The State of Physical Property Rights in India

state of property rights in india forest rights act ARCH gujarat fnf south asia friedrich naumann foundation for freedom

Land is a critical financial asset in South Asia - a population that is predominantly rural and agrarian. The agriculture sector provides employment and subsistence to roughly 50% of the total population of India. The implementation of inclusionary property rights gives financial security to farmers as land is a source of income for them - it can be rented, sold and used as a collateral for loans. However, Indian land legislation remains regressive and stuck in the colonial-era. The Land Acquisitions Act of 1890 has set the tone for a top-down, statist land policy that favours the interests of the elite. Land administration is overly bureaucratized and land records are not comprehensive and timely. Therefore, large segments of the population are landless or work on un-regularized land.     

This report is not intended to make a comprehensive analysis of every property legislation of India. The objective is to outline the nature of the right to property in India, arguing that it is at worst stagnant, anachronistic, and at best in its infancy. A broad discussion of Indian land legislation is followed by a case study on the Forest Rights Act (FRA). This Act has been pivotal in conceptualizing progressive property rights particularly for the marginalized sections of the Indian society who have been systematically excluded from mainstream property legislation. 

Land Rights in India: Facts and Figures

India has a total land area of approximately 3.3 million sq. km out of which 159 million hectares,  approximately 48%, is arable. Of this, 86% is privately owned by individuals or entities.  Land tenure typically falls into one of two categories: free-holds and lease-holds. Most farmers fall into the latter category and cultivate farmland as tenants or share-croppers.  According to the agriculture census of 2015-16, small and medium farmers constitute 86.2% of total farmers in India and yet they own just 47.3% of the total landholdings, which is just 0.6 hectares on an average, hardly enough to produce surplus to sustain themselves and their families.  The elite farmers that comprise 5% of the total farmers, hold an average of 17.4 hectares each, constituting 33% of total agricultural land.  Landlessness is rampant affecting 56% of rural households  even though it has been a priority policy since independence. 

India ranked 59th out of a total of 135 countries in the 2018 International Property Rights Index and 58th in the sub-index for Physical Property Rights.  As compared to other South Asian countries, India fares somewhere in the middle. Registering property in India requires nine procedures and takes an average of 69 days.  India ranks at 166 out of 190 countries in the registering property sub-index of the Ease of Doing Business report, faring below global standards.  India’s low ranking on these indices shou ld come as little surprise as closer analysis of its land policy and implementation would reveal.

Land Legislation Since Independence

Right to property is not protected as a fundamental right in the Constitution of India. Prior to 1978, Article 19 (1) (f) and 31 gave the citizens the fundamental right to ‘acquire, hold, and dispose-of property’ subject to reasonable restriction by Article 19 (5). This article was repealed by the 44th Constitutional Amendment, which declared that the right to property is a legal right that can be repealed or instated subject to existing legislation. Article 19 (1) (f) and Article 19 (5) were replaced by Article 300A which states that ‘no person shall be deprived of his property save for the authority of law’. Land and property laws fall within the purview of state governments - from determining ownership of land, that is, land distribution to claiming of ownership, that is, land registration. Land registration procedures have been set forth by the Land Registration Act of 1909 and are administered by the Revenue Department of each state. However, some states have specialized departments, such as West Bengal’s Land and Land Reforms Department. Land registration is controlled at the state-level by the Inspector General of the Revenue Department and at the district and sub-district level by an appointed registrar. 

Four types of land distribution legislations have been instituted since Independence - land ceilings, abolition of intermediaries, tenancy reform, and allocation of state land to poor families. Land ceilings have been implemented per state whereby ownership of land is limited to a maximum of 3.6 hectares in some states and 22 hectares in others.  Excess land is redistributed to landless farmers - over 2 million hectares of land have redistributed throughout India. Regulations protecting tenants vary from state to state. Some states prohibit tenancy, some impose maximum rents, and some allow share-croppers to eventually attain ownership of the leased land or permanently cultivate it - as is the case in West Bengal. 

As mentioned earlier, the Indian land legislations retain deep colonial trappings. The Land Acquisitions Act of 1890 is presently in force albeit with some modifications. It allows the state to acquire private land for ‘public purpose’ so long as they deliver full compensation. Public purpose and compensation have been either nebulously defined or modified by later legislation. The highly controversial ‘Urgency Clause’ of this Act allows the state to bypass any due process that is otherwise mandatory before any land acquisition such as the 15-day seizure notification and social impact inspection. This essentially allows property to be expropriated arbitrarily with minimal compensation, exacerbated by the fact that right to property is not a fundamental right.

The Urgency Clause has been rampantly abused to evict over 21 million land-dwellers in order to complete development projects, which frequently utilize ‘public good’ in the interest of private developers or for ‘Special Economic Zones’.  However, The Right to Fair Compensation and Transparency in Land Acquisition, Resettlement and Rehabilitation Act (LARR), 2013 attempts to curtail the worst abuses of the Land Acquisitions Act through measures like mandatory social impact assessment before land expropriation, setting compensation for land grabs to four times their market price, and seizing land only with the majority consent of affected families.  

