Much tenancy legislation has its origins in the still widely held misconceptions that share tenancy is necessarily inefficient and that landlord-tenant relations are necessarily exploitative. A substantial literature now corrects these misconceptions (Otsuka and Hayami 1988, Singh 1990): share tenancy represents a second-best response to missing, thin and imperfect markets for land, credit, labor, management, information, and insurance, and performs some very important functions which would otherwise have to fulfilled by other institutions; it is neither necessarily inefficient nor a barrier to the adoption of new technology; tenancy contracts are often part of a series of interlinked, interdependent contracts in a number of factor markets (land, labor, credit). They are not necessarily exploitative, but where they are, owing to the unequal bargaining power between agents, attempts to 'fix' relations in one sphere can lead to compensatory shifts in other contracts to leave tenants net worse off.

Rather more is known about why sharecropping persists than is known about the determinants of its relative efficiency in different environments (Faruqee and Carey 1997). Nonetheless, according to Singh (1990), the weight of evidence suggests that share tenancies are likely to show inefficiency where tenancies are small (less than 2 ha), cost-sharing is minimal, technical change and productivity increases are slow, markets of all kinds are imperfectly developed, and semi-feudal, patron-client systems are prevalent. Such conditions are to be found predominantly in the former _zamindari_ areas of northeastern India, particularly where share tenancies are very small and account for half or more of the total cultivated area, as in Bihar, Orissa, Uttar Pradesh and West Bengal. But this generalization overlooks important differences between these states. In Uttar Pradesh, owing to the prohibition on land-lease markets, tenancies are concealed and highly insecure. In West Bengal, by contrast, a significant proportion of tenancies are registered and protected, which has had a marked impact on agricultural performance. Cost-sharing tends to be more prevalent in the former _ryotwari_ areas of southern and western India, and is increasing in importance in areas significantly affected by the Green Revolution<sup>22</sup> .

Historically, it is thought that land markets have operated to the detriment of small and marginal farmers in rural India. The imposition of British colonial rule and 19th century land settlements brought new markets for agricultural products, freely negotiable land rights in _ryotwari_ areas, and oppressive taxation. This combination of factors resulted in the dispossession of heavily indebted small cultivators through foreclosures to money lenders in credit markets that were newly delinked from land and labor markets, leading to a rise in land concentration<sup>23</sup> . Downward mobility of rural households is often presumed to predominate over upward mobility on the grounds of repeated partitioning of holdings among multiple heirs, but theoretically this pressure could result in land distribution becoming either more or less concentrated, depdhding on the characteristics of buyers and sellers, the reasons for sale-purchase transactions (e.g. extent of distress sales), and access to non land-based income sources.

- 22 The relative complexity of cropping systems is also relevant to the nature of tenancy contracts. Sharecropping may be more suitable under simpler cropping systems, such as paddy production, than in more complex farming systems with several crops in rotation, in which fixed-rent contracts are more likely. The companion study in Orissa considers variations in tenancy contracts under different cropping systems (Mearns and Sinha 1998).

- 23 In fact there is no evidence of increasing land concentration in rural India since the mid- 19th century (Cambridge Economic History of India, cited in Heston and Kumar 1983).

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