Fast economic growth in the last two decades has increased demand for land from many sources, such as infrastructure, industry, mining, and urbanisation, including real estate. Even when these activities are funded privately and are driven by profit motive, they serve a social purpose since employment generation per unit of land is higher for non-agricultural uses than for agriculture ones. Growth through industrialisation and urbanisation would not only increase labour productivity but will reduce pressure on farmland by pulling people away from land to non-farming occupations.

However, acquisition of land by the government has lately drawn resistance in many cases due to inadequate and uncertain compensation for the land and loss of livelihoods of the affected people, as well as due to involuntary displacement without proper rehabilitation. The 1894 colonial law has been quite hostile to the interests of the landowner, as it attempts to make land available to government at a minimal price. So far the practice in most state governments has been to coerce people to give up their lands by using the legal powers of eminent domain, and in some cases even through the use of force. Thus the model followed has been, "let some people lose out so that others (this includes some enterprising poor too) may gain". Unfortunately, the losers tend to be the poorest with little skills, often tribals, who are unable to negotiate with the market forces and cope with the consequences of their forced expulsion from land, and end up much worse off than before acquisition.

In this context the Land Acquisition Bill just passed by the Lok Sabha tries to do justice to the landowners and those dependent on that land by prescribing that besides compensation, each affected household is either provided employment, or given a monthly sum of Rs 2,000 for 20 years, or Rs 5 lakh as a lump sum. The total cost, which the industry will bear, will not be more than 2 to 5 per cent of the project cost. For instance, a 4000-Mw thermal plant would cost about Rs 25,000 crore and would displace about 250 households. Thus, earmarking just one per cent of the project cost for acquisition would make each displaced family a crorepati!



The clause requiring consent of at least 70 per cent of the project affected people is highly welcome, and it should not scare industry, as in most cases of mono-cropped agriculture, farmers themselves are keen to get out of uncertain and risky crop production.

The main concern of industry should not be the one-time cost but the delay in getting secure possession over land which causes the escalation in the project cost. A close examination of the Bill just passed by the Lok Sabha would reveal that acquisition of even one acre of land would take at least three years and the proposal will have to pass through about a hundred hands. The delay is caused mainly because the Bill seeks to establish several committees adorned by activists and "experts". To begin with, the social impact assessment will be carried out by a committee, and its report would be vetted by an Expert Group. In addition, there would be an R&R Committee, of course a state-level committee and a national monitoring committee to pontificate over the reports generated by the junior committees. Delays in completing formalities would also delay payment of compensation, thus harming farmers and causing uncertainty in their rehabilitation.

Often land values go up after acquisition and the original owners feel cheated when they find that their land, after a few years, is being sold for ten times the price that was paid to them. Therefore, whenever land acquired by the government is transferred to an individual or a company for a consideration, 20 per cent of the appreciated value should be given to the original land owner. However, section 96 of the Bill completely defeats the intention behind the idea of sharing capital gains with the landowner since payment would be made only when no development has taken place on such land. The builder can plant one tree on that land and get away by not paying any capital gains!



A simpler solution would have been to delegate powers to the Collector to acquire up to 100 acres of land without committees and without any reference to the state governments. The Collector would obtain landowners' consent and fix compensation through negotiations and, thus, make land available to the project in a few months' time. The new law should have also encouraged industry to buy land directly from the farmers without involving administration, but section 42 of the Bill discourages direct purchase where more than 100 acres are needed. Moreover, such transactions are difficult in central and eastern India where land records are in a bad shape, and several state-level restrictions exist on land alienation from tribals. Markets in backward regions do not favour small farmers because of information asymmetry.

In section 3(c)(iv) of the Bill, the word acquisition should have been replaced by "acquisition and resumption" since forest lands and water bodies, being government property, are not acquired, these are just resumed. In the absence of this amendment the poorest people as users of common land and forests and slum dwellers will be deprived of their livelihoods without any R&R benefits. This amendment is particularly relevant in view of the state governments' reluctance to implement the community clauses of the Forest Rights Act.

Section 94 will hit the interests of the real estate industry since taking permission from the government for each sale of plot is not only time-consuming but will encourage corruption. It should be deleted.

The Bill has ended up by being both anti-farmer and anti-growth, but it is certainly pro-civil society and pro-bureaucracy!





The author is a member of the National Advisory Council