Presented at the 2nd Phase Planning and Review Workshop of the Indo-Ganges BFP, 24-25 February, 2009, Haryana, India

1. IGB-BFP:
WP 4 Institutional Analyses
Energy squeeze on Agricultural Water Use in the IGB
and its impact on the poor
Changing dynamic of agrarian tenancy in the IGB.
A framework to study water governance in the IGB
states

2. Is Irrigation Water Free? A Reality Check in
the Indo-Gangetic Basin, World Development,
vol. 37, No. 2, pp422-434
Tushaar Shah, Mehmood Ul Hassan, Muhammad
Zubair, Parth Sarathi Banerjee, O.P Singh

3. The global water pricing debate argues that zero price of
increasingly scarce water is the prime cause of water scarcity.
Get the water price right; and all will be well.
The debate is
cast in the
context of
public irrigation
systems which
are viewed as
dominant
suppliers of
agricultural
water.
Throughout the
IGB, this
context has
become
increasingly
remote.

4. These buy
Classes of Irrigators in theirrigation for food
IGB and to
security
Rented diesel pump
IGB irrigation absorb family
economy has got labour
heavily
Own diesel pump
Own and
Electric pump
Irrigation output &
Irrigation cost/ha dieselized. rented gen-
Own electric pumps
purchase
sets
15-18 million
canals & tanks
Marginal farmers
7-8 and share
cropper families
mha
10-12 12-15
mha mha
30-32 mha
20-22 mha
Million ha of gross irrigated area

5. Energy Divide in South Asia’s
groundwater irrigation economy
Bangladesh and Pakistan
have metered out electric
tubewells. West Bengal is
following suit.
Eastern India has de-
electrified its country-side
In Indian Indus basin,
farmers have held the
political Class to ransom
and kept meters out.

7. Rapid relative price of diesel: India
Increase in diesel price relative to food and
general price index (Base: 1996=100)
450
400
350
300
250
200
150
100
50
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Diesel price index
Food price index for farm laborers
General price index for farm laborers

8. Leveraged Impact of energy-squeeze on
water buyers from diesel STWs
Diesel price rise and pump irrigation
120 price:Mirzapur, UP
100 Diesel Price (Rs/Lt)
Irrigation Charges (Rs/Hr)
80
Rs.
60
40
20
0
1990
1997
1997
1998
2000
2001
2004
2006
2007

9. User cost of irrigation relative to
the prices of irrigated crops
Index No of Diesel price, irrigation price and farm produce:
Eastern Uttar Pradesh
900
800
700
600
1990=100
500
400
300
200
100
0
1990 1995 2000 2005 2007
Diesel (Rs/l) 5 hp Pump Irrigation (Rs/hr)
Diesel Pump Irrigation Price (Rs/hr, 5 hp)
Wheat (Rs/kg), farm gate
Paddy (Rs/kg), farm gate
Sugarcane (Rs/kg), farm gate

10. In 1990, buying a liter of diesel required selling less
than a kg of rice or wheat; today, it requires 3-5
times more.
kg
rice/litre Diesel Rice
of diesel (Rs/l) (Rs/kg)
India 5.67 34.00 6.00
Pakistan 3.20 37.80 11.80
Bangladesh 3.89 35.00 9.00
Nepal terai 5.70 57.00 10.00

11. Our fieldstudies in India-Pakistan-Bangladesh is showing that
groundwater irrigation demand is in a super-elastic phase with
respect to use cost of water. A major source of agrarian
stress.

