Can a policy be a devastating failure, a tiny improvement, and a bitter pill all at the same time? In India, the answer seems to be yes.
This month’s variant of a new land law, offered by the Bharatiya Janata Party (BJP)-led government, may be the maximum change that can pass an angrily divided national legislature and is a tiny bit better than the existing land law. It’s also a terrible result that could keep India poor.
The previous Congress Party-led government enacted a land law in 2013 that ostensibly protected Indian farmers and made it (even) harder to acquire land for new projects. The BJP wanted to make land acquisition easier but has given ground before serious political opposition.
That’s an old song; the core issue is much stranger. The political battle is portrayed as Congress protecting farmers versus BJP helping business, but the current law actually harms farmers and the now-minor modifications to it will do almost nothing to help business. This is because India remains fundamentally collectivist in its view of land (and some other matters).
Even the original differences between the Congress and BJP approaches, while much debated, are trivial. The foundation of both is the government negotiating with a group that is supposed to represent people living on the land. In both approaches, neither the group nor the individuals composing it clearly and fully own the land, rather they have tenuous and partial rights the government can alter.
In both, the Indian state remains not just important but indispensable. This almost guarantees bad outcomes, as the Indian state is renown for incompetence.
What should be happening instead is movement toward full private ownership of rural land. India’s rural population includes by far the world’s largest group of impoverished people. World economic history and simple logic both indicate that by far the best way to reduce rural poverty is to place ownership of the primary asset – land – in the hands of poor individuals.
In addition, dealing directly with individual land-owners on a market basis means more clarity and much less time spent for business. The world’s rich countries all feature individual ownership of rural land, because such ownership is the key to improving agricultural production and thus shifting poor farmers into more lucrative manufacturing. The latter effect is something India desperately needs.
It is certainly true that such a success will take a long time, with inevitable protests over land boundaries. But India is already at odds over land, and to no good end. Tinkering with the existing land law has proven politically tortuous and can only make the end result slightly less awful. It will take a fundamentally different approach, based on individual ownership, to help India truly rise.
from AEI » Latest Content http://ift.tt/1M4Vdpa
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