Agriculture Land Leasing

Land distribution was quite skewed in favor of influential people during the British rule and therefore, land leasing was very common during that period. Although the percentage of area leased out was estimated at 20.6% at the all-India level National Sample Survey Office’s (NSSO) 8th Round, a considerable amount of land leased out on the basis of oral or hidden tenancy accounted for 35% to 40% of the total cultivated area.

During the post-independence period, the major agenda of the government was abolition of zamindari system, tenancy reforms etc. All states had adopted legislation concerning agricultural tenancy in the 1960s or 1970s.

Although tenancy laws differed from state to state, they were generally found to be very restrictive in the sense that they had almost prohibited agricultural tenancy. The tenancy arrangements, as it existed, were primarily informal in nature, leaving tenants insecure and thus rendering the system inefficient, while reducing the operational mobility of landowners.

Why there is need of such model law?

•Land is a state subject in seventh schedule of Constitution. So center can create / suggest a model act but its enactment has to be done by states themselves.
•Across the country over 20% of land holdings are farmed by tenant farmers who cannot access facilities like credit (Andhra Pradesh this could be over 60 %.)
•There is discriminatory law in different states like - Kerala, Jammu and Kashmir and Manipur do not allow leasing of farmland.
•Tenants belonging to SC/ST categories in Gujarat and Maharashtra cannot be evicted once land is given to them on lease.
•Thus it does not form the unified land market in India.
•Absence of a sound institutional framework facilitating land leasing had been viewed as a major obstacle for private investment in agriculture resulting in poor productivity.
•Due to lack of any legal framework for leasing, the informal tenants of agricultural land have, in many parts of the country, been deprived access to institutional credit, disaster relief, and other support services.
•The situation, where beneficiaries of agricultural support services have been the land-owners and not the actual tillers, has fuelled problems of farmer suicides, default on agricultural loans among others.
•Also, agricultural land leasing has hitherto been informal due to legal restrictions imposed by some states, and these restrictions have affected agricultural productivity growth.
Absence of a sound institutional framework facilitating land leasing had been viewed as a major obstacle for private investment in agriculture resulting in poor productivity.
In this context, NITI Aayog had appointed an Expert Committee on Land Leasing, under the chairmanship of T Haque (NITI Aayog 2016). As a result model agriculture land leasing law 2016 has come up.

Prospects of agriculture land leasing and model law

•Due to land leasing, it will enhanced social mobility. As non-farmland owning groups or castes can benefit by taking land on lease can generate more income.
•Those with small landholding can lease out their lands and migrate to other occupations and therefore will reduce the burden on agriculture land.
•Tenants can now obtain loans, crop insurance, disaster relief or any other related benefits or facilities provided to farmers by the state or Central government.
•Will help corporate farming under which corporates can take large chunks of land on lease and do cultivation. This will completely professionalize the agriculture activity.
•Benefits in the form of enhanced investments, economies of scale in use of capital, machines and other inputs.
•Benefits to industries in the form of reduced costs of land acquisition. They can take land on lease and after certain period of time lease agreement can again be negotiated. This will also reduce farmer's unrest thatagitates against loss of land titles.
•Dispute resolution-State governments will able to constitute a special Land Tribunal, which will be the final authority to adjudicate disputes under the model Act.
•The cultivator and the owner can settle disputes between them using third party mediation, or gram panchayat, or gram sabha.

•This leads to speedy trials, save economic losses, harassment due to lengthy trials.

Main features of the proposed Model Agricultural Land Leasing Act, 2016

•Legalize land leasing, which will promote agricultural efficiency, equity, poverty reduction, agriculture productivity and rapid rural change.
•This is to ensure complete security of land ownership right for land owners and security of tenure for tenants for the agreed lease period.
•It will remove the clause of adverse possession of land in the land laws of various states as it interferes with free functioning of the land lease market.
•Allow automatic resumption of land after the agreed lease period without requiring any minimum area of land to be left with the tenant even after termination of tenancy.
•Allow the terms and conditions of lease to be determined mutually by the land owner and the tenant, without any fear on the part of the landowner of losing land rights.
•Facilitate all tenants including share croppers to access insurance and bank credit against pledging of expected output.
•Incentivize tenants to make investment in land improvement and also entitle them to get back the unused value of investment at the time of termination of tenancy.

Some limitations of Act:

•Change in land use pattern:Agriculture land can be diverted from crop cultivation to commercial use. Agricultural land now can be used for activities like plantation crops, animal husbandry and dairy etc., in addition to crop cultivation. Once agricultural land is transferred to allied activities, it will not only reduce the total land stock available for crop cultivation with an adverse impact on production of field crops but will also change the land-use pattern.
Food security: as land can be used for commercial purpose food security of nation will be under threat. Chances of more commercial crop can be grown, unbalancing nations nutrition diet profile.
•Also worrisome is allowing lease contracts between the parties for an indefinite period and that the government shall not fix a minimum or maximum lease period. It would also increase the risk of any influence/pressure on the lessor to lease out the land for a very long period and it might become very difficult for the survivors in the family to resume operating the land from an influential lessee. Thus, if the government does not fix maximum lease period, it will increase the risk of losing the contracted land permanently from food crops.
•The act is also silent on whether a land already under lease agreement can be mortgaged or not, keeping in view that the lessee might be interested in availing crop loans or term loans in case of allied activities.
•Absentee landlordism:Act will prevent redistribution of land through transfer ownership as people living outside the area will prefer leasing instead of selling. Otherwise land distribution through selling was an important means of redistribution and consolidation of land. Land leasing will promote absentee landlords.

Way forward

Land leasing alone is not the solution to the problems faced by agriculture. This has to be complemented by a number of other steps:
•Enhancing credit and insurance facilities for agriculture.
•Providing improved technical inputs in the form of soil health card, laboratory facilities etc.
•Modernization of the agriculture marketing so that informed decisions regarding leasing can be made so that informed lease agreement are concluded with proper knowledge of future market rates.
•Modernization and digitization of land records so that each and every owner has proper titles of his land. This will also reduce litigation related to the land leasing.
•The standardization of lease agreements and dispute resolution mechanisms should be developed.


Legalizing the tenancy will result in better productivity of crops grown on the contracted land by replacing an unwilling cultivator with a willing cultivator, provided the contracted land remains to be used for cultivation of field crops only. However, the Model Leasing Act appears to be lopsided and seems to be giving an edge to lessees over the landlords. Also, allowing the contracted land to be used for activities other than crop production that too for an indefinite period will certainly threaten the food security of the country in the long run.