In this article we will discuss about:- 1. Introduction to Land Revenue 2. Land Revenue Administration 3. Incidence 4. Defects 5. Abolition.
Introduction to Land Revenue:
Since time immemorial it became a recognised attribute of the ruling power that as a matter of custom it had the right to the share of produce. During the Hindu period, the king had no proprietary right in land, except the right to a share of the produce. His customary share was 1/6th of the produce and was known as customary pargana rate.
Manu had recommended 1/6th to 1/4th of agricultural produce as the share of the State. The Mughals also had no proprietary right in land. They in their heydays introduced regular record and revenue accounts and took 1/3rd of produce. The Marathas accepted these rates as the basis of this system, raising them to what they called Kamal i.e., maximum on perfect rates payable by the best lands. With the appearance of the revenue farming system, the revenue farmer paid the government nine-tenths of the whole collection and kept the rest as his remuneration.
But later on, the right of collecting land revenue for a Pargana was sold by auction to the highest bidders. With the introduction of the British rule in the country, the State was regarded as the supreme landlord and the assessment was made individually. The British fixed the maximum demand at one-half of the net assets, though actually it came to less than 30% of the rental.
The land revenue system, prevailing in India, may be classified from two angles:
(i) Whether the land revenue was fixed once for all or whether it is revised periodically. The former was known as the Permanent Settlement, and the latter the Temporary Settlement.
(ii) The second basis of classification was the responsibility of paying the land revenue. On this basis we had three land revenue systems- (a) the zamindari system; (b) the raiyatwari system; and (c) the mahalwari system.
The popular nomenclature of ryotwari, mahalwari and zamindari concealed transformation that had taken place during 150 years of practice. Shri Venkatasubbiah emphasizing this point mentions. “If Lord Cornwallis and Sir Thomas Munro, the respective protagonists of the zamindari and ryotwari, were to look at the systems in 1940, they would barely recognise them as such.”
The co-existence of zamindari, ryotwari and mahalwari led to intermixing of characteristics but the three systems gravitated towards the tenancies of the zamindari system. Sub-letting and rack-renting became a common practice even in the ryotwari areas.
The mahalwari system acquired the characteristics of the zamindari system in states like M.P. and U.P., where emphasis was laid on joint responsibility of the village for land revenue assessment while it acquired the characteristics of absentee landlordism of the ryotwari in Punjab where emphasis was on several responsibility for the payment of land revenue. Similarly, in inams and jagirdari areas, the zamindars demanded between a half and two-thirds as settlement.
Land Revenue Administration:
The general features of the land revenue administration may be indicated under three heads:
(i) The preparation of the cadastral records,
(ii) The assessment of the revenue, and
(iii) The collection of revenue so assessed.
(i) Preparations of Cadastral Records:
The land records include the village map, the revenue record and the record of rights. These records are prepared by means of a detailed field-to-field investigation and by inquiries from the villagers, the facts required for preparing the register of cultivating rights (or khatauni), agricultural statistics, and the changes in the field boundaries, so as to secure an exact amount of the cultivable lands, the extent of each kind of soil requiring its own rate of assessment.
From this survey a map is prepared for each village showing the separate holdings and the area and nature of the cultivable and wasteland. To correspond with the village map, a field book (or khasra) is usually prepared, and from these two (the village map and Khasra) the revenue record, showing correct list of revenue payers with the amount shown against the names, is prepared. They are supplemented by statistical tables and returns illustrating the past history and the present condition of the village.
A record of rights in the land such as the rights of landlords, co-sharers, sub-proprietors, occupancy tenants, as well as the rights created by mortgage sale, lease and so on is maintained. All these records are kept upto-date by a system of public entry and registration of all changes.
Thus the land records contain information about proprietary and tenancy rights in land, the revenue payable by each cultivator, the rent of each tenant, the area cultivated, the kind of crops grown, the nature and extent of irrigation, the customary rights of the village, the amount of rent and other dues actually paid to the proprietor and other details about the land in the village.
