OUR ECONOMY is weakening because major investments are stuck, one prominent reason being difficulties in land acquisition. At the same time, our politics is being roiled by a mass movement against corruption, where land transactions are a major source of the problem. Yet little has been done to address this issue of reforming the management of public-private land transactions.
A new Land Acquisition Bill to replace the colonial one is in the works. But it is stuck because the ministers concerned cannot agree on a crucial provision about the proportion of landowners who have to agree voluntarily before the land belonging to the holdouts can also be acquired.
The Bill that Union Rural Development Minister Jairam Ramesh has fashioned is not all that radical. It spells out the public purposes for which land can be acquired, a little more clearly than the existing law and jurisprudence. But the definition is broad enough to permit land acquisition for privatesector projects. It is more liberal in compensation than the existing arrangement and integrates the obligation for rehabilitation assistance into the law. But its baseline for compensation is still the value of land in pre-existing uses, leaving the capital gains from the conversion of land use with the acquirer. It includes innovative provisions for social impact analysis and community consultation, but stops short of leaving the decision to the community. Yet, it is being opposed by our industrialists and their supporters in the government because they still prefer the old and discredited colonial-era law that gave them large areas of low-cost land.
Landowners will resist compulsory acquisition under the present law with agitations and court cases, which will lead to continuing delays and difficulties in implementing projects. What should matter is the speed with which the process can be completed and that is likely to be lower with the new law.
I have described the proposed law as not all that radical. A more radical alternative would be to altogether avoid compulsory acquisition for private, for-profit purposes. Instead, there should be a law for large-scale land purchase, requiring direct negotiations between the acquirer and the community concerned, including not just landowners but all affected groups, with the government as a neutral umpire and facilitator rather than as a land purchase agent for the acquirer. The law and mechanism for collective bargaining in labour contracts can provide a structural model. Where whole villages are involved, the panchayat can speak for the community. For smaller tracts, the affected persons can be helped by the State to elect a negotiating committee.
One argument that the industry may give is the organisational effort involved in negotiating with hundreds of landowners. But that is where a collective bargaining framework helps, and it also takes care of individual holdouts. The possibility of monopoly power is absent when the activity (for example, a small car factory) is not location-specific and can always move to some other site. Even when there are locational specificities, as in a dam or a mining project, we should not begrudge the local communities wanting to cash in on the resource rent as we routinely accept with oil sheikhdoms.