Informal land leasing in rural India persists because it is credible

Abstract

While insecure property rights are considered ‘perverse’ with respect to development, we examine what are the features most amenable for their persistence. Applying a Credibility Thesis framework in the context of rural land tenancy relations in India, that are largely held through private arrangements, we try to understand if there are inherent preferences to the existing informal structure of land leasing. An in-depth primary household survey across four states of India reveals that farmers rely on customary, informal mode of leasing arrangements because of their functionality in terms of no paperwork, easy accessibility, swifter modes of payment and prompt conflict resolution. Informality makes the existing institutional arrangement ‘credible’ in the eyes of both the tenants and owners. This raises the questions of whether policy prescriptions on intricate land related issues should entail appreciation of prevailing informal tenant customs, regulating them, or simply letting them be and realign agrarian support and delivery systems around this embedded informality.