Stealing from the Poor

Here’s a simple illustration of how the government systematically robs the poor of their meagre possessions with total impunity. Consider a poor farmer who owns a small bit of land — say a couple of acres — which he farms. It provides him a subsistence existence because the land is not very productive. That land is not really suited for farming. 

Suppose that the land could be better utilized in some non-agricultural activity. Let’s say that by farming, the land provides an income of $1000, but in an alternate non-agricultural use such as in manufacturing the land would provide an income of $10,000. That means that the land value is much higher if it is employed in non-ag activity compared to farming.

If the farmer were restricted to selling the land only to another farmer, then he would get a fraction of what he would have otherwise received if he could sell it for non-ag use. Government rules restrict the sale of agricultural land only to other farmers. And the grandfather clause applies: you can only buy agricultural land if your grandfather was a farmer. This system is designed to steal from the poor farmers. Here’s how.

Some politician buys the agricultural land using fake documents that satisfy the grandfather clause. Politicians and bureaucrats work hand in hand in figuring out the appropriate paperwork. The farmer gets, say, $5000 for the land. Then the politicians and bureaucrats convert the land through a process that they are familiar with — because it was they who devised the whole system. That process turns the previously agricultural land into non-agricultural land. Under the new designation, the land is now worth $50,000. It is then sold to some developer and the politicians and bureaucrats divide the spoils. 

In effect, they steal from the poorest farmers, and the law of the land allows this immoral theft. Until the laws change to prohibit the government from interfering in the land market, the poor in India will continue to suffer immeasurably. The Indian state is an intolerable state.

Author: Atanu Dey

Economist.

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