By all counts, this was expected. Long before he became the BJP and subsequently the nation’s chosen one, Narendra Modi had made it clear that his model of development gains from the ease of doing business. Then, days ahead of his landslide electoral triumph this May, a report sponsored by the Union Commerce and Industry Ministry flagged the Gujarat model of land acquisition as the best practice for other states to follow. It lauded the Gujarat Industrial Development Corporation (GIDC) for “a very simplified procedure… with minimum direct government participation” that ensures “speedier acquisition with fewer hassles”.
The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, on the other hand, owed as much to Rahul Gandhi’s experiment with the farmer’s agitation in Noida’s Bhatta-Parsaul as to Jairam Ramesh’s intellectual rigour. The previous government rushed the Act, albeit with 157 amendments, as a flagship achievement that, along with the Food Security Act, was supposed to turn the tide in its favour. The resounding drubbing at the hustings was not necessarily a verdict against the Congress’ confused socialist strains. But with an absolute majority and an unapologetic growth agenda, the BJP was expected to put its imprint on this legacy of the Gandhi family.
So, after chairing a meeting of revenue ministers and officials from 32 states and Union Territories on 27 June, Rural Development Minister Nitin Gadkari decided to compile and forward 19 suggestions on how to rationalise (read dilute) the Land Acquisition Act to the prime minister. Modi will study the suggestions before placing a final list before the Cabinet for approval. Given the new government’s efficiency, a set of amendments is likely to be tabled in the House during the current monsoon session.
The prime concerns of the states were the mandatory consent clause even for Public-Private Partnership (PPP) projects, the mandatory social impact assessment of even small projects, a very “wide definition” of affected families, the retrospective clause that “unsettled business confidence”, provision of stringent penalty against civil servants and giving back unutilised land to original owners etc.
Gadkari, however, was quick to assure that sections of the law that dealt with compensation, rehabilitation and resettlement would not be tinkered with. “As far as the interests of the farmer are concerned, particularly in compensation, rehabilitation and resettlement, our party and our government have already decided that we will not compromise on any sections which are related to beneficiaries, particularly farmers. We will take maximum care of them,” he said.
In India, it seems no party can afford to sound non-socialistic when it comes to the peasantry.
Prohibiting the use of agricultural land for industries, feels Amartya Sen, is ultimately self-defeating. “Even though the land may be very fertile, industrial production could generate many times more than the value of the product produced by agriculture. The locations of great industry, be it Manchester or Lancashire, these were all on heavily fertile land. Industry has always competed against agriculture because the shared land was convenient for industry for trade and transportation,” he told The Telegraph in the context of the Singur land agitation in 2007.
Jairam Ramesh, TEHELKA readers would remember, argued in these pages last year that the Land Acquisition Bill directed states to impose limits on the area under agricultural cultivation that could be acquired to safeguard food security and to prevent arbitrary acquisition. “The title of the old law (Land Acquisition Act, 1894) conveyed that its primary purpose was to expedite the acquisition of land. The title of the new Bill conveys the Congress- led UPA government’s determination to address widespread and historical injustices that occur in the wake of land acquisition by establishing strong legal prerequisites that need to be discharged first,” he wrote.
The new Bill was passed by the Lok Sabha on 29 August and the Rajya Sabha on 4 September last year. But it was already red-flagged both by industry and the National Advisory Council (NAC) appointed by Sonia Gandhi. “It is pro-civil society and pro-bureaucracy because of the number of committees that will be needed to be set up under the Bill. It doesn’t provide for land acquisition within a reasonable time frame, which means it will hurt farmers and the industry,” said NC Saxena, NAC member.
Others have been far more acerbic. Economist Arvind Panagariya quoted a Times Of India report to point out that “the cost of land required to build the Delhi- Jaipur Expressway trebled to Rs 18,000 crore, with total cost rising to a gigantic Rs 32,000 crore as a result of the money that must be paid as compensation for the land” required.
“Even building rural roads under Pradhan Mantri’s Gram Sadak Yojana, a programme expressly meant to aid India’s rural poor, will turn into a nightmare. And this will be in the name of protecting ‘poor’ landowners, notwithstanding the fact that land reform has had little success in India. Except in a handful of states, much of the land is actually owned by large and wealthy farmers,” Panagariya wrote, arguing that entrepreneurs would rather look for land on Mars as the new Act might render land more expensive across India than in any other country.
Industry, and not just the real estate sector, has been livid. Industrialist Adi Godrej thought the law would have unusual effects on the market. “It will have a dual effect, because, in addition to making the cost of land acquisition to go up — especially for industry that is into infrastructure and housing — it will also raise the valuation of the existing land that people have in real estate companies,” he told the media days after the Bill was passed by the Rajya Sabha last September.
Others feared that the new Act would have adverse effects across the economy. The biggest objection was against making it effective on a retrospective basis. The consent clauses triggered outrage and the industry dubbed the new compensation mechanism, stretching over 20 years, impractical and expensive. The clause to limit acquisition of multi-crop land, many felt, would mark about 55 million hectares out of bounds. The consensus in industry was that the new Act would kill manufacturing and de-industrialise India.
