CONCEPT OF NEW INSTITUTIONAL ECONOMICS (NIE) IN TENANCY:

The New Institutional Economics (NIE) is a shifting paradigm of neo-classical institutions as critical constraints on economic performance. The phrase “New Institutional Economics” was coined by Oliver Williamson to distinguish it from the “Old Institutional Economics” pioneered by Commons and Veblen (Kherallah and Kirsten, 2002: 111).

However, the theoretical debates for institutions and economic growth under NIE have emerged with Coase’s (1937) writings “The Nature of the Firms” and “Problem of Social Cost” (1960), including North (2000), considered to be a revolution in economics (Ibid., 2002: 111).

NIE is an attempt to include the role of transaction costs in exchange. North argues that institutions are formed precisely to reduce uncertainty in human exchange (Harris et al., 2000:1). The NIE gives greater importance to the role of individual where public choice and the empowerment of individual agents are attached. The rent seeking behavior, distributive procession and dynamics in transition cost have drawn a greater relevance on the development experience on areas of Third World.

The school of Old Economic Institution (OIE) argued that institutions are theory based in explaining and influencing economic behaviour, whereas neo-classical economics ignored the role of institutions and economic agents. The Old institutionalism was particularly exercised by the impact of technological change on institutions (even lacking technical rigour) which may be defined as regulatory systems of formal laws and norms of behaviour. The new institutionalists are primarily interested in the behaviour of organizations (that may be individual agents, groups, firms, business, collective bodies and so forth) (Harris et al., 2000:6). So, the NIE has incorporated both theory as well as role of institutions as a new paradigm in economics.

Since the efficient production and active participation of people in economic activities depend on various institutional frameworks, the new institutional economics incorporates ‘institutions’ as an important constraint for economic growth and development. There is a strong causal relationship between institutions and economic growth. Many times, institutional breakthrough helps to develop mode of production and people participation in economic activity. On the other hand, economic growth and development leads to institutional change into more standards and competitiveway. However, with the influence of transaction costs and network possibilities, institution can have the effect of either facilitating or retarding economic growth (Kherallah and Kirsten, 2002: 111). There are different pathways of institutional arrangement and economic growth in different countries which reveal a profound and influential relationship between institutions and economic growth.

Bardhan (1985: 691-692) argues that peasant agricultural production is the process of constant returns to scale, sharecropping and the wage contract choice. This process interlinks land and credit markets, and landlord power. However, it may not be inconsistent for the landlord to be a monopolist in the land lease market and at the same time be a competitive buyer in labor market. Bardhan’s study emphasizes on two hypothesesi) the percentage of area under tenancy will be higher in areas where the land improvement factor is larger (soil fertility, rainfall, irrigation etc.) ii) the larger is the degree of imperfection in the market for credit, the larger is the percentage of area under tenancy.

Tenancy was existed in the antiquity when the dominant mode of production was slavery (Chakraborty, 1981: A13). However, the early history of settlements and colonization in Europe shows that the appearance of tenancy become an integral part when the mode of production was feudalism. In Russian context, the early form of peasants’ tenure land retains medieval feudal features. A similar process of colonization also led to the creation of independent rent paying peasants in Germany (Ibid., 1981: A9). So, tenancy is an institution which has been characterized by both pre-dated and post-dated feudalism. Marx treats this institution as being in a continuous process of evolution and transformation (Ibid., 1981: A7). In Indian scenario, though tenancy is an institution where pre-capitalist relation of production is also found but it has changed through its organization and mobilization.

TENANCY AS AN ECONOMIC INSTITUTION:

‘Institutions’ may be defined as a conceptual whole made up of certain socio-economic and political rules (norms and behaviors) which constructs social interactions and persists over time. A notable study carried out by D. L. Winters (1977: 382-385) represents tenancy as an ‘economic institution’. The study reveals that the federal land system and tenancy had undergone a renting attribute of owner-operators system in the federal land policy and the natural agricultural system functioned in Iowa. In this system, large speculators were able to engross massive amount of land and increase the land price. As a result, farmers with no real property were unable to purchase land and many farmers (including perhaps agricultural laborers and retired farmers) were forced into tenancy even during the pioneer stage of development.

However, this study points out that there is a difference of land quality between eastern and western Iowa. Therefore, tenants were paying enormous rent for the privilege of working a small farm with fair and fertile land belonging to men in eastern Iowa who never have been seen the land and expect to. Indeed, the landless poor in other parts of Iowa were unable to purchase high price land raised by speculators and thus, this practice enabled them to hold their land out of market until they get a fancy price for it (Winters, 1977: 385).