12. Desperate Strategies:
Small-holder/Water Buyer
Responses to Diesel Price Increase
Diesel-saving crop substitution: boro rice on a decline
Among diesel pump buyers; Return to rainfed farming
West Bengal: Chinese diesel/kerosene pumps to is common for
It
the aid of India’s agrarian poor farmers in
eastern India to
Energy substitution: PDS kerosene for diesel;pay Rs 80-120 for
Electricity preferred but connections hard to come by water.
Pump irrigation 50 m3 of
price is
Forced exit from unviable farming-for landless who
Cultivated leased landsticky;
downwardly with rented diesel pumps
it does not fall
Energy saving irrigation practices: alternate furrow;
when diesel price Pump irrigation price
Rubber pipes; adjacent fields leased to use drainage
falls. for water buyers is
Gambler’s response: shift to high value, high input,
rising 30-40%
High risk crops-summer onion in North Bihar faster than diesel
price
Large increases in monopoly rents and power of electric tubewell owners:
Uttar Pradesh

13. Ideas to relieve stress on small-
holder irrigation in IGB
• Diesel efficient pumps; promote Chinese pumps
• Pumps in the hands of the poor
• Subsidized diesel-as for fisher-folk in Gujarat?
• Kerosene ration for farmers? As in Kerala.
• Give small farmers LPG ration?
• Treadle pump? Return to gravity flow irrigation?
• Mulayam Singh’s strategy: Increase power supply.
• Increase the supply of electric connections and do a
Jyotirgram
• Target electric tubewell connections to the poor
• Co-operative electric tubewells?
• Promote professional sellers of pump irrigation service.

15. Similarly, far-reaching changes are
occurring in IGB’s land tenancy scene.
1. Extent, pattern, dynamic
and impact of tenancy
2. Irrigation impact on
Tenancy
3. Estimate irrigation value-
added

16. Indirect estimation of Irrigation Value Added
• Irrigation benefit is estimated by comparing farm budgets
with and without or before and after irrigation. Highly
susceptible to measurement errors and manipulation.
• Original Objective: Land-lease rentals as indicators of
“Irrigation Value Added”.
• We learnt some about this. But we also found that the
institution of tenancy is undergoing profound changes.
• Precursor of the ‘shake-out’ imminent in India’s countryside

17. Tenancy in South Asia’s agrarian history
• State as well as people lived off the land.
• Mughal and pre-Mughal times: no private property in land; all cultivators were
tenants-at-will; Emperor the heir to every subject.
• Land rents went upto 2/3rd of gross output; Akbar kept it at ½;
• East India Co. continued with rack-renting; the Colonial govt. policies encouraged
‘rent-seeking sub-infeudation’ akin to Western Europe’s feudal structure before
the Ind. Revolution.
• When India became independent, tenancy reform was a key component of the
land reform program.
• Security of tenure: Operation Barga in West Bengal
• Regulation of Maximum Rent: all states passed laws

18. Extent of lease farming is vastly under-
reported; moreover, there is explosive growth
in tenant farming since 1995
Tenancy is alive and kicking in Informal
Figure 1 Trends in tenant holdings and
tenanted land (Source: NSS reports) land lease markets.
30 Nair and Menon 2005, Laxminarayan and
25
Tyagi 1977, Sanyal 1972 show it has
always been higher than officially
20 believed.
15
%
Bandyopadhyay (2008) places it at 15-
10 35% of cultivated land.
5 We found indications that it is even
0
higher in most states. Our estimates
1960- 1970- 1981- 1991- 2002- range from 22-65% in the villages we
61 71 82 92 03 covered. More pervasive in West Bengal
(17th) (26th) (37th) (48th) (59th)
and Kerala than in many other states
Tenant holdings as % of total operated holdings
But more importantly, the nature of the
Tenanted area as % of total operated land
institution is changing

19. Drivers of land lease-markets
• Tenancy laws? Naah. Just minor irritants.
• Labor market environment: key driver in West Bengal and Kerala
• Land fragmentation: owners lease out distant parcels
• Dynamism in ‘non-farm economy’ of the area.
• Highly unequal land ownership: UP & Bihar
• Social structure: land owned by Kayastha’s in West Bengal Iyers in TN
who were never farming communities.
• Enterprising farming castes like Gounders in TN and Patidars in Gujarat
are seeking new pastures.
• Absentee owners: Irrational attachment to ‘ancestral property’; future
price appreciation.
• Irrigation is by far the biggest driver: demand for canal irrigated land
is highest; few takers for rainfed lands
• Rising cost of cultivation: owners find cultivating with hired labor
uneconomic.
• Sub-marginal dairy farmers find tenanting land for fodder more
affordable than buying fodder.
• NREGP is shrinking tenancy in central Gujarat and Nalgonda

