Model Agricultural Land Leasing Act, 2016 – Indian Economy UPSC Notes

Model Agricultural Land Leasing Act, 2016:

After independence, India wanted to end the zamindari system and give land to those who worked on it.
States banned or restricted land leasing (renting), hoping it would help tenant farmers.
But the reform failed — by 1992, only 4% of farmland had transferred to actual cultivators.

To force land transfers, some states banned renting farmland completely (no tenants allowed!).
This didn’t help much. Instead, it made things worse because:
- Tenants had no legal protection anymore.
- Future rental deals went "underground" – meaning they were done secretly and not on paper.
Some states allowed renting but capped the rent at a very low rate (like 20–25% of the produce). Since this wasn’t fair for owners, they avoided official contracts.
- Tenants ended up paying more (like 50% of the produce), but the deal stayed unofficial, and tenants had no rights.

Banned leasing: Telangana, Bihar, Karnataka, Madhya Pradesh, Uttar Pradesh (with few exceptions like widows, minors, disabled, etc.)
Leasing allowed but risky: Punjab, Haryana, Gujarat, Maharashtra, Assam. Here, tenants might gain the right to buy the land after some time, so owners don’t like to lease land officially.
More open rules: Andhra Pradesh, Tamil Nadu, Rajasthan, West Bengal (but even here, sharecroppers often aren't given legal recognition).

The old rules don’t help anymore. In fact, they:

Hurt tenants – no legal security, no loans, no crop insurance, no long-term investment.
Worry landowners – they fear losing their land, so many leave it unused.
Waste land – land stays uncultivated even though people are willing to farm.

In 2016, the central government (through NITI Aayog) suggested a Model Land Leasing Act to fix all this.

Let landowners legally rent their land without fear of losing it.
Give tenant farmers legal rights, so they can:
- Get loans
- Buy crop insurance
- Be compensated if crops fail
- Invest in improving the land

About 18% of land holdings and 13% of farmland is already used by tenants – but most of them have no legal protection.
If this law is followed by states, it will:
- Encourage better use of land
- Give confidence to both landowners and tenants
- Help government policies reach real farmers

Anyone can legally lease farmland
- Farmers or even others can take agricultural land on rent (lease) for farming and related activities like dairy or animal husbandry.
Tenant farmers can get loans and benefits
- Those who take land on lease (like tenant farmers or sharecroppers) will be able to:
  - Get loans from banks
  - Access crop insurance
  - Receive help during natural disasters
Helps combine small plots of land
- Small farms (like 2-3 acres) are too small to use machines efficiently. This law helps combine many such small plots so farming becomes easier, cheaper, and more profitable.
Owner and tenant can decide lease terms freely
- The landowner and the tenant can mutually decide:
  - How long the land will be leased
  - How much the tenant will pay
No limit on land size
- There is no upper limit on how much land can be leased or combined. The government wants market forces (supply and demand) to decide the size of land being farmed.
Leasing for allied activities too
- Land can also be leased out for non-crop activities like animal farming for up to 5 years.
Fast and local dispute resolution
- If there’s a dispute, it will be solved quickly through:
  - Gram Sabha
  - Panchayat
  - Tehsildar
- No need to go to regular courts. This saves time and money.

Old rules were outdated – They were made when people feared landlords and zamindars. Today, lease farming is an economic need, not feudalism.
Hidden tenancies – Because of bans, most leasing happens informally, without paperwork. This hurts tenant farmers, as they:
- Can’t get loans or benefits
- Have no motivation to improve the land
Landowners stuck – Many landowners want to leave farming for jobs elsewhere, but fear leasing their land because they might lose ownership.

China – Farmers can lease land even to companies for up to 30 years. This encourages long-term investment and farming of valuable crops.
Andhra Pradesh & Kerala – These states have reformed their laws to:
- Allow leasing
- Protect the rights of both tenants and landowners
  Their success stories can be used as models for other states.

Problem: Landowners still hesitate to lease land because land records are not updated or safe from tampering.
Solution:
- Digitise and geo-tag land records
- Link land records to Aadhaar and bank accounts
- Create a central digital system for land records

This would build trust in the system and make it easier for landowners to lease land without fear.