Land Ceiling Legislations, Land Acquisition and De-industrialisation: Theory and Evidence from the Indian States

Sarmistha Pal, Prabal Roy Chowdhury () and Zoya Saher ()
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Prabal Roy Chowdhury: Indian Statistical Institute
Zoya Saher: University of Nottingham

No 14624, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We examine the impact of legislated land ceiling size on capital investment and industrialisation in the Indian states. India's land ceiling legislations of 1960s and 1970s imposed a ceiling on maximum land holdings and redistributed above-ceiling lands. These ceiling legislations, effectively implemented or not, had increased land fragmentation and increased transactions costs of acquiring land for both strategic and non-strategic reasons. States with smaller ceiling size are thus likely to have (i) lower capital investment; (ii) less factories and lower industrialisation too. Ceteris paribus, estimates of both relative (post-1971 ceiling legislations relative to pre-1971 ones) and aggregate effects of legislated ceiling size lend support to these hypotheses, after eliminating competing explanations. These results offer insights about how to reduce transactions costs of land acquisition, policies that we claim are also applicable beyond India.

Keywords: land reform; land acquisition; land ceiling size; transaction costs of land acquisition; investment in capital; industrialisation; India (search for similar items in EconPapers)
JEL-codes: H70 K11 L38 O14 Q15 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2021-07
New Economics Papers: this item is included in nep-agr, nep-dev, nep-his and nep-isf
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