20. Usurious rents levied from gullible tenants by emperors, overlords and
zameendars has been the stuff India’s economic history is made of.
Reform of tenancy institution has been top on the govt. agenda since
Independence. But today, tenancy is reinventing itself..
Regulation of ‘maximum
rent:
Kerala: 1/3rd to 1/4th
Classical crop-share
Gujarat, Maharashtra, and
contract persists in stagnant
Rajasthan= 1/6th of gross
farm and non-farm
produce
economies of eastern India;
Assam, Karnataka, Manipur
but even here, the terms are
and Tripura= 1/4th to
changing
1/5th.
Punjab =1/3rd
Tamil Nadu= 1/3rd to 2/5th
Andhra Pradesh= 1/4th for
In west and south, hundred
flowers bloom; a vast varietyland; 1/5th on
irrigated of
fixed rent and share tenancy
rainfed
flourish; tenants are no longer at
the receiving end.

21. Drivers of tenancy: broad trends
Population pressure on farm land
Relatively high Relatively low
Dynamism Relatively Eastern UP, Bihar, West Rajasthan, Vidarbha region;
of the low Bengal: 50:50 crop share eastern Madhya Pradesh,
economy contracts for single season Telangana: share-cropping
dominate, with owners dominates but owners share
dominating the bargaining input costs with tenants
process
Relatively Kerala: a variety of share, Gujarat, Tamilnad: fixed
high fixed rental and hybrid rental contracts for an year or
contracts are found with longer dominates; tenants
bargaining power shared by with credibility and loyalty
tenants and owners enjoy bargaining power;

22. Determinants of Terms of Tenancy
• Conventional wisdom: crop-sharing predominates: owner takes half the
crop for just land.
• We found this still popular especially in the east; elsewhere, this is
modified in myriad ways; moreover, scores of different contracts are
in use; we identified 30 different share and fixed rental contracts.
• Demand-side (tenant side) factors: highly skilled and resourceful
tenants prefer fixed-rent contracts; resource poor prefer share
cropping
• Kharif tenancy is generally crop-sharing; rabi is often fixed rent
• Food crops is generally crop-share; cash-crop is both; high value cash
crop is always fixed rent

23. Determinants of Terms ofTenancy
• ‘TINA tenancy”-the classical owner-dictated tenant contract
• “Scale-tenancy”-small/medium/large farmers seeking larger
operational unit by renting unviable marginal holdings.
• “monitoring costs”-absentee owner prefer fixed rental
• “Custodian tenancy”-NRI owners; 5-7 year written contracts
• “fodder-tenancy”-Gujarat
• “Banana-tenancy”-Kerala; rent/pit
• “Coconut-tenancy in TN and ‘orange tenancy’ around Nagpur
• “specialist-skill tenants’ fixed rental contracts”- Telugu rice
tenants in coastal Orissa; Mali’s of UP, Kachhias of Gujarat
• ‘niche tenancy”; migrant tenants tenanting land to exploit a
niche market