The advocates of the new law, however, found much of these apprehensions unwarranted. The 2013 Act, they pointed out, did not apply to privately negotiated land purchases unless they were large enough to oblige the rehabilitation and resettlement provisions in it. And it is up to the states to decide how large a private purchase is large enough to come under the Land Acquisition Act.
For the record, the new law applies to land acquisitions by the government for a public purpose to be used by itself or by a private entity. Since the old law of 1894 gave sweeping powers to governments to forcibly acquire land, the UPA argued, it triggered frequent agitations that led to delays and cost overruns. Therefore, they claimed that the new Act provided for fair and speedy compensation and a host of other enabling mechanisms so that both parties benefited. The advantages include:
- Clear timelines for different stages to ensure fast acquisition. The old law had no such deadlines
- Higher compensation and R&R expenses are likely to discourage resistance and litigation, leading to faster acquisition
- A thorough project report in the shape of social impact assessment (SIA) made mandatory before land acquisition. Important to justify the acquisition, this also ensures that there are no hidden factors or surprises down the line
- Consent of no less than 70 percent and 80 percent of landowners is mandatory for acquisitions for PPP projects and private companies, respectively
- A comprehensive and participative process, involving the participation of local Panchayati Raj institutions, has been put in place prior to the start of any acquisition proceedings
- Protects tribal communities and other disadvantaged groups as no land can be acquired in Scheduled Areas without the consent of the Gram Sabhas
- In addition to those losing land, the Act provides compensation to those who are dependent on the land being acquired for their livelihood
- Safeguards against displacement as no one shall be dispossessed until and unless all payments are made and alternative sites for the resettlement and rehabilitation have been prepared with mandatory infrastructural amenities
- If land remains unutilised after acquisition, the government to return the land either to the owner or add the same to the state land bank
- Price paid in the previous transaction does not form the benchmark for compensation in future acquisitions
- Freedom to states to decide how to fix compensation in rural areas between two and four times the market value, determine how much multi-crop land to mark for acquisition, and notify land limits beyond which private acquisitions will have rehabilitation and resettlement obligations
- Acquisition of the minimum requirement for individual projects will ensure more judicious and effective use of land, a finite resource
As far as the price escalation is concerned, the proponents of the new law argued that the cost of land constituted less than 5 percent of capital expenditure in sectors such as power, steel, automobiles and refineries, and was unlikely to affect the internal rate of return of these projects.
But few delegates from the 32 states and Union Territories who attended the 27 June meeting seemed convinced. Some, like West Bengal and Uttar Pradesh, wanted complete autonomy to shape their respective land acquisition policy and slammed the new law as an infringement upon the state’s autonomy.
At the meeting, participants were in agreement that obtaining majority consent would make acquisition a longdrawn process. Some demanded that the consent clause should not apply at all for PPP projects. Others, like officials from Madhya Pradesh, wanted it to be scaled down to 50 percent. Delegates from Kerala felt that obtaining consent before preliminary notification was a tough task as identifying landowners at such early stages would be difficult. The Congress-ruled state also submitted that public hearings, while ensuring transparency, might also stall projects.
A number of states wanted “affected family” to be redefined as it also included livelihood losers working in the affected area for three years prior to the land acquisition. While the Union Territories of the Andaman and Nicobar Islands and Lakshadweep thought it would be difficult to form expert groups for SIAs, Karnataka and Kerala felt such studies were required only for large projects.
The other major objections were to the provisions of land-for-land compensation, returning unutilised land to the original landowners, and sharing 40 percent of profit with original landowners when the land is sold at a higher price to a third party. A few states also pointed out that the provisions of penalty, including imprisonment of six months to three years or fine or both, might cause harassment of civil servants.
Some of these are valid concerns but can be dealt with certain checks and balances while implementing the law. The sia process, for example, needs to be spelt out in greater detail. More importantly, land records have to be updated across the country and states need to be upgraded to digital records. The new state of Telangana has already sought 600 crore to modernise and computerise its land records.
Surgical amendments can improve any legislation once it faces the test of practical application over a period of time. Instead, the mood at the 27 June meeting was to take away the very purpose of the new law. At the heart of the discontent is the fear that the State may lose its absolute control over land, one of the most vital primary resources. Add to this the desperation of the new government to meet growth targets. If the “NAC faction” of the UPA erred on the side of social justice, the BJP perhaps read the electoral landslide as a mandate for tipping the scale to the other extreme.
Gadkari is also in charge of highways, roads and ports. Having already streamlined 142 projects worth Rs 35,000 crore, he has set his eyes on the pending 265 projects worth Rs 75,000 crore. In this growth season, the states also want their share of the instant development pie. No doubt, the collective discontent on 27 June was music to Gadkari’s ears.
The BJP does not have the numbers in the Rajya Sabha. But the Samajwadi Party, the Trinamool Congress, the aiadmk and the bjd — all running state governments and keen to water down the new Act — have enough mps in the Upper House to see the BJP through. And with even Congress- ruled Assam and Kerala joining the chorus, an amendment is very much on the cards. If the BJP generously call a customary all-party meet before that, Jairam Ramesh may get to cry his heart out.