Recent evidence from longitudinal village studies, however, suggests that by and large land markets in rural India have operated in favor of small and marginal farmers rather than against them. Annex 2 distills findings from several studies of sale-purchase transactions over periods of several decades. While these findings cannot be generalized, several observations are of broader relevance. Only one study (in Madhya Pradesh) found that sale-purchase transactions had resulted in more unequal holdings; in this case land transactions were infrequent and, for small and marginal farmers, were largely distress sales (Sarap 1995). Others observed rather more active land markets, even in semi-arid areas; identified both upward and downward mobility of households over time (Attwood 1979); and found little net change in land concentration (Walker and Ryan 1990, Balabh and Walker 1992, Mani and Gandhi 1994).

Annex 3 reviews the findings from studies of land-lease markets in both agriculturally progressive areas and semi-arid areas with a lower incidence of irrigated land. Active lease markets were observed in virtually all cases, even where leasing is legally prohibited (as in Uttar Pradesh). Households in all holding size groups lease out land, generally to take advantage of non-agricultural employment opportunities, particularly where household endowments of labor and draft animals preclude self-cultivation and other markets do not compensate. Reverse tenancy (larger operators leasing land from smaller owners) appears to be particularly important in more progressive areas (Punjab, western Uttar Pradesh), while land-labor market interlocking (larger landowners leasing to landless and marginal farmers in order to take advantage of their family labor) remains significant in less progressive areas (Bihar, Orissa).

Similarly, households in all holding size groups lease in land, although in many cases small and marginal operators are disproportionately represented, often but not always linked to labor contracts. One study explicitly addressed transaction costs as a possible constraint on leasing-in land, and found that small and marginal farmers were less likely than large farmers to lease-in as much land as they would have wished, owing to the heavy burden of transaction costs they faced (Skoufias 1995). Faruqee and Carey (1997) suggest that access to credit may be the most serious constraint on access to land for smaller operators. One study in Uttar Pradesh found some evidence, though weak and statistically insignificant, that households with access to credit are more likely to lease-in land, although access to credit in turn was shown to be determined by other variables reflecting farm productivity: notably amount of irrigated land and extent of plot fragmentation (Kochar 1992). Very little interlocking of land and credit markets was observed in the studies reviewed (Annex 3). In agriculturally more progressive areas, larger operators with sufficient family labor, capital, and access to irrigation accounted for a significant share of households leasing in land. In some of these areas, a slight increase in land distribution towards larger farmers was observed, but generally land-lease markets appear to have led to a more equal distribution of operational holdings.

# **FRAGMENTATION OF HOLDINGS**

The fragmentation of operational holdings into multiple plots is commonly perceived to be a serious constraint on agricultural productivity in India. High direct and opportunity costs in cultivation are frequently ascribed to fragmentation, including: the time and energy expended in moving labor, draft animals, seed, manure and irrigation water from one plot to another, and bringing harvested crops to a common point; supervision of labor; increased expenses of irrigation and drainage; difficulty of access to scattered plots; and loss of land in boundaries. The Indian Planning Commission, for example, estimated that as much as 7-10 per cent of land in 22