Land Acquisition in India

The issue of land acquisition continues to hog the headlines in all leading newspapers and is a matter of concern among analysts debating its fallout on the inclusive growth of our country. The recent strictures passed by the Supreme Court cancelling the acquisition of a huge tract of agricultural land in Noida Extention, home buyers consequently taking to the streets in protest and the real estate sector coming to a stand still in the area shows that the issue refuses to die down. 

  Indeed, starting from agitation in Nandigram and Singur in West Bengal, there have been growing protests and demonstrations against land acquisition in most parts of the country. All this is threatening to delay or stall industrial and infrastructural projects of crucial importance to economy. A number of steel, power, chemical and automobile projects have been stalled because of agitations by farmers and local residents in West Bengal, Orissa, Jharkhand, Haryana, Uttar Pradesh, Maharashtra and Gujarat. No wonder, land deals have emerged as the single most important issue that is engaging the attention of policy makers and industry on one hand and the citizens from both the agriculture and non- agriculture belt on the other.
The major issue on which the current debate rests is: what exactly is public interest? Whether the principal of ‘eminent domain’ or public purpose incorporated in the present act is in the larger interest of the economy and society? And if so, is public purpose sufficiently important to override the costs of displacing land owners from their habitat? Besides, should the state intervene on behalf of private industry or real estate owner to acquire land or should it confine itself to infrastructure and security issues? What is more, what should be the compensation paid to the land owner for relinquishing the title of his land?  
To begin with, it is increasingly realized that if our economy has to achieve double digit growth rate and realize its vision of emerging as a developed country, it is important to augment our investment in industrial and infrastructure projects for which access to land is an important consideration. In fact, availability of land, its price and quality are the most crucial issues which would determine the course of development. However, it is equally true that involuntary acquisition of land for industry, infrastructure and urban development displaces people from their homes, land and/or means of livelihood. What is more, it has severe psychological and socio-cultural consequences for the land owner who could be materially and emotionally attached to the land which he is being forced to give up. Hence, the challenge is to strike a fine balance between conflicting interests and propel the development process forward.
It is in this backdrop that the current impasse over the enactment of the model land acquisition policy becomes an area of concern. Indeed, the dithering over the Land Acquisition Act – of the 1894 vintage-is largely responsible for holding up important projects-both domestic and international- in our country. How else does one explain the steep decline in foreign direct investment in our country by as much as 28 per cent in 2010-11 as compared to 2010? This has happened at a time when emerging markets such as Brazil and China are reporting increased inflows?
At the same time, the delay in arriving at an amicable solution to the land problem is driving the marginalized into the folds of non-state actors and Maoist groups which are threatening the integrity of the country. The agitations to block projects like Posco in Jagatsinghpur in Orissa or agitating against French tyre company Michelin in Thervoy in Tamil Nadu is helping neither the industry nor the land owners of the two states. And this is a problem which seeks urgent resolution.
There are two fundamental issues the land acquisition policy has to deal with: the process of acquisition and the compensation issue. With a burgeoning population and a growing economy, the demand for land –both for industry and infrastructure is bound to increase. And if this is juxtaposed with the fundamental desire of every individual to own and hold on to his land, this gives rise to a conflict of interest between the holders of land and the acquiring entity. Hence there is need for a policy which addresses the interests of owners and stakeholders before devising a solution.
It is in this context that the provisions of the Draft National Land Acquisition and Rehabilitation & Resettlement Bill 2011 released last week are noteworthy. The Bill has taken a position on the major issues of concern on land acquisition and rehabilitation. The draft defines ‘public purpose’ to allow land acquisition for strategic purposes, public infrastructure projects and industry where 80% of the land has already been purchased from willing sellers through the free market.

The Draft Land acquisition Bill comes close to the heels of the approval of the New Mining Bill which seeks to earmark 100 per cent of the royalty paid by major mineral mining companies to compensate people displaced by such projects. Besides, the bill stipulates 26 per cent of mining profits made by coal mining companies would also be distributed in favour of the displaced people. The Bill seeks to correct the prevailing discrepancy where those living on forest land or on land rich in minerals were deprived of property rights without compensation and provides tribals a stake in the sale of land to mining companies.  The introduction of Draft Land Acquisition Bill as well as the presentation of the New Mining Bill shows the Government’s seriousness to put in place a transparent and flexible set of rules for land acquisition which would be acceptable to all segments of the society and also take care of the resettlement of those displaced by the acquisition process.
However, a close reading of the provisions of the Draft Bill on Land Acquisition and Resettlement Bill shows that the compensation package is too harsh for industry especially for start-ups and for those contemplating expansion and modernisation. The exorbitant compensation amount which is stipulated at twice the market value for urban areas and at least six times that in the rural areas would prove to be a major bottleneck for industry even before it starts its operations as it would increase its cost of operations many-folds.
Besides, the question is: who defines the market value of land? This is especially relevant in a scenario where it is publically acknowledged that land markets are imperfect. Indeed, land is not routinely bought and sold in the country. As a result, the market price of land becomes a nebulous concept. The buyer has to negotiate the price of land with each seller who may have a different perception of the market price. This makes the cost of land acquisition not only prohibitively high but also entails a possibility of different sellers charging different prices and imposing varying conditions which could make it difficult to arrive at a negotiated settlement.
The high cost of land acquisition would raise a question mark on the future of manufacturing and emerge as a setback to the vision of enhancing the share of manufacturing in GDP to 25% in 2022.  Hence, there is need for an intense debate and a tripartite discussion between the Government, industry and the civil society to ensure that the Land Acquisition policy not only addresses the needs of the land owner but is also growth-centric in its approach. In this context, the Government would also do well to constitute an empowered apolitical quasi-judicial body which would address the different issues related to land acquisition in consultation with stakeholders. 
Simultaneously, the priority should be to identify and set up land banks to facilitate acquisition and disbursement of land for industrial use. Such land banks should also explore the possibility of acquiring barren and unproductive land for industrial purposes.
Efforts should also be made to effect digitisation of land records, across states, so as to ensure smooth transfer of land and payment of compensation to the rightful owner without any cumbersome procedures. Such a move would lend transparency and authenticity to land transfer and help in proper planning of land use.
As a confidence building measure, and to convey to the farmers that the land acquisition procedure is transparent, the government should consider e-auctioning of land assets to meets the needs of industry and infrastructure. Besides, states should consider e-monitoring of land acquisition deals as also rehabilitation and resettlement to affect transparency in the acquisition processes by eliminating subjectivity and human bias in compensation process. In fact, such a system is being followed in Andhra Pradesh in irrigation projects and could be extended further to other segments as well.

No doubt, states such as Gujarat, Haryana or even UP have successfully facilitated land acquisition to industry while addressing the concerns of land owners. However, much more needs to be done to reconcile the divergence of interests between the owners and acquirers of land. Most importantly there is need for a political consensus to assure stakeholders that the provisions laid down by the Central and State Acts would be implemented in all sincerity for the overall benefit so that  the country can move unfettered on the path of inclusive growth .