Taslim (1989: 785-790) studies resource allocation under crop share cultivation. A desired output from leasing land in a land scare economy is possible by granting only short term lease to tenants. However, tenants are free to choose the amount of land and the amount of input to use in land. But such tenants’autonomy is also constrained by possible termination of lease if tenants’ performance is not satisfactory to the landlords. So, the short term leasing makes a behavioral approach which is characteristic institution among tenants.

It is not necessarily a direct order to tenants what rules to be followed, but a structural consequences have the desired effect on crop share cultivation. It implies perpetually a threat of eviction to tenants whether they will secure a renewal of lease or not only on the basis of their performance on crop cultivation. "The simultaneous co-existence of poor peasant tenants and rich peasant tenants has certain implications in terms of theory of rent. It implies that not only pre-capitalist rent but capitalist rent also exists; whether rent is capitalist or pre-capitalist in character depends entirely on the underlying production relations, viz, what class of cultivator is paying the rent. There is, however, no denying that even perceptive (Utsa Patnaik, 1976. In: Chakraborty, 1981: A5).” Tenancy continues to be a problem in modern agriculture characterized by insecurity of tenure. “The policy of 'land to the tiller' is likely to be implemented faithfully. Strictly interpreted, the policy would mean that ownership rights in land should go to the persons who work on it as tenants or hired labourers. And, none should be allowed to own land unless he has also been cultivating it by his own personal labour (Appu, 1975:1355).”

Bardhan (1985:691-692) represents that there is a significant positive relationship between the land improvement factors and percentages of area under tenancy. It means the percentage of area under tenancy will be higher in areas where the land improvement factors are larger (soil fertility, rainfall, irrigation etc.) Some findings of his previous works in rural West Bengal reveals that in rural West Bengal fixed rent tenancy is insignificant and sharecropping is near universal form of tenancy.

LAND REFORMS AND TENANCY IN WEST BENGAL:

Man-land relation is pervasively related to the agrarian system. It is the way in which the right and privileges enjoyed by different categories of people who accessed the land. So the pattern of relations of ownership of land can be understood by the land reforms programme. This is designed to eliminate the various obstacles to economic and social development pertaining to agrarian system. Land reforms have been major instruments for radical changes in the economy based feudal and semi feudal production relationships.

Land reforms measures are to remove the impediments to agricultural development and to eliminate exploitation and social justice within the agrarian system. This is the relation which is favourable to the tillers and raise the size of units of cultivation to make them operationally viable. Hence, these measures encompass two types of structural changes- one is related to agrarian relations and other to the size of cultivation. Changes brought about the utilization of land in the agrarian system have not taken only through direct intervention of government but also by the non- government agencies. Land reforms generally reflect public policy of land distribution for the benefit of landless, the tenures and the small farmers. It aims at diffusion of wealth increase in income and productivity (Chakraborty, 2006:3).

It was the period of Mughal before the arrival of British when the assessment of revenue was systemized and the measurement of land depending on survey of productivity was introduced. Tax in kind was permuted into cash in the agrarian system. A system of “revenue farming” was grown up. The task of collecting revenue was assigned to a class of agents called zamindars. With the arrival of the East India Company in 17th century, the agrarian structure underwent radical changes. The British made use of intermediaries, and proprietary interest was attributed to them. This was the shake of the policy to gain political support in order to new British administration.

The first five year plan stated “This (Land reforms) is a fundamental issue of national importance (Venkatasubramanian, web: p.1).” Land reforms, therefore, became one of the vital aspects for the development of agriculture especially when five year plan came to stay. Land reforms in India were not only due to peasants’ movement but it was also a political setting by Central government and implementation was asserted by the state government relied on the support and mobilization of the affected rural people. Land reforms in India were associated with lower poverty and higher agricultural wages, but this occurred through changes in production relationships rather than through changes in land distribution, and land reforms had their greatest effect in those Indian states with the greatest initial land inequality (Besley and Burgess, 2000. In: Vollrah, 2007:203).

