Importance of Landowning Non-cultivating Households

There is an increasing importance of landowning households that do not cultivate and a significant presence of urban households owning rural land, which constrains the growth of the agrarian economy, as such households have low incentives to invest in agriculture, and tend to use land for residential purposes, reducing the cropped area. Agricultural labour households tend to lease in land and become cultivators.

The evolving structure of the agrarian economy and its nature of growth have been much debated. One aspect of the debate is the unviability of small/marginal farmers in the agrarian economy, and the reasons for their continued sustenance. Another aspect is the process of generating growth in the sector, which is dominated by small and marginal farmers. A particular aspect, which is missed out, is the increasing importance of households who own land but do not self-cultivate the land. An increase in importance of these households in the rural economy influences the decision-making processes of economic agents within the production system of the rural economy. On the one hand, if these households own cultivable land but do not cultivate the land for various reasons, this land would enter the tenancy market reflecting a low level of incentives to invest, and by implication low growth as well. On the other hand, if these households convert land use from agriculture to non-agriculture, again one would have issues related to growth of the agrarian sector.

In the initial phase after independence, there was an attempt to reduce the role of intermediaries who had an adverse impact on the decision-making of cultivators. Vijay (2012) made an attempt to analyse the importance of households who own land but do not self-cultivate in the post-1980s period using different National Sample Survey Office (NSSO) rounds on Household Assets and Liabilities in India, substantiated with primary data collected in 2003 from nine villages in erstwhile Andhra Pradesh. Over time, the importance of these households has increased and the share of land owned by these households has also increased in the rural economy. The primary village survey data also substantiated this feature of increasing presence of these households in the surveyed villages. Interestingly, the irrigated areas have witnessed a significant presence and increase of these households and an indication of this feature is the high extent of land under tenancy. In the context of the recently released debt and investment in India (2013–14) unit-level data by the NSSO, this article revisits the above-mentioned changing rural agrarian structure.