India’s agricultural reforms: Modi’s missed opportunity

The Prime Minister of India has been caught like no other PM in recent times between an irresistible force and an immovable object.

The irresistible force is economic progress. How to use agricultural lands more efficiently to create more economic value. The immovable object: millions of Indian farmers who have built stable lives for their families based on traditional relationships.

He did not have go capitulate to either side. He could have followed a third path.

And become the most important figure in Indian political history ever. And a pioneer for political leaders elsewhere.

In short, he could have imposed a land value tax. A tax on the assessed commercial value of land. At tax not on the buildings, factories, or commerce conducted on that land. Just the land itself.

In so doing, he could have reduced personal income taxes for all Indians by at least 50 per cent.

And he could have given all Indians their rightful share of the economic rent from land that was given to them by God. This is not a new idea. It is practiced in some parts of the world as we speak. First proposed by American Henry George. His book, Progress and Poverty, was first published in 1879.

Coming back to the case of India.

If the small farmer says I want to grow just as much food as I need to feed my family and make a small income. We say. Fine go ahead. But you will have to pay a land value tax based on a realistic estimate of what your land could economically produce. The people of India are entitled to this rent.

If the agri-business owner says I can create huge large scale farms that can greatly increase the income from the land. We say. Fine go ahead. But you will have to a pay a land value tax based on a realistic estimate of what your land could economically produce. The people of India are entitled to this rent.