LAND REFORMS IMPERATIVE FOR POVERTY ALLEVIATION
TARIQUE KHAN JAVED
PRESIDENT, OVERSEAS PAKISTANI INVESTORS FORUM
Mar 16 - 22, 2009
Among the five major drivers of poverty in the country, the two related to land ownership are most important. Lack of ownership of land in Urban and Rural areas does not allow people to come out of poverty trap. The other three factors are the high inflation rate, high indirect taxes and inefficient justice system.
URBAN POVERTY TRAPS
In cities like Karachi 80% people are forced to live in Katchi Abadies which take only 10% of city's space. The properties built on open spaces on self help basis are demolished from time to time and are not recognized by Banks as security. This insures that urban poor never come out of poverty trap. In-effective property rights and very slow justice system does not induce people with money to make enough houses in regularized areas for rental purposes. If such houses and flats were made people will not have to live in Katchi Abadies and have a decent life. On the other hand if Banks could lend for financing houses, as in the West, people could become owners of property instead of living in rented houses by paying the rental as mortgage payment. However this can not happen given the weak legal system that does not allow foreclosures. The only lender for housing- HBFC is on the verge of collapse as Rs 12 billion of its 20 billion lending is classified as bad due to none payment.
Justice demands that for all those families who have opted to live in the cities permanently; the State should consider it its responsibility to provide a plot of land. The plot could be as small as 60 sq yard but leased and mortgage able. Such plot in a city can take family out of poverty trap as the owner with the help of Bank finance can build up to 5 story on the plot, according to their growing needs. As this is not happening the State in the meantime can lease out all property in the un-regularized Katchi Abadies and Goths. This measure will immediately bring bulk of the city dwellers out of poverty and improve law and order.
RURAL POVERTY TRAPS
In Rural areas bulk of the irrigated land was given to Informers, Recruiters, and Animal Breeders and ex Soldiers by Britishers. Britishers used the newly irrigated land in Punjab and Sindh as a means of supporting its army spread all over the Empire. Canal systems developed in other parts of India irrigated already settled areas while those in Pakistan were fresh land and Britishers could use their discretion. Need for more Soldiers, Horses, Camels and Donkeys compelled them to give land to recruiters and breeders. The remaining land had to be auctioned to the highest beeder to cover the cost of construction of Canals. That meant that no poor landless peasant got any land. Britishers considered the poor as an economic necessity to provide work force for the rich farmers. The argument went that if all peasants get land who will work for the rich farmers. Thus poor were kept poor by design and not by accident.
Unlike India, China, Iran and Afghanistan where injustices of the past were corrected on an urgent basis to lay a foundation of a just and peaceful society, in Pakistan this process was successfully delayed up-to now. Two half hearted land reforms only benefited some 250,000 people and involved redistribution of only 1,251,593 hectares as this table shows:
PROGRESS OF IMPLEMENTATION OF LAND REFORMS UP TO JUNE 1994 (HECTARES):
PROVINCE AREA AREA BALANCE PERSONS
RESUMED DISPOSED OF BENEFITING 1959 REFORMS:
Punjab 511,244 505,082 6,162 109,889 Sindh 346,307 300,091 46,216 46,131 NWFP 112,108 97,287 14,821 24,314 Balochistan 53, 268 53,196 72 6,621 Total 1,022,927 955,656 67,271 186,555
Punjab 121,593 94,583 27,010 36,017 Sindh 112,920 72,477 40,442 17.167 NWFP 57,415 55,122 2,293 12,811 Balochistan 189, 316 73,755 115,562 5,506 Total 481,244 295,937 185,307 71,501
The issue of land redistribution is in abeyance since July 1977, other then talk of distribution of 2.7 million Government land.
LAND REFORMS IN INDIA AND BANGLADESH:
Before the end of British rule Zamindari system was abolished in Bengal, Bihar and Orissa. Congress Party's manifesto in 1937 promised to abolish Zamindari, Jagirdari and Nawabships and States after independence and this was done.
With the creation of Pakistan therefore Pakistan (West) remained the only area of the subcontinent to retain elements of medieval Feudal, Sardari and Jagirdari system. Therefore there is a view that the Landlords, Sardars and Jagirdars of West Pakistan supported the creation of Pakistan to avoid the fate of their counter parts in India.
East Pakistan (Bangladesh) had no significant large landlords and the society was fairly flattened, in contrasted to very large holdings in West Pakistan. The vast difference in land owning pattern led to vast cultural differences. This also led to throwing up very different types of leadership. While East Pakistan was represented by middle class; the leadership of West Pakistan comprised of very large Landlords, Sardars and Jagirdars. Interaction and accommodation between the two set of people proved very difficult and contributed to the dismemberment of the country.
