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Chapter # 40. Optimizing the Use of Land Resources

Optimizing the Use of Land Resources-Ensuring that land markets function smoothly, through efficient allocation of land across uses, provision of secure property rights and titles, and clear and consistent regulations around the operations, leasing and sale of land are critical for India to achieve and sustain high economic growth. To this end, the following goals have to be achieved by 2022-23:

  • Legalise and ease land leasing.
  • Consolidate fragmented plots of farmers to enhance efficiency and equity.
  • Create a digitized and integrated land records system that is easily accessible in all states.
  • Increase efficiency in the management of forest land.
  • Convert waste and fallow land to productive uses.
  • Strengthen property rights, especially community rights over forest land.

Current Situation

As measured by the land-to-population ratio, India is one of the most land scarce countries in the world. Agriculture accounts for the bulk of land use although the sector contributed only 17.45 per cent of value added to gross domestic product (GDP) in 2015. There has been a sharp fall in the average farm size from 2.28 ha in 1970-71 to 1.15 ha in 2010-11.1

The total recorded forestland in India is 76.4 million hectares, which is about 23.3 per cent of the total geographical area. Although it has more than one-fifth of its land under forest cover, Indian forests contribute only 6.4 per cent of the demand for wood.2 Property rights over forestlands can be strengthened.

The passing of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights Act (FRA)), which provides individual as well as community rights over forests and allows local communities/gram sabhas to protect and manage their customary forests on a sustainable basis, is a step forward.

At the same time, there is an imperative need to make land available to meet the needs of a fast expanding economy and rising population with a greater thrust on vertical development.


  • Restrictive agricultural tenancy laws: Agricultural tenancy laws passed by various state governments between the 1950s and 1970s are highly restrictive.
  • Conditions on leasing: While the states of Kerala and Jammu & Kashmir prohibit leasing out agricultural land without any exception, states such as Bihar, Telangana, Odisha, Madhya Pradesh, Chhattisgarh, Tripura, Karnataka and Himachal Pradesh allow leasing out only by certain disabled categories of landowners, such as physically and mentally handicapped persons, persons from the defence services, minors, widows, etc.
  • Lack of ease in leasing: In other states, there is no explicit ban on land leasing, but there are restrictive clauses that discourage landowners from leasing out land.
  • High informal tenancy: Due to legal restrictions, many landowners prefer to keep land fallow rather than lease it out, fearing they may lose their land rights for illegally leasing out land. At the same time, as market forces drive land leasing, there is informal tenancy in several places. Informal tenants do not have either security of tenure or access to institutional credit, insurance and disaster relief. As a result, productivity on tenanted land suffers.
  • Small sized land parcels: Landholdings in India are small and highly fragmented, which not only results in diseconomies of scale, but also makes the task of irrigation management and land improvement difficult. Punjab, Haryana, Uttar Pradesh and Maharashtra have completed their first round of consolidation, but further sub-division and fragmentation of land have necessitated reconsolidation. The progress in other states is either nil or negligible.
  • Productivity of forestland: There has been no systematic effort to increase the area and productivity of forests on a sustainable basis.One important reason is the lack of human resources. The number of forest officials for management of both timber and non-timber forest resources is lacking relative to the size of forests.
  • Absence of conclusive titling and records: Deficient land records and lack of conclusive land title result in costly litigation and adversely affects investment and economic growth.

Way Forward

  1. Agricultural Land
  • States may consider the Model Land Leasing Act, 2016. Further details on land leasing are given in the chapter on Agriculture.
  • Consolidate smaller plots of land through pooling to enhance productivity. The consolidation of fragmented landholdings is essential to exploit scale economies and increase farm incomes. Pooling the land of willing farmers and organizing them into land shares or joint stock companies will allow farmers to earn dividends based on their equity shares. Farmers will also earn wages/salaries as an employee based on agricultural output.
  1. Increase efficiency around the management of forest land
  • Implement effectively the Forest Rights Act (FRA) in all states to strengthen the property rights of forest dwellers, tribal populations and local communities.
  • Zone land on a priority basis to clearly demarcate forest and revenue lands.
  • Bring more area under agro forestry using wasteland, non-cultivable fallow lands, etc.
  • Revisit the policy on tree-felling. Encourage trees as a resource for farmers especially by easing restriction on certain species of trees. Current restrictions on inter-state and inter-district movement of wood should also be removed.
  1. Updating and modernization of land record systems
  • Beyond creating and maintaining land records, efforts must be made to update and digitize these records in a user-friendly manner.

The National Land Records Modernization Programme (NLRMP), now Digital India Land Records Modernization Programme, aims to develop a well-functioning and transparent electronic land records management system that will provide easy access to all available and relevant information to give a fair comprehensive position of any plot of land to the landowner, concerned officers/agencies and interested persons/entrepreneurs.

This will improve real-time information on land, optimise use of land resources, benefit landowners and prospectors, assist in policy and planning, reduce land disputes and check fraudulent/ benami transactions.

  • While most states have started digitizing their records, all states must have digitized textual as well as spatial records so that they are easily available and verifiable. In this area, commendable efforts have been made by the states of Karnataka and Gujarat. It will also be desirable to link the land record database with banks.
  • Other states should review their progress in terms of digitization and move toward complete and accessible up-to-date records. In due course, states may move towards conclusive land titling.
  1. Initiating Public Private Partnerships (PPPs) for wasteland development
  • Cultural wastelands, estimated at about 12 million ha, need to be improved and productively utilized as a potential resource.
  • This can be done either by gram panchayats with financial support from states/union government or through PPPs, with clearly laid down procedures and norms.
  • Strengthen property rights, plan urbanization and prevent land degradation.
  • Define and identify common land, along with details of ownership, control and use rights.
  • Recognize the customary land tenure system including community ownership in tribal areas.
  • Remove encroachments on public land to ensure that land is used efficiently.
  • Free estimated ceiling surplus land of over 1 lakh acres that has been under litigation for several years through speedy disposal of cases.
  • Define and demarcate revenue and forestland, including land used for shifting cultivation.
  • Plan urbanization as per master plans with greater emphasis on vertical growth.
  • Prevent land degradation and soil erosion through policies that promote fertilization and organic farming.
  1. Using land as resource to finance urban development
  • Tools such as land value capture, incentive zoning, town planning schemes, and land-based taxes like land value tax, vacant land tax, land value increment tax, etc., can be used to finance rapid and efficient urbanization.

NITI AYOG - New India @ 75

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