Bengal was the first province to come under the British administration. The Permanent Settlement Act was set up in 1793 under which zamindar declared to be proprietors of the land (Chakraborty, 2006:3). As a result, in the upper ladder of the agrarian system, the landlords or zamindars were evolved. The inevitable exploitation of tenants and cultivators come into existence. Zamindar used to sell their proprietary rights and typically a series of middleman appear in the spectrum of the zamindari system. The increasing layer of intermediaries meant for increasing tax or rent extracted from tenants and failure to pay this increased amount cause large scale evictions, widespread unrest and declining agricultural production. The permanent settlement regulation act, 1793 was failed in Bengal due to negligence of tenants’ (raiyats) interest.

The British sought to stabilize the situation through legislated tenancy reform. The Bengal Rent Act of 1859 placed restrictions on the power of landlords’ to increase rent orevict tenants. However, the Act only protected fixed-rent tenants and did not protectbargadarsor agricultural labourers (Kar, 2011).The Bengal tenancy act came into existence in 1885 but similarly it was unsuccessful. The Bengal land revenue commission was set up under the chairmanship of Sir FranciesRond in 1939 which is landmark in the abolition of the zamindari system (Kar, 2011: 4)It made some major recommendations.

1 Abolish the Zamindari system

2 Bring the government into direct relation with actual cultivators by acquiring superior interest in agricultural land

3 Eliminate sharecropping (so prevalent in Bengal) and

4 Regard the bargadars (sharecroppers) as tenants with definite right on the property.

The similar recommendation was also made by the Rowland Committee (Bengal Administration Enquiry Committee) in 1945. The jodedars were also a form of landholders in Bengal. Jodedars a rich peasant class controlled over the uncultivated forest and wet lands outside the territory governed by the permanent settlement. Jodedars cultivated some of the land under direct supervision by employing hired labourers or servants. The bulk of the land of the jodedars was farmed by bhagidars.

The Tebhaga movement in the 1940s emphasized the concern of bargadars or sharecroppers in West Bengal. In 1946, this movement was shaped in wide manner with growing political awareness and consciousness of peasants centred round the question of share crops and developed the slogan “He who tills the land, own the land” (Datta, 1981: 24-25).This led to the West Bengal Bargadary Act, 1950 followed by West Bengal Estate Acquisition Act, 1952 and West Bengal Land Reforms Act in 1955 (Ibid., 25).These are acted out at the initiative of the congress government of the state.

Components of land reforms:

The concept of land reforms includes the following measures

i) Abolition of intermediaries

ii) Tenancy reforms to regulate fair rent and to provide to security to tenure.

iii) Ceiling on land holdings

iv) Consolidation of holdings and prevention of sub division and fragmentation

v) Organization of cooperatives farms.

In the period of post-independence the land reforms in West Bengal shaped into three phases i.e. the first phase (Congress Phase), the second phase (United Front Phase) and the third phase (Left Front Phase) (Datta, 1981: 27-33).In the first phase 1953-1966, some progress in the redistribution of above ceiling land and protection to bargadars was improved. The hindrance due to the influx refugees during the Bengal partition shrunk the careful attention to the land reforms (Kar, 2010: 44). In the phase second (1967-1977), land reforms to some greater extend get momentum when left wing and centrist parties formed a coalition government known as the United Front in 1967. In the third phase 1977 to onwards, tremendous progress was made to distribute the above ceiling land and protect the rights of bargadars. By 1972 when the Zamindary Abolition Act was passed by the central government, the Left Front government took a sound steps to land reforms in West Bengal.In 1977, when left front came into power and continued the same land reforms programme under the central government provision. The wining and more popular support to the left front was the fact that such reforms had become part of the dominant social consensus of the time, notwithstanding opposition from landed elements (GoWB, 2004: 29).

The main purpose of Land reforms act was to redistribute surplus land acquired from the hand of intermediaries (zamindars, those not involved in cultivation) and of raiyats (cultivators traditionally responsible for paying land taxes directly to the government) in excess of prescribed ceilings. Ceilings for intermediaries were imposed on the holdings of individuals: 20 acres of agricultural land, 25 acres of non-agricultural land, with exemptions for religious and charitable institutions, as well as lands devoted to fruit orchards and tanks (Bardhan and Mookherjee, 2003: 6). The Second Land Reforms Act in 1971 by the Left Front Government in West Bengal had imposed a ceiling limit of 5 standard hectares for irrigated land (equal to 7 hectares un-irrigated land) up to 5 members of a family and ½ hectare per additional member up to a maximum of 7 hectares for each family (Bardhan and Mookherjee, 2003: 8).