LAND REFORMS IN IRAN AND AFGHANISTAN
Starting 1978 both in Iran and Afghanistan a process of progressive transformation began. In Afghanistan the Sour Revolution brought immediate change in land ownership, confiscating Land from big Land Lords and distributing it among landless peasants. The Land Lords were mostly Pukhtoons from the Ruling elite who had held these lands for centuries. The landless peasants were non Pukhtoon tribes like Hazaras, Tajiks, Uzbuks etc. The redistribution has led to civil war which still goes on.
In Iran the redistribution started in the North where Turkoman tribes drove away by force the Land lords and divided land equally. Central government legalized the redistribution against all cries of this being unIslamic. The trend spread all over the country and by 1988 all land in Iran was redistributed. The ex land lords were given 4 times the average peasant. In effect 20 acres became the upper ceiling while the average land holding became 5 acres.
To meet the needs of Urban housing, more than one house was nationalized and given to the needy.
Now Iran is in peace. In Afghanistan the Northern Area dominated by non Pakhtoon- Northern Alliance is at peace while the Pakhtoon areas of South and South West; neighbouring Pakistan is not at peace and so called Taliban led insurgency goes on in the name of Islam but actually it is a protest against expulsion of Pakhtoons from Northern Area and their very limited participation in Central government, dominated by Northern Alliance.
LAND REFORMS PROSPECTS IN PAKISTAN
In 2002 Prime Minister Jamali of Muslim League declared that the issue of land reforms was over in Pakistan and that the current holdings were optimum for productivity.
Other than 2.7 million Government land distribution which comes in to discussion from time to time there is no talk of land reform in Pakistan since 2002. Even distribution of Government land is delayed on one pretext or the other while the millions of poor landless people keep pleading.
The coming to power of PPP led government has not made any difference. No one even talks of implementing the 1977 Land Reform under which the maximum holding would have reduced to 100 acres irrigated. Implementation is overdue and must be undertaken. There is no hindrance to it. However the current Land Lord dominated leadership of PPP is bent upon ignoring the issue as long as it can. This is likely to cost them next election.
Given the large number of available landless peasants in the Country, who also constitute the bulk of poor in the Country, the question of how much each family should own becomes pertinent.
If land could be provided to these landless peasants they would come out of the poverty trap and contribute in a major way reduction in Poverty level in the Country.
The question arises as to what constitutes an optimum land holding, so the total production is not effected and at the same time social justice is provided.
Is the current applicable ceiling of 150 acres alright and there is no need to change it given the natural redistribution of land with the passing of land from one generation to another?
Some Economist urge that while Pakistanis have a Feudal mind set which is opposite of democratic mind set, its economy is no more Feudal rather it is Capitalist. Land holdings have become smaller with the passage of time as each large holding of the past got divided and sub divided among heirs, as per Islamic Law. Some Economists even worry that too small holdings might become economically unviable and retard over all production.
On the other hand some Economist believe that Feudal large land holding still exist and is the source of all Economic, Political and Social injustices in Pakistan and land reform is an urgent need. World Bank officials in a recent report (March 2007) have termed unfair land and water distribution as major cause of poverty in the Country.
They urge that to create a just society it is imperative that landless peasants are given land on an urgent basis. This, they believe will not only alleviate rural poverty but also increase the production of these lands.
While I have no doubt that morally and socially it is imperative that land less peasants of the Country be given land and this can only happen by repossessing large tracks of land from large land owners, I have concern over the productivity issue. Will these small holding be economically viable or not?
OPTIMUM LEVEL OF LAND OWNERSHIP
From purely economic point of view in my opinion for Pakistan the optimum level of land ownership per family is 20 acres. Given the very large number of landless peasant in the country, the Iranian formula of 5 acres for normal peasant family and 20 acres for the ex Land lord family may be considered. Thus a new legislation should limit the maximum land holding of irrigated land at 20 acres and un-irrigated at 40 acres. The resultant resumption of land may be distributed at the rate of 5 acres per family.
The land may be allocated on the basis of NICs and B forms. The allottees to sigh an undertaking that they will till the land and in case they leave for towns the land will be taken back. This is practice in China now where the lease is granted for 30 years on this condition of domicile.
Five acres per family given at a 30 years lease with all government taxes to be agreed before hand and not subject to change, as was done in 1793 Permanent Settlement for Bengal, provides the best set up for optimum production, social justice and political stability. This will alleviate poverty in Rural Areas in a major way.
In Urban Areas also based on NIC and B form each land less family may be provided a 60 sq.yard land, at small upfront payment and remaining payment over 20-30 years in quarterly installment. Almost all families will be able to afford such land and then gradually build their houses, value of which will rise with passage of time. This will alleviate poverty in Urban Areas, as the rent eats up a large chunk of poor family's income and it does not give them ownership of property and thus they never come out of poverty trap.
Strong ownership rights under an efficient justice system which will allow land to be considered as security by Banks will usher a new era of huge construction boom. The condition is foreclosure of mortgaged property. Than only will the Banks lend against the property. Given the huge backlog of demand for houses in urban areas the construction boom will absorb a millions of unemployed for an extended period.