(ii) The Assessment of Revenue:
The revenue is levied by means of cash demand on each unit assessed. The basis of assessment is defined under present arrangements in a variety of ways, as the ‘net produce’, the ‘net assets’, the ‘economic rent’, the ‘rental value’ and the ‘annual value’.
Sometimes two or more of these mean the same thing sometimes different meanings are attached in different places to one or the other……. The original settlements which were based on a great variety of factors, such as crops and soil values and the expenses of cultivation, have been replaced by resettlements, which are based mainly on the prices and general economic factors, “In carrying out these resettlements, increasing degree of importance has been given to annual value as ascertained by records of leases and sales and other similar factors.”
(iii) Collection of Revenue Assessed:
Owing to the abject poverty of the cultivators and practice of obtaining two main crops during the year, the land revenue is generally recovered not by a single annual payment but in instalments, the dates and amounts of which are determined according to local conditions so as to suit the convenience of the revenue payers. For the recovery of the sums or arrears not paid by the fixed date the Government has extensive powers conferred by law including compulsory attachment and sale.
Though the assessment is fixed with reference to average seasons and conditions during the period of the settlement, exceptional disasters, widespread or local, such as floods, blight, total failure of rains or of the sources of irrigation, or collapse of prices of agricultural produce are apt to upset all calculations.
In these circumstances, relief graduated according to the degree of crop failure is necessary and may take the form of suspension or remission (partial or total). The Government of India has laid down the principles to be followed by local Government, in case of suspensions or remission of land revenue according to which relief will not ordinarily be required when there is half a normal crop.
The total relief is to be granted where the crop is less than a quarter of the normal. No relief is to be ordinarily given to the revenue payer of the landlord class, unless, it could be ensured by legislation or otherwise that a proportionate share of the relief is extended to the actual cultivators of the soil. The suspended revenue may be recovered or remitted according to the nature of the succeeding harvest.
The Incidence of Land Revenue:
The incidence of revenue charges varies according to the nature of settlement, the basis of assessments, the class of tenure and the type of holding from one part to another. Owing to the variations in the systems followed between States and even between one district and another, it is not possible to obtain any general idea about the land revenue charges.
Five possible criteria may be applied, viz.:
(1) The ratio borne by the land revenue to the population;
(2) The ratio borne by the land revenue to the occupied area, i.e., the average assessment per hectare;
(3) A comparison of assessment per soil unit;
(4) The ratio borne by the assessment to gross or net produce; and
(5) The ratio borne by the assessment to rents or rental value.
The Taxation Enquiry Committee accepted the last as the least unsatisfactory method but, even in this respect, owing to the absence of the full and reliable data, they were unable to arrive at any definite conclusion regarding the actual burden of assessment in different States.
Land revenue was the mainstay of the tax revenue of the States in the past. It contributed 70% of the total revenue about a hundred years ago, now it contributes only 11% of the total tax revenue of all the States in the country. At present its importance as a source of revenue is declining. The declining trend has continued throughout the planning era.
The table given below shows the trend of the income of the states through land revenue:
Collections from land revenue was Rs. 51.57 crores in 1950-51. It increased to Rs. 285.66 crores in 1984-85. It further increased to Rs. 1326.25 crores in 1994-95 and Rs. 1651.00 in 1999-2000. But the percentage share of land revenue to total tax revenues of the states is continuously decreasing. The percentage share of land revenue to total tax revenue of the states was 8.25 per cent in 1950-51. It declined to 0.89 per cent in 1997-98. Now the percentage share of the land revenue to total tax revenue of the states is stagnant. It is 1.04 per cent of the total tax revenue of the states.
Although the yield from land revenue has increased in absolute terms it is not due to any upward revision of land revenue rates but for various other reasons such as at the cost of the zamindar and also due to increase in area under cultivation. The burden of land revenue has also fallen due to rise in real income of the cultivator on account of increasing productivity of land and rise in the price of agricultural products.
