New Delhi: The government moved a step closer to put in place a new land acquisition policy, after a ministerial panel overcame differences and struck a compromise. The Bill will now be put before the Union cabinet for its approval in the next few weeks. If indeed the government sticks to the proposed time line, then it proposes to introduce the Bill in the winter session of Parliament to replace a legislation that’s over 100 years old.

Differences of opinion between ministries, especially on whether the law should be effective only prospectively and also the proportion of people giving consent for land acquisition, had held up the drafting of the legislation. The lack of a policy, some have argued, has hampered India’s infrastructure and industrial development, critical to revive the momentum in the economy.

It is, however, unclear whether the new draft legislation incorporating the suggestions of the group of ministers (GoM), chaired by agriculture minister Sharad Pawar, will make acquisition any easier. Especially, since the new suggestions have drawn mixed reactions from Indian industry.

“The draft has been finalized. I have to circulate the minutes of the meeting to the members... and then it will go to the cabinet," Pawar told reporters after a meeting that lasted about an hour. “Each and every issue on which there were different views, we succeeded in bringing some understanding,"

Finance minister P. Chidambaram, one of the key members of GoM, confirmed that Tuesday’s meeting was “the last meeting" of the panel. “If everybody agrees to the minutes (of the meeting), that will be the final recommendation," he said.

Rural development minister Jairam Ramesh, whose ministry drafted the Bill, told reporters he would meet Pawar on Friday to discuss the suggestions and recommendations made. “The Bill has been broadly and specifically supported. There have been some useful suggestions, clarifications, drafting improvements—all that will be incorporated. There is no disturbance to the basic structure," Ramesh said. The minister said he expected the Bill—with the changes—to be brought to cabinet in two weeks and introduced in the winter session of Parliament starting next month.

The proposed law, renamed the Right to Fair Compensation, Resettlement, Rehabilitation and Transparency in Land Acquisition Bill, 2011, which seeks to replace the Act of 1894, was referred to GoM in August. This followed differences within the cabinet with key ministers expressing concerns that the law would lead to unreasonable delays in acquiring land.

The legislation is expected to address rehabilitation and resettlement (R&R) by providing safeguards for both landowners and livelihood losers while clearly defining the “public purpose" for which land can be acquired by the government.

According to the consensus reached on Tuesday, the government will acquire land if two-thirds of those who own the land agree to give it up for public-private partnership (PPP) projects, Ramesh said. Earlier, the ministry had proposed acquiring land for PPP projects only when “80% consent of project-affected families has been taken".

A parliamentary panel that had examined the initial draft of the Bill had recommended that the government should not acquire land for any private firms even if it is for public interest.

Acquisition in the tribal areas has been prohibited, but where it happens, “it will require the approval of gram sabhas (village councils)", the minister said.

Another issue that was settled was that of retrospective acquisitions, Ramesh said. “There is also a very strong view that we cannot have two laws (the 1894 and the 2011 Acts) going on at the same time," he said. “You cannot have land being acquired under 1894 Act and this (2011) Act, and one set of people getting compensated from one Act and another set of people getting compensation under the other Act. We have to think of a way of ensuring a cut-off date so to speak—the word is not retrospectivity, it is really a cut-off date, so that you don’t have both the laws operating at the same time."

“There is no change in the terms and conditions of compensation, rehabilitation and resettlement, and social impact assessment," Ramesh said. The Bill had proposed that R&R will not only be linked to the Consumer Price Index, but will also be revised every three years and compensation will be doubled in case of double displacement. On compensation, the Bill provides for two different slabs—one for rural areas and one for urban areas. It allows states to set up land pricing commissions and authorities “to top up compensation amount" and “manage the process". Social impact assessment (SIA) will study the social costs of the project vis-à-vis its benefits. It seeks to ensure that the views of the affected families are heard and included in the SIA report.

Industry reactions varied.

“The Bill seems very rigid. It neither helps farmers or the industry. It only seems pro-civil society," said N.C. Saxena, member of the National Advisory Council, a body headed by Congress party chief Sonia Gandhi and set up as an interface between the government and civil society. “It seems it will take years to acquire even one acre of land. Some powers should have been vested in the local administration like the district collector for acquiring land. Now for everything, industry will have to approach the government. I am unhappy with the Bill."

“As is being reported, the reduction in consensus of 80% landowners to 66% is a welcome move. We welcome it," said Navin M. Raheja, president of National Real Estate Development Council, and chairman and managing director of Raheja Developers Ltd.

“But, the compensation amount of 2X for urban areas and 4X for rural areas is going to increase the cost of establishing projects," he warned.

Federation of Indian Chambers of Commerce and Industry president R.V. Kanoria in his comments said his industry body’s stand was that “R&R provisions should be applicable only in case of government acquiring land for the industry and there also the total R&R amount needs to be reduced so that it does not put an unfavourable burden on the industry".

Abhay Agarwal, a partner at audit and consulting firm Ernst and Young, said making the law retrospective will increase industry’s problems as there are already enough delays. “It has to be from the date when the policy is notified," he said, and added that, however, the government should make the cut-off date very clear in order to avoid litigation.

Surabhi Agarwal and Remya Nair contributed to this story.

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