The land acquisition stalemate: Contentions & Solutions

While the process of industrialisation is facing many problems that need to be addressed, the problem of land for industry is among the most serious. Many major projects today are stuck due to problems related to land acquisition. According to an estimate by ASSOCHAM, projects worth US$100 billion are at stake-many of them critical infrastructure projects linked to railways, national highways, ports and power plants.

Land remains at the heart of India's many predicaments. A day does not pass without some agitation or stray violence over land acquisition. Many major projects today are stuck due to problems related to land acquisition. According to an estimate by ASSOCHAM (The Associated Chamber of Commerce and Industry of India), the country's leading business association, projects worth US$100 billion are at stake—many of them critical infrastructure projects linked to railways, national highways, ports and power plants. Why has land acquisition become such a controversial issue in India today? Why do farmers and other landholders vociferously resist selling their land even after being offered high compensation? Can the proposed land acquisition legislation address the issues and challenges raised by various stakeholders? What is the way forward?

Issue of Consent

`Consent' to sell—both in government and private and public-partnership projects (PPP)—is among the most contentious issues in land acquisition. Should consent be from 67 percent (two-thirds) or 80 percent of the landowners? Should consent be required from all land users (e.g. those dependent on land like agricultural workers, wage labourers, artisans and landless peasants) or only from the land losers? Industry representatives stated that consent from the affected families was risky as often there were no land records. The panellists felt that it would be appropriate to seek consent from both the land losers and also those dependent on the land. The question of `67 per cent or 80 percent', it was felt, should be decided by Parliament and the affected families should come under purview of rehabilitation and resettlement as proposed in the bill.


The current scheme of compensation that the bill has laid down is two times the market price for urban areas and four times the market price for rural areas. There is no rationale as to how these figures were arrived at. Another criticism is that these numbers have been tampered with: the initial draft of the National Advisory Council proposed six times the market price for rural areas. The “top down” approach in evolving the formula has also not gone down too well. While top officers are busy devising formulas and local government officials are calculating the market price, the affected people have no say on any aspect of the transaction—whether they want to give up the land or what would be a fair price. The government's position on this is that the market values are notoriously low representations of the actual price of land and need to be enhanced. The Rural Ministry's formula is to take the highest previous sale transactions in an area and add a multiplier. In its view, four times the market price in rural areas would be a fair price.

Institutional Support

In order to understand the position of stakeholders, their needs and explore fair solutions, a three-tier institutional structure was mooted: institutions for suggesting proposals, institutions for dialogue and institutions for decision-making. Institutions for proposals would include think-tanks or academic research organisations which use data, analyse it and make recommendations. Institutions for dialogue would bring stakeholders together to deliberate on their respective positions. Finally, institutions for decision-making would be given the authority, constitutionally or organisationally, to finally take decisions.

Definitional Issues

The experts felt that the bill does not clearly define what constitutes `rural' and `urban' areas. This omission is bound to lead to litigation. It is essential to plug this loophole. However, this may prove to be a difficult task for the Central Government, given that each state has its own laws on development. The panellists recommended that the bill should provide that the definition of “rural” and “urban” be defined by the concerned governments.


The panellists stressed the need for transparency, process efficiency and viability. Transparency would entail evaluation, selection and determining the market price for land as well as sharing the incremental gain from land development with land losers. Process efficiency implies clarity in legislation which would result in less litigation and realistic deadlines for all parties involved. On viability, it was felt that there is a need to reach a common ground between the acquirer's right to profit and compensation rights. The experts held that companies acquiring land for public-private partnerships should be given limited control rights.




Niranjan Sahoo

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