Chapter 8 Fractionalization of Holdings and Food Production: Subdivision and Fragmentation of Holdings – Indian Economy

8

Fractionalization of Holdings and Food Production: Subdivision and Fragmentation of Holdings

The Size of the Holdings 

Land is a negligible factor in industry, but of the utmost importance in agriculture. The most obvious fact about the land held by the average cultivator in India before land reforms were initiated in independent India was the smallness of its size. The average cultivated area per owner in the Punjab was between 7 and 8 acres. The holdings in the Provinces were still smaller. The average size varied from 2 to 3 acres in Madras and Bengal to half an acre in Bihar and Orissa. In UP, it was two and a half and, in Assam, it was barely three. According to Dr Mann, the average size of a holding in a Deccan village was as much as 40 acres, in 1771, but by progressive subdivision, it had been reduced to 7 acres by 1915. When the holding was too small, the income from the holding was insufficient to maintain the farmer and his family. Uneconomic holdings, therefore, were one of the root causes of the poverty of the Indian farmer, but what was worse, such holdings increased and became more uneconomic with every succeeding generation.

The Causes of the Small Size of the Holdings

The causes leading to the small size of the holdings in India were many. As the area under cultivation does not increase in proportion to the growth of population, the land gets divided among larger and larger numbers of people and thus the size of the average holding decreases. The Hindu and the Mohammedan laws of inheritance and succession favour the partition of the landed property amongst the heirs. Under the old joint family system, such subdivision was not necessary but the growth of the spirit of individualism led to the breakup of the old family system, so that joint farming was an exception and partition, became the rule. The need to partition and subdivide the ancestral property had also been increased by the decay of the Indian handicrafts and, as there had been no corresponding industrial development to absorb the displaced labour and the surplus population, the pressure upon the land had increased. In India the sentiment in favour of landed property is great and every one sticks to his little share of property. With the advent of the British Rule and the establishment of peace and security, the value of land had increased and it had become a very secure form of investment to the middle classes. Agricultural indebtedness also had acted in the same direction, as lands had to be divided and the right of ownership of the debtor secured, before the execution of a sale deed in favour of the money lender.

The evils of subdivision and uneconomic holdings had increased by fragmentation. Whereas, by subdivision is meant the distribution of the land of a common ancestor among his successors either according to the law of inheritance or through gifts or sale, fragmentation refers to the way, in which the lands owned by an individual are spread all over the village area in scattered plots separated from one another by lands held by others. The Agricultural Commission reported of a case in Punjab where one person had lands in 200 different places and two others in 100 places. In Bairampore, it was found that 34.4 per cent of the cultivators had over 25 fragments each. Though, usually, fragmentation of ownership also means fragmentation of cultivation, this need not be always the case. A cultivator may take on rent a block of land consisting of several plots belonging to different owners. On the other hand, a compact holding may be let on rent to different tenants in fragmented pieces. From the merely economic point of view, the consolidation of cultivation is more important than the consolidation of ownership.

Fragmentation is normally caused at the time of subdivision of property among several heirs, each of whom wants a share in each of the ancestral plots, because of the difference in fertility or irrigational facilities. The causes explaining the excessive subdivision of land also explain the fragmentation of holdings.

The Effects of Subdivision and Fragmentation

The subdivision of holdings while it is justified on the ground that it gives equal chances to all the heirs, has certain additional advantages, for, it prevents the creation of a class of landless labourers and thus is conducive of economic security and social stability. Similarly, the fragmentation of land is defended on the ground that it insures the cultivator against the vagaries of the seasons by enabling him to sow different crops in different soils and different localities and that it makes a more elaborate rotation of crops possible. These arguments hold good when subdivision is moderate and fragmentation is determined by the differences in the soil. But, in India, subdivision and fragmentation have proceeded to such absurd lengths that, in most cases, the evils are much greater than the advantages claimed for them and, hence, it has become a problem demanding a speedy solution.

Subdivision and fragmentation are wasteful in several ways. When the holding becomes smaller, the proportion of the fixed costs to the total cost of cultivation increases, as the cost of maintaining the farmer and his family, his bullocks and implements, etc., remains the same as before. Subdivision also means a rise in the variable costs incurred for fencing, seeds, etc. Moreover, it hinders agricultural improvements such as capital investments in land, a better rotation of crops, etc. Further, much land is wasted in hedges, pathways and water routes. Fragmentation, besides aggravating the aforesaid evils, entails some more. There is a considerable waste of time, energy, produce and manure, when the plots lie scattered over a large area. Some plots are so small that they are not worth cultivating at all. In the Punjab, for instance 5 per cent of the land was thus uncultivated. Moreover, disputes about the boundaries, the rights of passage for man, beast and water end in ill-feeling, litigation, impoverishment, etc.

Measures Taken to Remedy the Evils

Two methods, remedial and preventive, are being tried to solve this problem of excessive subdivision and fragmentation: one is the consolidation of the existing subdivisions and fragments; and the other is the prevention of excessive subdivision and fragmentation.

