Karnataka does well to pass new law on sale of farm land; land-use change must be automatic if farmers are to benefit
That the BJP-led government in Karnataka has effected a change in the law allowing easier sale of farmland in the midst of a raging agitation by Punjab farmers holds out the hope that state governments will continue to do what is needed to fix the investment environment. Last week, the state passed the Land Reforms (Amendment) Act 2020 that removes restrictions on purchase of agricultural land; earlier, all such purchases were made via the Karnataka Industrial Areas Development Board under a lot of restrictions; the ceiling on land ownership has now been raised and sales to non-farmers have been allowed. Apart from allowing farmers to sell their land at higher prices than in the past, the changes will make it easier for industry to buy land. Indeed, a Group of Ministers at the Centre headed by textiles minister Smriti Irani, as per ThePrint, has recommended that the process to purchase land be shortened considerably; one of the suggestions made is that industry be allowed to buy land directly from farmers. “While industries will still need to seek permission”, the report says, “a deemed approval after 30 days may be provided”.
Acquiring land for industry—think Tata Nano in Singur—and even infrastructure projects has been a problem for decades, and while the BJP had tried to amend the land acquisition laws when it first came to power in 2014, it had failed to do so due to the lack of a majority in the Rajya Sabha. Given how inability to get land is a big problem, being able to fix this will boost India’s Ease of Doing Business ranking; but, it is important that the exercise be done in a manner that ensures farmers get the best value for their land.
Right now, agricultural land is often purchased by various front companies who then use their clout—this often also involves payment of speed money—to then get this converted for industrial or commercial use. Ideally, through proactive zoning laws, state governments must declare as many areas as possible—where such sales can take place—as those where commercial/industrial use can take place along with what the conversion charge will be. Once this is known, and it is clear that converting the land use from agriculture to industrial/commercial does not require any clout, farmers will be able to get the market price for their land. In order to ensure that farmers are not getting cheated, it is important to ensure that all sales are registered; indeed, a government-run website can also let farmers know indicative prices for their land based on nearby sales. While there is always talk of how farmers will lose out once they sell their land, it is important to keep in mind India has too many people doing farming; indeed, it is only when there is greater industrial growth and people are moved out of agriculture that productivity will rise for those left on the farm. A comprehensive exercise of land titling, of course, is critical if such sales are to take place; this is critical to settle the issue of the rights of those that own and those that till the land.