The implemented land reforms act of 1971 had been amended in 1972 and in 1981 sought by the registration of lands for the purpose of charitable society and land conversion into ponds (Ibid., p. 9).The principles initiatives of land reforms were land redistribution (patta programme) and registration of lands (barga programme).A massive mass mobilization campaign involving party leaders, local activities and the administrators was mounted to identify surplus or barga land and distribute or register them to the beneficiaries (Ibid., p.7).Elections to local governments (panchayats) were mandated from 1978 onwards, and the active cooperation of the newly elected bodies was sought in this process. Bhumi SanskarSthayeeSamiti at panchayat level, settlements camp and the state government's land reform officers were empowered to create an open and participatory process for the preparation in which tenants and poor farmers participated widely by listing the surplus lands and of suitable beneficiaries (Ibid., p. 8).

Kar (2011: 56-63) has studied that the land reforms in west Bengal had two important components: tenancy reform and redistribution of land. The tenancy reforms in the state were implemented through a massive campaign-popularly known as Operation Bargaby registering the heritable right of bargadar to cultivate land. Operation Barga involved registration of 1.4 million bargadars, of which over 30 per cent were dalits and over 12 percent were adivasis. Through operation barga, about 1.1 million acres of land was permanently brought under the control of bargadars and their right to cultivate this land was secured. But the bargadar still gets affected by the poor living conditions and sometimes compelled to sell the certificate (patta). Some poverty alleviation programme of West Bengal have been introduced to tackle this problem. However the success of the land reforms programme has also been highlighted in respect to other states by the planning commission of India. West Bengal is one such notable exception where the rate of implementation of land reforms has been fairly successful.

The tenancy reforms in the shape of Operation Barga implemented in the state after the late 1970s by giving the right to register of tenancies and also have granted the entitlement to higher crop shares in favour of the tenants through legislation. Land re-distribution programme provides a sense of social security i.e. permanent and heritable right to cultivation to the tenants and it also seeks to increase production indirectly by giving stability to the major partners in agricultural production, namely, sharecroppers (Datta, 1988: 101-103). However, the change in cropping pattern in favour of non-food crops took place in West Bengal in the wake of economic reforms of the 1990s in the shape of opening of the Indian market to global forces. In West Bengal, productivity growth in agriculture, particularly in food grain production, has contributed significantly to overall economic growth of the state since the early 1980s with the expansion of cultivation by using high yielding seeds (HYVs) and chemicals-based technology within the frame of more equitable distribution of land through agrarian reforms (GoWB, 2010: 41).

CONCLUSION:

The changing tenancy relations in West Bengal are the outcomes of organization and their mobilization. The market for land lease projects the tenants’ exploitation in its early feudal system. It gets transformed into one where the better-off landed farmers lease in land to further augment their farm size (Chadha and Bhaumik, 1992: 1009).“Many of the erstwhile landless tenants might have been elevated to the class of owner-cum-tenants with the distribution of vested agricultural land among them in recent years causing a very low incident of pure tenancy (Ibid., p. 10010).”However, the weaker tenant gets exploited as landlords keep in their mind that a better rent might be come from owner-cum-tenants who have some experiences over land rather than landless tenants. So, for solving the problem and ensuring economic benefits to the pure tenants who don’t have own land, policy institution has to formulate some rights for ownership by which the lease in land may go to the poor tenants for the betterment of agrarian structure.

The relation between landowner and tenants is somehow a regulation by which their behaviour and expectations reflect. Institutional arrangement drives as an agents’ Individual choice and collective-choice process by a community under New Institutional Economics (NIE). Tenants got some rights over land and individuals and organization engage in collective actions for their benefits (Kingston, 2009:155).Sometimes, this action is called as mass mobilization in the institutional change.

REFERENCES:

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2. Bardhan, P. and Mookherjee, D. (2003). Political economy of land reforms in West Bengal1978-98. Working paper, Institute for Economic Development, Boston University, Boston, MA.

3. Bardhan, P. K. (1985). Agricultural Development and Land Tenancy in a Peasant Economy: Reply. American Journal of Agricultural Economics, Vol. 67, No. 3, pp. 691-692.

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14. Taslim, M. A. (1989). Short-Term Leasing, Resource Allocation, and Crop-Share Tenancy. American Journal of Agricultural Economics, Vol. 71, No. 3, pp. 785-790.

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Received on 01.03.2017 Modified on 15.03.2017

Int. J. Rev. and Res. Social Sci. 5(1): Jan.- Mar., 2017; Page 01-06 .

DOI: 10.5958/2454-2687.2017.00001.6