Pressure on farmland

The government, it appears, is yet to find ways to address conflicting demands on land. Instead of quickly charting a comprehensive approach to land utilisation, it continues to speak in different voices and at cross purposes. The latest addition to the policy confusion is the move to consider Foreign Direct Investment (FDI) in agricultural land bought for real estate purposes. Existing Foreign Exchange Management Act regulations prohibit the use of FDI funds to buy farmland. However, real estate companies have tried to bypass these restrictions. Last year, the Enforcement Directorate imposed a fine of Rs. 8,600 crore on Emaar MGF for allegedly using foreign funds to buy agricultural land. The Ministry of Urban Development now wants to ease these restrictions, and the government has constituted a three-member Cabinet committee to look into it. The reasoning behind this move is that 100 per cent FDI is already permitted in developing townships, housing and other infrastructure projects. Hence, it would be only logical to extend it and allow the purchase of agricultural land for construction purposes. The other arguments are that restrictions create bottlenecks and delay projects, and that buying of agricultural land on the outskirts of a city is inevitable and necessary. 

On the face of it, relaxing FDI norms may appear to be a rational step, but in the absence of a clear-cut land use policy and plans, it will hasten unrestricted acquisition and unplanned conversion of farmland and lead to hoarding of land. In 2013, the Ministry of Rural Development published a draft National Land Utilisation Policy. It convincingly argued that the shrinkage of per capita ownership of agricultural land and the demand to produce more food — 245 million tonnes in 2013 to 307 million tonnes in 2020 — necessitates the protection of fertile land. The National Policy for Farmers, announced in 2007, insisted that the government conserve productive land and allow any change in use only under “exceptional circumstances.” These two policies make no distinction between foreign and local investment. The government has not acted on a recommendation to revive land use boards, which could provide guidelines to State governments. Nor has it implemented the idea of delineating and integrating land utilisation zones under the development plans. These measures are necessary to map the availability of land and coordinate demands for it. It is imperative to correct any institutional deficiencies and strengthen local level land-management plans to ensure an orderly process of urban development and prevent detrimental effects on agriculture and environment.