Abolition of the Intermediaries

By: EconomyWatch   Date: 21 April 2010

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Abolition of the intermediaries was started as the first agrarian reform measure to redistribute the agricultural resources equitably.

  • Reasons Behind the Abolition of Intermediaries:
    • Before independence the Indian rural economy and polity had been dominated by some big landowners. They could acquire lands by paying a very small amount of money to the British government.
    • In addition to that, an intermediate class was also developed by the British government to simplify their tax collecting system. The people of this class had no direct connection with land and agriculture, but they could capture land easily and this had no limit. So the small and marginal farmers were exploited and forced to transfer land to the big landlords. As a result of this, rate of employment decreased and so was the productivity.

    • The sharecroppers had been exploited by both the intermediaries and the big landlords. So they lost their interest to work completely.
    • After independence when the Government of India started agrarian reform, the main issue was the abolition of intermediaries. Otherwise redistribution of lands would have been extremely difficult for the Government.
  • Process of the abolition:

    The government took the land from the intermediaries. The small landowners were compensated by the government for giving their land. The amount of this compensation was inversely proportional to the amount of revenue earned from the land.

  • Effects:
    • Government expenditure in the agricultural sector has escalated due to the compensations that have to be given for the loss of land brought about bu\y the imposition of ceilings.
    • Many intermediaries were not in a position to start a new way of income. So the government had to arrange pension scheme for them which was again a huge burden.
    • Despite the bad effects, due to the abolition of the intermediate classes not only more than twenty million farmers in India had been connected directly with the government but also the tax revenue from the rural area increased.
    • The increase in tax revenue compensated the huge burden of the government mentioned above.
    • The financial security of the farmers improved and as a result of that, productivity and rate of employment also increased. But this measure had no effect on the numerous sub tenants of India.

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