Land is at the heart of India's current development predicament. Hundreds of its mega projects and big ticket projects are caught up in the land logjam. But the proposed Land Bill still lacks effective provisions to provide reasonable price to land owners in rural areas where there is no land market.
Land is at the heart of India's current development predicament. With hundreds of mega projects being mired in the process of land acquisition and many big ticket projects of the current National Democratic Alliance (NDA) caught up in the land logjam, the government is under tremendous pressure to smoothen the acquisition process.
The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act (LARR) 2013, which was passed by the previous UPA government in its dying days, seems to be a major roadblock in the present government's plan to revive manufacturing boom and create millions of new jobs. The LAAR Act, seen as a much needed improvement over the century-old Act of 1894, however, had numerous pitfalls and did not address the major concerns of both industry and land-owners. Even the former member of the erstwhile National Advisory Council, N.C. Saxena, has described the LAAR Act as "both anti-farmer and anti-growth", but certainly "pro-civil society and pro-bureaucracy!"
Concerns over the 2013 Act
The foremost concern over the 2013 Act was about the consent clause. The Act, which comprehensively defined the application of the purpose, required prior consent of 70 per cent of affected families for public-private partnership (PPP) projects and 80 per cent consent for private projects. This was further compounded by having a compulsory Social Impact Assessment (SIA) for every project (irrespective of the size of land required, number of people being impacted, or the size of the investment). This, according to industry watchers, would make the acquisition process costly and cumbersome. It would take minimum 4-5 years to complete the acquisition process. Effectively, this would make most projects unviable by the time they become functional. For industry and other big buyers, acquiring a piece of land would be worse in the Schedule Areas as they would have to obtain the consent of Gram Sabha (rural local legislative body).
Among the other concerns, a major area of dispute was with regard to the addition of "affected people" to be eligible to receive compensation. It is also worth noting that it is not always easy to determine who the non-land owning adversely affected people are, for they don't necessarily work on the same land all year round and there are no fixed, legal contracts in place. Issues such as higher compensation (2 times for urban areas and 4 times for rural areas) and rehabilitation and resettlement (R&R) also generated a bout of consternation among private sector players. However, at the heart of most vociferous opposition to the 2013 Act were the consent clause and SIA. The Act was viewed as "anti-industry", and a bonanza for civil society bogey that could milk the consent clause and SIA provision for profit.
2014 Ordinance
The NDA, which swept to power in May 2014 on development agenda, found the new law as a serious challenge to big ticket projects such as "Make in India", infrastructural projects, industrial corridors and defence modernisation. Given the perceived opposition to any amendments to the land law and the winter session of parliament failing to transact any major legislative business, the NDA government took to the Ordinance route to amend certain key concerns raised above. It passed an Ordinance on December 31, 2014.
While the Act, in its definition of public purpose, excluded private hospitals and private educational institutions, the Ordinance removed such restrictions, broadening the scope for private entities to utilise the acquired land. The second key feature of the Ordinance is the exemption of five categories -- (i) defence, (ii), rural infrastructure, (iii) affordable housing, (iv) industrial corridors, and (v) infrastructure projects, including PPP, where the central government owns the land -- from certain provisions of the 2013 Act. The Ordinance, in one clean sweep, exempted projects that fall under the aforementioned categories from getting the consent of people affected by acquisition, conducting a SIA and acquiring multi-crop and other agricultural land.
The third noteworthy change proposed by the ordinance is on the issue of "return of unutilised land". The 2013 Act provided that if land acquired was left unutilised for 5 years, it would be returned to the original owners or to the land bank. The ordinance changed this provision by stating that the period after which unutilised land will need to be returned will be 5 years, or any period specified at the time of the setting up, whichever is later.
The Land Acquisition (Amendment) Bill 2015
The government's move of promulgating an Ordinance to make major changes to the 2013 Act brought together the entire opposition. It described the move as "trampling democracy" to promote "private industry". Even farmers associations, trade unions and civil society activists have come out strongly against the Ordinance. They argue that by creating broadly defined categories which are exempt from consent clause and SIA, the Ordinance has taken the law back to 1894 colonial land Act. For them, SIA is the "soul of the LARR Act" and that has been "assaulted". They say the changes brought out in the Ordinance would not only affect the land owners but also those whose livelihood depends on land - a fact which was agreed upon by all parties only a year back and was therefore a key feature of the Act.
