Jeetendra P. Aryal and Stein T. Holden

Department of Economics and Resource Management

Norwegian University of Life Sciences (UMB)

P. O. Box 5003, N-1432 Ås, Norway

Land Reforms in Nepal

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Introduction: Land Reform Act of 1964

First, comprehensive land reform programme in Nepal

The Land Reform Act of 1964 has been amended a number of times.

Objectives of Land Reform 1964:

– Ensure a fair share of the production to the cultivators by putting an end to exploitation

– Encourage labor and capital to shift from agriculture to other sectors

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Main Features of Land Reform 1964

Abolition of intermediaries collecting taxes (called ”Zamindari System” in Nepal)

Imposition of ceilings on land ownership:

– 17 ha in the Terai

– 4.1 ha in the hills and

– 2.67 ha in Kathmandu valley

Imposition of ceiling of tenancy holdings

– 2.67 ha in the Terai

– 1.51 ha in the hills and

– 1.02 ha in Kathmandu valley

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Main Features of Land Reform 1964 (contd.)

Redistribution of the surplus land (land acquired after the imposition of the ceilings) to land-poor/landless farmers

Security of tenancy rights

– Cannot evict tenant without proper reasons

– Later on, interpreted as: registered tenants can claim ownership rights on 25% of rented land (land-to-the-tiller)

Fixing of rent no more than 50% of production

Abolition of sub-tenancies

A compulsory saving program to provide an alternative source of credit

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Implementation of Land Reform 1964

Longer time to implement programme

– Cadastral survey

– Identification of tenants

– Distribution of provisional certificates of tenancy

Land ceilings imposed in 3 phases

– 1st phase: 16 districts in 1964

– 2nd phase: 25 districts in 1965

– 3rd phase: 34 districts in 1966

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Achievements of Land Reform 1964

Successful in abolishing intermediaries collecting taxes

Granted tenancy certificates to 300,000 tillers

Acquire nearly 31000 ha surplus land (land obtained by imposing ceiling on land holding)- nearly 2% of total agricultural land.

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Weaknesses of Land Reform 1964

Due to weak implementation,

– large land owners got time to sell (or redistribute among close relatives) their land above ceiling

– Many landlords evicted tenants

Dual ownership of rented land: As tenants can claim ownership rights to 25% of the rented land, it created dual ownership of rented land by landlord and tenant.

– Increased conflicts between landlords and formal tenants

– Increased informal short-term tenancy as landlords fear to rent out land using written contract

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Table 1 Proportion of Tenants and Area under Tenancy (in percentage) Description Year

1961 1971 1981 1991 2001 Tenant households 40.4 19.0 9.5 15.9 12.2 Area under tenancy 25.5 15.9 6.2 8.5 8.7 Source: Ministry of Land Reform and Management (2006)

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Consequences of Land Reform 1964

Weaker property rights of landlord on rented out land

More focus on benefit of tenants through expropriation of land in tenancy and access in ownership rather than on rental regulations to facilitate land rental markets and enhance productivity.

Tenants may not return rented lands even after the expiration of contracts but claim the ownership rights to the land.

Increased conflicts between landlords and tenants

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Consequences of Land Reform 1964

Distorted land rental markets

Create a loss-loss situation for tenants (Bhandari, 2006)

– Do not get enough land from redistribution (because only 2 % land was acquired by imposing ceiling and that was distributed among land-poor tenants)

– Reduced access to land through land rental market due to insecurity for landlords.

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Amendment to the Land Act of 1964 in 1996

Main objectives:

Abolish traditional tenancy by partitioning tenanted land.

Abolish dual ownership of rented land

Main features:

Equally divide land under tenancy between landlord and tenant (Provision that tenant can claim ownership rights to 50% of tenanted land).

Receive 50% ownership rights if the tenant tills the land for 3 consecutive years.

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Amendment to the Land Act of 1964 in 1996

Lower ceiling of ownership holding of land

– 3 ha in the Terai

– 2 ha in the Hills

– 4 ha in the Mountains

– 1 ha in the Kathmandu valley and all other urban areas

– 0.5 ha in urban areas of Kathmandu valley

Compensation to land owners whose land is above the new ceilings

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Weaknesses

Not implemented yet

Aggravated the problem by increasing the share of the rented land that the tenants can claim.

Increasing tenure insecurity for landlords

Distorted land rental markets

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Land Reform in Nepal: the Present Context

After the Maoist war: Land reform “a scientific land reform” a top agenda for all political parties in Nepal

Not clear on what constitutes ” a scientific land reform”

Maoist favors land-to-the-tiller policy again by capturing land from landlords without any compensation; other parties oppose it.

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