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New Delhi: The NITI Aayog is considering a proposal for model law that will help increase farm productivity by reviving lease farming through securing the rights of the agricultural land owners and helping them lease their land to tenant farmers, who can then access credit and insurance from the government.

Tenant farmers will also be able to avail compensation for crop damage under the act—a facility they do not have now.

The law has been mooted by an expert committee led by T. Haque, former head of the Commission for Agricultural Costs and Prices, that was formed in September 2015 to look into ways to liberalise land leasing.

The panel submitted its final recommendation, which also included a model act that can be adopted by states, to the Aayog on 11 April.

The basic idea is to allow land owners to lease out agricultural land to tenant farmers without the fear of losing it, Haque said, adding, “this would allow fallow land to be used productively, enable tenant farmers to invest in the land and also access credit and insurance facilities."

Haque said that the act does not specify terms like rent amount and period of lease and these should be decided by individual parties without any interference from the government. “Most state governments have either legally banned or imposed restrictions on agricultural land leasing," the report .

“Restrictive land leasing laws have forced tenancy to be informal, insecure and inefficient. Informal tenants are most insecure and inefficient, as they do not have legal sanctity and access to institutional credit, insurance and other support services," it added.

According to the report states impose varying degrees of restrictions on leasing of farm land. While Kerala prohibits leasing altogether, states like Bihar, Madhya Pradesh and Uttar Pradesh allows leasing out farm land by certain category of land owners who are disabled, widows or are in the armed forces.

In Punjab, Haryana, Gujarat and Maharashtra tenants have the right to purchase land from the owner after a period of tenancy---a rule that discourages leasing or force owners to change tenants frequently.

Across the country over 20% of land holdings are farmed by tenant farmers who cannot access facilities like credit, Haque said, adding, that in states like Andhra Pradesh this could be over 60%.

“Many states Madhya Pradesh, Uttar Pradesh and Orissa have shown interest in reforming their laws during consultations and once the centre accepts it as a model law the process will gather momentum," Haque said.

The report said that current restrictions on land leasing have reduced the occupational mobility of landowners who wants to take up employment outside agriculture but are forced to stick to their land due to the fear of losing it.

“The restrictive tenancy laws have proved to be anti-growth and anti-poor," the report said.

The report also said legal ban or restrictions on land leasing has led to ‘concealed tenancy’ due to which tenant farmers do not have any incentive to invest in land improvement.

Land leasing laws framed in the wake of independence have lost their relevance today, it adds.

“Lease farming is an economic necessity and not a symbol of feudalism, as it was thought before," the report said, adding, “the growth of an active land lease market, would be helpful for the rural poor to get out of poverty trap. The fear that liberalization of land leasing may result in concentration of operational holdings in a few hands, can be allayed by allowing leasing in within the existing ceiling limits in a state (if needed)."

According to the report, marginal and small farmers would be better off leasing out their land to more viable farmers for rent, while seeking paid employment within or outside agriculture.

“The critical need of today is to legally allow farmers to lease out without any fear of losing land ownership right and provide support for their upward occupational mobility by way of access to either self-employment or wage employment," the report said.

It’s good that the leasing law is limited to farm activities and cannot be used to bypass land acquisition laws (for industrial activities), said Kavitha Kuruganti of the Alliance for Sustainable and Holistic Agriculture, a collective of farm organisations.

“The proposed law needs to be more protective for the tenant farmer like the Licensed Cultivator’s Act in Andhra Pradesh and Telangana where state departments play an active role to record tenancies so that tenant farmers can avail credit, insurance and disaster relief," she added.

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