The Consolidation of the Existing Fragments and Subdivisions

The Punjab

The work of the consolidation of fragmented holding was first taken up in Punjab in 1921–22 through the Co-operative Department on a voluntary basis. Intensive propaganda, in selected areas, on the benefits of consolidation prepared the way for the formation of Co-operative Societies for the Consolidation of Holdings. A special staff trained for the purpose arranged for the redistribution of the lands of the cultivators in such a way as to make the cultivated areas more compact. By July 1937, 791,358 acres had been consolidated. The Consolidation of Holdings Act, 1936, however, allowed compulsion to be used if a stubborn minority stood in the way. In 1939, there were in the Punjab 1477 Co-operative Consolidation of Holdings Societies and the total area consolidated amounted to about 1.3 million acres in 1941. The work of consolidation in the Punjab was facilitated by the comparative homogeneity of the soil and by the simplicity of the tenure. Consolidation has been followed by better and more intensive cultivation, increase in the number of wells sunk for irrigation, reclamation of waste lands and the reduction of litigation.

The United Provinces

Other Provinces followed the lead given by the Punjab. In UP, first Co-operative Society for the purpose was started in 1925. By 1939–40, 182 societies had been started for effecting consolidation and they had brought down the number of plots from 41,000 to 4000. The U.P. Consolidation of Holdings Act, 1939, enabled the Consolidation Officers, appointed under the Act, to issue orders, after careful enquiry, for consolidation, if more than one-third of the landholders in the area applied for it.

The Central Provinces

The work done in the Central Provinces deserves greater attention for it was there that an element of compulsion was introduced for the first time. Some work had been done by the Co-operative Societies on a voluntary basis, but in 1928, the CP Consolidation of Holdings Act laid down that, if one-half of the landholders owning not less than two-thirds of the occupied area in a village declared themselves in favour of consolidation, it became binding on the rest as well. The Act, which was made applicable, in the first instance, to the Chhattisgarh division, had been fairly successful. By 1939, 1685  villages had been dealt with and the number of strips had decreased from over three millions to 550,000, i.e., by 83 per cent.

Baroda and Kashmir

The Baroda State enacted in 1920 a permissive Act of facilitate consolidation, if two-thirds of the khatedars of a village holding at least half the occupied lands applied for it. There were 79 Consolidation Societies in 1939 but the progress of consolidation has been rather slow. An Act Kashmir in provided for compulsory consolidation if 80 per cent of landholders in a village voted it, but it was almost a dead letter.

Bombay

In Bombay, a Bill was introduced in 1927 to deal with certain features of the problem. It proposed that a standard unit is fixed in every tract as the minimum area that could be ‘profitably’ cultivated as a separate holding and that a scheme of consolidation be adopted, if two-thirds of owners holding not less than one half of the land in any village consented to a redistribution of plots, but the Bill had to be dropped on account of strenuous opposition both within and outside the legislature, due largely to the suspicion that large-scale farming was attempted just to create a market for the English tractors.

Madras

In Madras, attempts to legislate on this matter failed and the Government’s attempt to rearrange the holding by consent, in Trichinopoly District, succeed. In 1941, there were 26 societies but the area consolidated was very small and the progress had not been encouraging. The two most remarkable facts about consolidation in Madras were first, the ‘considered’ opinion of the Townsend Committee on Co-operation that the evils of subdivision and fragmentation were not very acute in the Presidency and secondly, the startling conclusion of the Deputy Registrars of Co-operative Societies that there was ‘no need, or future, for consolidation in the Province.’

The Prevention of Excessive Subdivision and Fragmentation

The best way to prevent this evil is to change the law of inheritance and restrain subdivision. The Egyptian custom is that, even though land is normally divided among the heirs, it is actually cultivated by one, on behalf of the rest. In Belgium one heir, usually the eldest son buys out the rest.

Bombay

The Bombay Government tried the method of refusing to recognise, for record purposes, any subdivision beyond a certain minimum. This was ineffective, since individuals were not debarred from actually subdividing their lands or the court from recognizing such divisions and, therefore, Section 98 of the Land Revenue Code embodying this provision was repealed and at present the Record of Rights recognizes the minutest subdivision.

In 1916, Mr Keatinge, the then Director of Agriculture, Bombay, proposed a measure to give the landholders the right to institute permanent economic holdings not subject to any partition in future. This was merely a permissive measure, but it was objected that it contravened the law of inheritance, and that, in the absence of suitable occupations the number of the landless agricultural population would increase.

The Bombay Small Holdings Bill, 1927, was another attempt to stop further subdivision of existing fragments and the creation of new ones. A standard unit of ‘profitable’ holdings was to be fixed for each area; the alienation of existing fragments was to be forbidden unless it was for the purpose of consolidation; all estates paying land revenue to the Government were to be so divided in future as to leave no fragments, etc. The objections raised against Mr Keatinge’s scheme were levelled against this also and hence, it was dropped.

Madras

As early as 1911, the Madras Government took up the question of subdivision and fragmentation, but it was dropped lest it should impair the efficiency of revenue collection! Six years later, it was mooted by the Legislative Council. The administration favoured it, as it would render the task of surveying and recording easy!, but the Board of Revenue contended that the creation of impartible holdings would not only go counter to the social customs of the Hindus and the Muslims but defraud the money lenders!, and impair agricultural credit. The issue was raised, off and on, and finally shelved.

