike papers carny the nam7lesof the authorsancd should he citedaccordingly. The hidigs,r a;ipretatiohs,meg. ana conclusio s exp,ressedin1 tl2s paperare entirelythose outhe authors. They do not necessarilyrepresent the rvie, of tche'Aorld Binzk, its ExecotiveUi'reciors, or the countries they represent. Produced by the Policy Research Disserinatior' entccu Access to Land in Rural India Policy Issues and Options Robin Mearns Socio-Econoniist/Natural ResourceManagement Specialist, World Bank (SASRD).The author gratefullyacknowledges comments on an earlierdraft from: Bina Agarwal,M. Balasubramanian,Will Candler,Klaus Deininger,Jean Dreze,John English,Diana Hunt, CecileJackson, John Kerr, Nalini Kumar,Peter Lanjouw,Jonathon Lindsay, Michael Lipton, JolyneMelmed-Sanjak, Richard Messick, Jessica Mott, M S Rathore, I U B Reddy,Ratna Reddy,N C Saxena,Cora Shaw, SaurabhSinha, T V Somanatian,V S Vyas, and John Williamson.The study has also benefitedfrom discussionswith AbhijitBanerjee, Robin Burgess, Kim Cuenco,James Manor, DavidMarsden, Ridley Nelson, B K Sinha,and D C Wadhwa. TABLE OF CONTENTS 1 INTRODUCTION .................................. 1 2 ANALYTICAL FRAMEWORK .................................. 4 3 CONTEXT .................................. 7 EVOLUTIONOF LANDTENURE SYSTEMS .................................. 7 POLITICALECONOMY OF LANDREFORMS .................................. 9 A NoTE ON DATA .................................. 12 SIZE DISTRIBUTIONOF RURALLAND HOLDINGS .................................. 13 LANDLESSNESSAND ABSENTEE LAND OWNERSHIP.................................. 16 FARMSIZE AND PRODUCTIVITY .................................. 17 4 KEY POLICY ISSUES .................................. 19 LAND MARKETS.................................. 19 FRAGMENTATIONOF HOLDINGS.................................. 22 GENDERAND LANDRIGHTS .................................. 25 ACCESSTO AND ENCROACHMENTON COMMONS.................................. 27 RECORDSOF RIGHTS IN LAND.................................. 30 5 SUMMARY AND POLICY OPTIONS .................................. 36 BIBLIOGRAPHY.39 LIST OF TABLES TABLE 1: TYPOLOGYOF PROPERTYRIGHTS IN LAND .6 TABLE2: TYPOLOGYOF STATESBY TENURESYSTEM AND AGRICULTURAL GROWTH RATE. 9 TABLE3: KEY PARAMETERSIN INDIA'SAGRARIAN STRUCTURE .14 TABLE4: POTENTIALSTAKEHOLDERS IN REFORMOF LANDREGISTRATION .33 LIST OF FIGURES FIGURE 1: DISTRIBUTIONOF HOUSEHOLDOWNERSHIP HOLDINGS: ALL INDIA, 1953-54 TO 1982. 14 FIGURE2: SHAREOF TOTALOWNED AREA BY HOLDINGSSIZE: ALL INDIA, 1953-54 TO 1982.15 FIGURE 3: DISTRIBUTIONOF HOUSEHOLDOPERATIONAL HOLDINGS: ALL INDIA, 1953-54 TO 1982. 15 FIGURE4: SHARE OF TOTALOPERATED AREA BY HOLDINGSIZE: ALL INDIA, 1953-54 TO 1982.16 LIST OF ANNEXES ANNEX 1: LAND REFORMLEGISLATION IN INDIA, BY STATE.46 ANNEx 2: STUDIESOF LANDSALE-PURCHASE TRANSACTIONS IN RURALINDIA .48 ANNEx 3: STUDIESOF LAND-LEASEMARKETS IN RURALINDIA .49 i 1 INTRODUCTION Access to land is of fundamentalimportance in rural India. The incidenceof poverty is highly correlatedwith lack of accessto land, althoughthe directionof causality in this relationshipis not clear. Householdsthat dependon agriculturalwage labor accountfor less than a third of all rural householdsbut make up almost half of those livingbelow the poverty line (Agarwal 1994a). Many of these householdsalso own some land, but in holdingsthat are so small or unproductivethat their owners derive a greatershare of their livelihoodsfrom their own labor than from their own land. Land plays a dual role in rural India: aside from its value as a productivefactor, land ownershipconfers collateral in credit markets, security in the event of natural hazardsor life contingencies,and social status.Those who control land tend to exert a disproportionateinfluence over other rural institutions,including labor and credit markets. The purpose of this paper is to providean overallframework for the critical assessment of alternativeapproaches to improvingaccess to land by the rural poor in India, as part of a broader strategy for reducingpoverty throughrural growth.Viewing persistent constraintson access to land in their historicalcontext, the paper considersIndia's record in implementingland reforms,and identifiesthe elementsof a new, complementaryapproach to improvingaccess to land by the rural poor. This approachincludes incrementalreforms in public land administration that seek to reduce transactioncosts in land markets,thereby facilitatingland transfers,while at the same time increasingtransparency and public accessto informationto ensurethat socially excludedgroups also benefit. The weight of internationalevidence now stronglyendorses a rural growth strategybased on the dynamismof economicallyviable, family farms.This means increasingthe share of farmlandoperated in small units, which are demonstrablymore equitable, labor-intensiveand poverty-reducingthan large holdings,and are at least as efficient or productiveper unit area. In the Indian context, in which growingnumbers of rural inhabitantsare net consumersrather than producersof food, the equity gains will come as much from the higher demand for labor than from direct land transfersto the poorest(Lipton 1985). While India's agrariansystems have not preventedthe poor from taking advantageof new opportunitiespresented by the
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