In his paper, ‘Small Holdings in India and their Remedies’ published in 1918, Ambedkar talks on the issue of small and fragmented farms and low productivity in India. At that time, the British experts considered Indian farms too small and fragmented, and suggested consolidation of these farms into large holdings. Ambedkar made a critical examination of the issue, and in the process arrived at some conclusions. To begin with, he struck at the very root of the proposal by arguing that there can be no such thing as a correct size of agricultural holding. As he argued, land is only one of the many factors of production and the productivity of one factor of production is dependent upon the proportion in which the other factors of production are combined. In his words: ‘the chief object of an efficient production consists in making every factor in the concern contribute its highest; and it can do that only when it can cooperate with its fellow in the required capacity. Thus, there is an ideal of proportions that ought to subsist among the various factors combined, though the ideal will vary with the changes in proportions’. From this, he proceeds to point out that if agriculture ‘is to be treated as an economic enterprise, then, by itself, there could be no such thing as a large or small holding’. If this is so, what is the problem? Certainly it is not due to want of efficiency in utilising whatever the peasant has. Ambedkar’s answer rests on the inadequacy of other factors of production. The insufficiency of capital which is needed for acquiring ‘agricultural stock and implements’ arises from savings. 

It was non-availability of sufficient land in India to give her prosperity through the means of agriculture alone. There is almost a prophetic statement made by him long before modern theorists of development systematised notions of disguised unemployment or under-employment: ‘A large agricultural population with the lowest proportion of land in actual cultivation means that a large part of the agricultural population is superfluous and idle’. Even if the lands are consolidated and enlarged and cultivated through capitalistic enterprise, it will not solve the problem as it will only aggravate the evils ‘by adding to our stock of idle labour’.