Exclusion By (Policy) Design  

Throughout India, land ownership is recorded through a dual deed-based system, or a record of property transaction between buyer and seller, and a cadastral or map-based system. However, these records are full of inconsistencies and do not accurately represent the ground reality of landholdings. Land settlement surveys are hardly conducted or are very piecemeal. Only 46% of cadastral maps have been digitized and only 26% have been linked to the record of rights, which provide details of the property.  Only a digitized land records system can provide comprehensive records, but existing land records that would be digitized are very inaccurate to begin with. Without an accurate and accessible land records system, conducting property transactions are all the more difficult. 

Registering property comes with a high transaction cost, resulting in much of India’s populace surviving on un-regularized land. To claim ownership of land, only official, state-issued documents are accepted and applicants are expected to pay a registration fee, which can be as high as 15% of the property value in some states.  These procedures are indeed costly and exacting for the lower-income sections of society, who continue to be regarded as ‘encroachers’ and are rendered ineligible for vital provisions like bank loans, crop insurance, electricity connections, and drought relief. Dalit farmers in Gharegaon district of Maharashtra have even resorted to filing claims against themselves–by requesting officials to penalize them for unlawful occupation on their own lands - just so that they can obtain official documentation. 

The extensive bureaucratic procedures involved in the land records and registration sector makes it rife with corruption. Bureaucrats and politicians involved in property administration have control over the outcome of property transactions and demand bribes to streamline the process.  In addition, because of heavy government restrictions such as heavy taxes and duties on the buying and selling of land, land disputes, and cumbersome environmental regulations, India lacks a market where buyers and sellers can easily interface. This allows intermediaries to thrive by charging exorbitant prices for their services.  With such high transactions costs for registering and selling land, much of Indian society resorts to surviving on un-regularized land.

While some states have been more successful in land distribution than others, the total amount of ceiling land distributed so far has not been significant in regards to India’s total landless population and available arable land. Land ceiling laws are easy to evade as land-owners often have strong ties with the bureaucrats or are politicians themselves. According to a study by the Centre for Rural Studies, Lal Bahadur Shastri National Academy of Administration , landlords evict their tenants who would have otherwise been beneficiaries. They also forge documents claiming a smaller size of their property to avoid having their landholdings declared surplus, or else legally distribute their property amongst family members. 

Case Study: The Forest Rights Act

The Forests Right Act of 2006 signifies a serious departure from previous land administration policy. It was drafted from bottom-up demand to protect India’s tribal community, who have borne the brunt of state land grabs as well as other exclusionary property policy. The FRA grants the inhabitants of forestland who qualify as Scheduled Tribe (ST) or as Other Tribal Forest Dweller (OTFD), the right to Individual Property Rights (IFR), or land titles for inhabitation and self-cultivation as well as Community Forest Rights (CR), or ownership of all non-timber forest resources as well as the right to ‘protect, conserve, and manage community forests of their village”. 

The administration of the FRA indeed follows a bottom-up process. Gram Sabhas, constituting all adult members of a village initiate the process by receiving all the claims, screening them, and determining whether they qualify for land titles.  Gram Sabhas are assisted by village-level Forest Rights Committees mandated to be at least one-third tribal and one-third women. The claims are then sent to Sub-divisional Level Committees (SDLC) and then District Level Committees (DLC) for final approval. Both these committees consist of Panchayat members, officers from the Forest Department and Ministry of Tribal Affairs (MoTA) and must have at least two members from the Scheduled Tribe or form the forest-dwelling community. As such, the FRA is designed to account for all stakeholders.

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However, the ground reality does not quite meet the promises of a law that provides seemingly decentralized and transparent procedures. As many as 50% of FRA claims have been rejected since the passing of this law.  From these rejected claims, 1.2 million forest dwellers are subject to facing eviction as per the Supreme Court ruling of February, 2019.  However, the SC has put this order on hold till the next hearing. 

The Ministry of Environment, Forests, and Climate Change (MoEFCC), wields significant influence as a stakeholder in the FRA. Land claims often clash with the interests of MoEFCC, who maintain a stronghold over the forestlands of India. The amount of documentation required for claims processes is very exacting for a largely illiterate target group. Therefore, the role of civil society actors is most crucial. Action Research in Community and Health Development (ARCH), a partner of the Regional Office of the Friedrich Naumann Foundation for Freedom (FNF) in New Delhi, works to ensure that FRA beneficiaries send in complete and acceptable claims. ARCH was also instrumental in broadening the proof of evidence needed to file land claims through the case ARCH and Ors. vs. State of Gujarat in the Gujarat High Court.

While the FRA provides basic right of ownership of forestland, it issues limited economic rights. The FRA does not allow beneficiaries to sell or transfer their titled lands except through inheritance, restricting them from utilizing them as collateral for mortgages.  

angelica zocchi

Angelica P. Zocchi

Angelica P. Zocchi is a Program Assistant at the Regional Office of the Friedrich Naumann Foundation for Freedom (FNF) in New Delhi. In this report, she shares her personal views and observations.