24. Profile of Lessees and Lessors
lessors
Large
farmers
lessees
landlesse Medium farmers Large farmers
Marginal
farmers

25. Irrigation Value Added in 12 systems
Rs/ha)
Location in Rainfed wells Canal Conjunctive
term crop
the system only only Use
Mahi system, Kheda, Gujarat tail 4950 10524 18648 1 year various
Mahi system, Anand, Gujarat middle reach 2166 15129 16299 1 year various
Checkdam, Banaskantha, Gujarat near the dam 5249 10806 25620 1 year potato
Sainthal Sagar, Dausa, Rajasthanhead 11856 23712 1 year any
Pench Project,Nagpur, Maharashtrahead 3705 9880 season various
Temni project, Chindwara, Madhya Pradesh
head 6175 9880 season various
Narayanpur Lift Canal, Mirzapur, Uttar Pradesh 19687
head 24063 2 seasonsrice-wheat
Nagarjunsagar, Nalgonda, Andhrahead
Pradesh 4200 5250 7350 season rice
Cheerakuzi regulator, Trichur, Kerala reach
middle 4500 4500 31250 1 year banana
Bhawani lift canal, Erode, Tamilnadu reach
middle 6175 16611 123500 1 year coconut
Mahandi barrage, Khurda, Orissa middle reach 13647 17224 16611 season rice
Sone canal, Rohtas, Bihar head 7039 17908 13585 season rice
Mayurakshi system, Birbhum ,West Bengal
head 6039 6002 11115 season boro rice

26. Some Implications and New Question
• “Irrigation Value Added”: if irrigation takes Rs 2.5 lakh/ha, it
creates an asset with a rental value of 5-7% of the capital cost.
• Irrigation value-add depends on variety of factors besides
system performance: skill and enterprise of the cultivator,
stakes, access to markets, and more
• What does growing tenancy imply for water reform programs?
What stakes would tenants have in WUAs and Watershed
Committees?
• Does tenancy reform-old and proposed– matter? Many believe
tenancy conforms to tenancy laws; others argue that liberalizing
tenancy laws will help the poor. Is either true?

27. A framework to understand water
governance in the IGB
• water governance is viewed as the sum total of
processes, mechanisms, systems and structures
that a State evolves and puts into place in order
to shape and direct its water economy to conform
to its near and long term goals.

28. Governments influence the working of sectoral economies by
using a combination of three classes of instruments
Positive Negative
Direct action Public production; canal Banning private provision:
by public sector systems; water supply administrative ban on private
systems; public tubewells tankers in Chennai
Promotion/ Promoting institutional Making laws to regulate
regulation arrangements; PIM laws; individual actions: e.g.,
PPP; GO-NGO Swachchh in groundwater laws; APWALTA
Rajasthan; inviting global
water companies
Price/economic Subsidizing Taxing ‘socially undesirable’
instruments products/services behavior: ‘Polluter pays’;
considered ‘socially
desirable’: subsidy to
micro-irrigation; canal
irrigation subsidies; power
subsidies

29. Indirect
instruments: Indirect
e.g., power instruments:
Direct Fixing Procurement
subsidies Instruments of Water policy
Governance
Backward linkages to Forward linkages to
input markets output markets
Access
Improved
Livelihood
Economics Institutions
Indirect instruments
e.g., subsidizing
Indirect
Physical and social Externalities (e.g., socio-economic,
arsenic filters
instruments:
setting environmental and health)
e.g., Gujarat’s
recharge program

30. Economic Growth and Water Governance
Poor Rich
Nature of the Highly informal; Highly formal;
water economy state’s direct state’s direct
outreach limited reach deep and
broad
Objectives of Livelihoods; Sustainable NRM;
water governance economic growth Environment;
Green Growth
Nature of water Indirect; reactive; Direct; proactive;
governance people-centred resource centered

31. Governance toolbox Un-governed Under- Moderately Intensively
governed governed governed
Polities Bihar, India Maharashtr Hebei, China The
a, India Netherlands
1 To what extent is the water economy 10-20% of 40-45% 60-65% of 95%
(in terms of volumes of water and users and Of volumes; volumes; 80%
number of water users) formalized? volumes 70-75% of of users
users
2 What is the ‘ambit’ of the water Very small; 1/3rd 4/5th Full
administration? How much of the <10%
water economy—volumes and users— *****
does it encompass?
3 How effective have been the public
systems in promoting institutional * ** *** *****
arrangements in the formal economy?
Or formalize informal IAs?
4 How effective and far-reaching is the 0
regulatory power of the public system ** **** *****
in the water economy?
5 How extensive is the use of economic 0
instruments—prices, taxes, *** *** *****
subsidies—to manage the water
economy in keeping with policy
goals?
6 What kind of indirect tools are used 0 No need
outside the water economy to produce * *
desired impact within it?