The NDA government, which has brought the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill (Amendment) Bill 2015, has inserted a number of changes in the original Act, largely based on the changes brought by the Ordinance. Being faced with a united opposition, including few allies like the Shiv Sena, the NDA government agreed to nine amendments in the 2015 Bill. Apart from agreeing to remove social infrastructure from one of the five exempted categories of projects as mentioned above, the government also specified the definition of industrial corridors (around 1 KM), removed the provision with regard to land acquisition for private hospitals and private educational institutions. This apart, the Lok Sabha undertook some major changes in the Bill, including guaranteeing employment for 'one member of an affected family of farm labour' as a part of the R&R award, specifying the role of the Land Acquisition, Rehabilitation and Resettlement Authority to redress the grievances related to compensation be held at the district level and a comprehensive survey of wasteland. While these amendments signalled some amount of scale down from the government, for people opposed to the 2015 bill, these are mere whitewashes that barely address the issues of involuntary acquisition and livelihood concern of many who depend on those lands for their survival.
Key issues overlooked
While the consent clause and SIA may be at the heart of current impasse over Bill, there are equally important issues that have received little attention. The most pressing concern is that of determining the compensation i.e. the price of the land which is being acquired. Under the current system, the first step is to determine the market value of the acquired land. This is computed as the higher of (i) the land value specified as per the Indian Stamp Act, 1899 for the registration of sale deeds, or (ii) the average of the top 50% of all sale deeds in the previous three years for similar type of land situated in the vicinity. Second, the market value thus calculated is doubled, but only for rural areas. The value of all assets attached to the land is then added to this amount. On this amount, a 100% solarium, i.e. extra compensation, shall be provided to arrive at the final figure. The criticism for such a methodology is that it fails to recognize that in most parts of India, a land market is non-existent. Very few land transactions happen at the scale of villages and the ones that do take place are distress sales. An arbitrary guarantee minimum price formula is therefore not beneficial in deep rural pockets and can have other unintended consequences such as creating an incentive to increase speculative activities. The contrast is true in the case of acquisition of urban land. According to many analysts, India's urban and pre-urban land price is one of the highest in the world. Therefore, a mechanical "2 times of last sale value" make land acquisition not only prohibitive, But would also encourage speculative activities, lending fortunes to land sharks.
Second, the process of R&R still remains extremely lengthy and bureaucratic and to some extent, even vague. As per Section 43 of the Bill, the State Government shall appoint an Administrator who will be responsible for the formulation, execution and monitoring of the R&R scheme. Section 44 provides for the appointment of a Commissioner for Rehabilitation and Resettlement, who shall be responsible for supervising the formulation of rehabilitation and resettlement schemes and their proper implementation. The Commissioner will also conduct a post-implementation social audit in consultation with the Gram Sabha in rural areas and the municipality in urban areas.
Further, Section 45 provides that where land over 100 acres is to be acquired, a Rehabilitation and Resettlement Committee under the chairmanship of the Collector will be established to monitor and review the progress of the implementation of the R&R scheme, and to conduct post-implementation social audits. This Committee will consist of over 10 members such as representative of women residing in the affected area, a representative each of the Schedule Castes and Scheduled Tribes, MP and MLA of the concerned region, etc. This is an extremely lengthy and cumbersome exercise and gives plenty of powers to the bureaucracy, which doesn't have the best track record when it comes to being transparent and credible.
In short, the proposed Bill neither addresses the contentious provisions of public purpose and SIA in a meaningful manner nor does it adequately prunes the administrative and adjudicative mechanisms that would surely drag issues of grievances for years.
The government now has a rare opportunity to improve several key aspects of an Act that came through political compromises rather than deft drafting, but the question is whether the NDA government is ready to undertake such a needy revamp.
(The writers are research scholars with Observer Research Foundation, Delhi)
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Niranjan Sahoo, PhD, is a Senior Fellow with ORF’s Governance and Politics Initiative. With years of expertise in governance and public policy, he now anchors ...
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