The Punjab

In the Punjab Canal Colonies, subdivision has been checked by restrictions on alienation and, in the case of certain grants by the limitation of succession to a single heir. In certain case, special acts declare large estates impartible and subject to the law of primogeniture.

The Central Provinces

The C.P. Consolidation of Holdings Act of 1928 made all schemes of consolidation, confirmed by the Government, binding not only on all the existing right holders but also on their successors and thus paved the way for the prevention of subdivision and fragmentation, in future, of all consolidated holdings. It may be noted here that, even though, under the existing Hindu and Muslim Laws of Inheritance, further subdivision of land cannot be checked legally, the good effects of consolidation have made the old practice of subdividing each and every field into as many bits as there are shareholders less common. The shareholders try to take compact blocks and adjust the differences in value by a larger or a smaller area.

Baroda

A provision was made, in1922, in the Partition of Immovable Property Act to prevent fragmentation below certain prescribed limits, but the purpose of the Act was defeated by transfers through sale and mortgage. Hence, an Act was passed in 1993, giving neighbours and co-parceners the right to purchase adjoining lands under prescribed limits and obliged those who wanted to sell such lands to intimate their intention to the owners of the contiguous plots.

Efforts at Consolidation of Holdings

The attempts outlined above show clearly that, except in some Provinces, no serious effort has yet been made to deal with the problem of subdivision and fragmentation. The ideal of ‘economic holdings’ is, therefore, far from becoming a reality. Meanwhile, subdivision of ownership as well as if cultivation continues as before and, in certain places, has increased. The solution is, obviously, neither easy nor simple. Further, legislation at consolidation and changes in the laws of inheritance, limiting the succession to one heir only, on the Belgian and Egyptian models, are suggested. But unless alternative employment is available to the dispossessed heirs, such proposals are not only futile but fraught with serious consequences. It has been estimated that any serious attempt to bring about compact economic holdings would result in the ousting of at least 50 per cent of the present cultivators, and without a parallel development of industries, large scale and small, and a rapid growth of cultivation, intensive and extensive, the remedy may prove worse than the malady itself.

Under these conditions, plans for the formation of large farms and capitalistic farming using tractors and other machinery may prove disastrous. They may promote the investment of capital in land and benefit the richer classes but never the prosperity or the welfare of the peasants. The displaced peasants will help to swell the ranks of the landless agricultural labourers, with dire consequences to the future policy of India. Food production and stocks as we have noted earlier Indian agriculture is a gamble on the monsoon and rainfall has impact on productivity. During the south-west monsoon season, which accounts for the bulk of rainfall in the country, helps augment agricultural output.

Impact on Government Efforts in Agriculture

In the year ‘a significantly high level of 244.78 million tons of food grains production was achieved’… production of food grains during 2011–12 has been estimated at 250.42 million tonnes owing to increase in the production of rice in some of the rice-producing states of the country, namely Assam, Bihar, West Bengal, Jharkhand and Uttar Pradesh.1 As regards stocks, the amount of food grains in the central food as on February 2012 was 55.2 million tonnes, comprising 31.8 million tonnes of rice and 23.4 million tonnes of wheat which is adequate for meeting the requirements under the targeted public distribution system (TPDS) and welfare schemes during the current financial year. The higher levels of agricultural output and ample food stocks augur well for bringing down headline inflation.

Problems of Plenty in 2012

The problem of plenty is once again causing anxiety to the government as it does not know where to store the bumper crop to be harvested for the third year in succession. ‘Fears are rising that the grains would be out in the open not and be eaten by rodents even as millions go hungry which is planning to enact a right to food law… The government’s plans to create additional storage capacity of 19 million tonnes (MT) planned by 2012–13 through public–private partnership (PPP), only 0.5 MT could be created till January 2012 (Ibid) the main reason being the unwillingness of the States to offer land for the purpose. Another reason cited by experts is that government does not offer tax benefits to them, while the Supreme Court does not favour the involvement of private players in this vital area. As a result, as per an estimate’ up to seven per cent of the country’s annual food production goes waste due to insufficient storage space and inefficient transport and distribution networks. In a related development, the Food Corporation of India (FCI) has identified 10 sites in as many states for construction of modern silos to be declared mantis with storage capacity of either 25,000 tonnes or 50,000 tonnes to enable farmers to directly sell their produce there ‘The location of silos shall be considered or the basis of wheat procurement and off take in a revenue district.’ Silos with a combined capacity of 51.25 lakh tones for Punjab, 38.8 lakh tones for Haryana (have been mooted Gargi Parsai, ‘ “FCI” give green signal for building modern silos in 10 states’.)2

Discussion Question

8.1. What were the causes that led to the subdivision and fragmentation of land holdings in India? What were the efforts initiated by the government at consolidation of holdings?

 

Footnotes

1 Economic Survey 2011–12, Ministry of Finance, Government of India, New Delhi.

2 The Hindu, Chennai, dated 16.04.2012.