It is worth noting that land revenue formed 4 per cent of the income originating in the agricultural sector in 1938-39. Since then it has declined, in 1950-51, the proportion was, 1.2 and in 1961-62, it rose to 1.5 but again fell to 0.8 percent in 1965-66.
Dr. Khusro’s analysis of the declining trends in land revenue deserves mention here. He observed- “The internal value of the rupee has fallen considerably between 1939 (whole-sale price index—100) and 1959 (index 1915) so that the real value of tax received by the Government has declined steeply. Secondly, yields per acre have been rising during the 1950’s and since upward revisions of land revenue have been infrequent and meagre, land revenue collection has declined in this decade as a proportion of output. Thirdly, since the price level of farm produce has increased considerably, land revenue has come to constitute an even smaller share of the money value of output than of output in real terms. Fourthly, as big farmers market larger surplus both absolutely and relative to their output than the small farmers, the distribution of farm incomes in a general inflationary set-up tends to become increasingly favourable to big farmers and warrants higher rates of land revenue in their case. And finally, since inter-sectoral terms of trade have been gradually moving in favour of farmers and against non-farmers between 1940 and 1951 and again between 1954 and 1961, there is a presumption that the tax paying capacity of the agricultural sector has increased proportionately more than that of the non-agricultural Sector.”
Defects of the Land Revenue System:
The Indian land revenue system suffers from a number of defects which may be enumerated as below:
(i) Save in some states, not only the burden in oppressive on the majority but the incidence of it is also not uniform and the inequalities do not bear any relation to the productive capacities of the land.
(ii) It violates the law of equity as there is no minimum exemption and no progression. However, many States have introduced agricultural income-tax and incomes besides the land revenue. Assam, Bihar, J. and K, Kerala, Maharashtra, Karnataka, Rajasthan, Tamil Nadu, U.P. and West Bengal account for most of (97.5%) the collections under agricultural income-tax.
(iii) The system lacks elasticity as the land revenue is fixed permanently or for a long period ranging from 20 to 40 years.
(iv) The basis of assessment is unjust and complicated, profits should be the basis. No allowance is made to the labour of the cultivator and his family.
(v) The land revenue is assessed not on the actual tiller of the soil but on those who have turned absentee landlords. This has given rise to a vicious tenancy system.
(vi) The method of revenue collection is also very rigid. The inelastic nature of the time of payment and rigidity of assessment are responsible for the deterioration in the economic conditions of the ryots.
Whatever be the nature of land revenue, one thing is clear that it must be adjusted within the taxable capacity of the cultivators and it must be levied in accordance with the ‘Equity’ canon of taxation.
Abolition of Land Revenue:
The Governments of Madhya Pradesh, Tamil Nadu, Karnataka, Orissa, Punjab, Rajasthan and U.P. have either decided to abolish land revenue or agreed in principle to do it. M.P. has abolished land revenue on holdings of 7.5 acres or less and those in respect of which the assessment did not exceed over Rs. 5 per annum. This was expected to involve a loss of revenue of about Rs. 7 crores during the Fourth Plan period.
The Government of Tamil Nadu withdrew the surcharge on land revenue and water rates imposed in 1965. This was to involve a loss of Rs. 6.6 crores over the Fourth Plan period. In Karnataka, surcharge on land revenue was discontinued. This involved a loss of Rs. 6 crores per annum. The Orissa Government decided to abolish land revenue, the loss in revenue was to be of the order of Rs. 18 crores over the Fourth Plan period. Punjab decided to abolish land revenue on holdings upto 5 acres, together with the surcharge leviable thereon. This was expected to involve a loss of Rs. 2.7 crores over the Fourth Plan period.
The Rajasthan Government also decided to exempt small holdings from land revenue, the estimate of loss in revenue was not made. The U.P. Government withdrew surcharge on land revenue, from 1967-68 rabi crop, expecting to involve a loss of Rs. 20 crores. The land tax has now been abolished completely or partially in most states.