Land Acquisition: Where Lies The Promised Land?

 A brief tour through the contentious issues regarding the Land Acquisition Act

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act) came into force on January 1st, 2014. It replaced the British era Land Acquisition Act, 1894. It provides clear rules and procedures for land acquisition, granting compensation and rehabilitation and resettlement (R&R) of affected persons.

Land acquisition by the government for public purpose has always been a contentious issue. India being densely populated and largely agrarian, land for industrial and developmental projects is scarce. Since independence, the government has used its power of ‘eminent domain’ to acquire large tracts of privately owned land not only for public sector infrastructure projects like dams, mines, power plants, highways, railways and defence establishments, but also for private sector use like Special Economic Zone (SEZ) projects across the country. The 1894 Act was criticized as being draconian because of the following reasons.

First, the compensation paid to the landowners by the government was less than the market value of the land. Second, poor maintenance of land records and in many cases, complete absence of proof of ownership made many deserving people ineligible for compensation. Third, those dependent on the land for their livelihoods were not compensated or rehabilitated. Fourth, consent was not sought before acquisition. Objections raised were simply decided on monetary terms. This was particularly severe on the tribals who occupied lands rich in mineral and forest resources. The tribals do not attach monetary value to their land and have a symbiotic relationship with nature. Due to low literacy rate and inadequate skills, they end up as casual labourers in construction or plantations after being evicted from their lands. It is believed that land alienation is one of the main causes of tribal unrest and the Maoist movement in central India.

Fifth, agricultural land was diverted for industrial projects which was contradictory to the goal of food security. For example, the government of West Bengal took over 997 acres of farmland in Singur so that a Tata Nano factory could come up. Sixth, it was alleged that promoters focused not on utilizing land, but on monetizing gains that came with getting land use changed from agricultural to non-agricultural purposes. Seventh, the definition of public purpose was also vague which resulted in the granting of very broad discretionary powers to the state by various Supreme Court (SC) judgements. The industry bodies also claimed that the procedures mandated were cumbersome and costly, resulting in inordinate delay in land acquisition and cost escalation of projects.

The LARR Act passed by the United Progressive Alliance (UPA) government in 2013 seeks to strike a harmonious balance between the interests of the landowners and industrialization, infrastructure development and urbanization of the country. Various innovations have been introduced, some of which are as follows.

Public purpose has been clearly defined. It includes strategic purposes for the armed forces, infrastructure projects like agro-processing and allied activities, industrial corridors, housing, healthcare etc. The compensation paid to the landowners will be four times and two times the market value of the land in rural and urban areas respectively. A Social Impact Assessment (SIA) survey has to be performed based on which compensation and R&R of project affected persons will be carried out. It includes land owners as well as those whose livelihoods depend on that land.

For private projects, consent of 80% of people whose land is acquired is necessary whereas it is 70% for Public Private Partnership (PPP) projects. It also restricts acquisition of multi-cropped, irrigated land unless it is for defence or emergency caused by calamity, thus assuaging fears of food insecurity due to loss of prime agricultural land.

While the act has been hailed as progressive and pro-poor, it has come under severe criticism mainly from industry bodies. First, the cost of land will go up significantly. Landowners as well as other dependents have to be compensated and rehabilitated. This will raise project costs and can even make them unviable. Second, the procedure is lengthy and cumbersome. It is estimated that it may take close to 4-5 years to complete the acquisition. Third, the consent clause will lead to inordinate delays thus derailing the development agenda. Fourth, it is heavily loaded in favour of land owners and ignores the needs of poor Indians for affordable housing, schools and hospitals, industries and employment opportunities and infrastructure. To prove the point, not even a single successful acquisition has taken place since the act came into force!

Demands have been made to amend the act. There is an urgent need to develop infrastructure like roads, railways and power plants to support the rapid economic growth required for poverty alleviation. The 12th Plan envisages an investment of approximately 51 lakh crore in this sector. Furthermore, nearly 12 million young people join the workforce each year. The only way employment can be generated is by increasing the share of manufacturing, and this requires setting up of new industries. According to the government, India is becoming increasingly urban and by 2030, more than 40% of its population will be living in urban areas. This calls for building new cities and expanding the existing ones. 24 smart cities are slated to come up along the Delhi Mumbai Industrial Corridor (DMIC). All these require land.

The new National Democratic Alliance (NDA) government has recently approved amendments to the LARR Act, some of which are, one, 5 sectors- national security, defence, rural infrastructure including electrification, industrial corridors and affordable housing for which land has to be acquired have been exempted from mandatory SIA, food security impact assessment and the consent clause. Officials say nearly 80% of land acquired is for such purposes. Two, compensation and R&R norms will be applied to 13 frequently used acts for land acquisition for central government projects like national highways, metro rail, atomic energy etc previously exempted from such prescriptions.

It is expected that these steps will help kick-start the economy. Nearly $300 billion worth of projects are stalled due to problems in land acquisition. Ultimately, the act has to ensure that procedural difficulties for developmental projects are mitigated without compromising on the benefits given to land owners and dependents.