A law and its losers

Print edition : January 11, 2013

In Greater Noida, Uttar Pradesh, a highway built through what was farmland. Parliament will take up the new Bill on land acquisition for infrastructure and industrial projects in its Budget session.-V.V.KRISHNAN

The Land Acquisition, Resettlement and Rehabilitation Bill is an attempt to circumvent the hurdles before acquisition, such as rehabilitation of land losers, without much increasing the cost of land.

THE preamble to the draft Land Acquisition, Resettlement and Rehabilitation (LARR) Bill is very noble; it talks about a humane, informed, consultative and transparent process for land acquisition for industrialisation, development of essential infrastructural facilities and urbanisation with the least disturbance to the owners of the land and other affected families and provide just and fair compensation to the affected families whose lands have been acquired. The Bill, which emerged in the context of increasing disputes over land acquisition and rehabilitation, was supposed to replace the Land Acquisition Act, 1894. But even in its original form it failed, to a large extent, to address the fundamental issues that led to a lot of discontent over land acquisition and rehabilitation in the first place. The Bill is now heading even further away from that objective as there is a concerted attempt to amend it and make it more private-investor-friendly; there will be compromises in the consent, rehabilitation and compensation clauses provided for in the original Bill.

The Bill, introduced in Parliament in September 2011, has been hanging fire on account of objections from various quarters.

One area of contention, which perhaps has overshadowed the other negative features of the Bill, was a debate within the Ministries concerned over the proportion of consent to be sought for government, private and public-private partnership (PPP) projects. The Ministry of Rural Development, the nodal Ministry that drafted the Bill, the Ministry of Commerce and Industry, and the Ministry of Urban Development did not see eye to eye over the issue of consent before acquisition the question being whether it should be sought from 67 per cent, that is two-thirds, of the landowners or 80 per cent. The writ of the United Progressive Alliance (UPA) chairperson, favouring the latter, seems to have prevailed. However, for PPP projects, the ceiling was raised from 67 per cent to 70 per cent. What went largely ignored was that consent would not be required from all affected land losers, including those dependent on land, such as agricultural workers, wage labourers, artisans and landless peasants, but only from landowners, who in many cases constitute only a small section of those affected.

The Bill, rechristened the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, was cleared by the Union Cabinet on December 13 and was listed to be introduced in the winter session of Parliament. In the Rajya Sabha, the Minister of State for Rural Development Lalchand Kataria announced that the government intended to introduce the official amendments to the LARR Bill in the Lok Sabha. At the same time, the government was keen to assuage the fears of industry regarding the Bill. While addressing the 85th annual general meeting of the Federation of Indian Chambers of Commerce and Industry, Prime Minister Manmohan Singh said that the Land Acquisition Bill recently approved by our Cabinet will soon usher in a more fair and transparent regime for land acquisition. The Bill has now been deferred to the Budget session of Parliament next year.

The original draft Bill prepared by the Ministry of Rural Development, on which a Parliamentary Standing Committee had given its views, was referred to a specially constituted Group of Ministers (GoM) to look into the various contentious points raised by certain stakeholder Ministries. Notwithstanding the contradictory views within various Ministries, there have been attempts to water down the present draft, which is inadequate in itself, under pressure from industry. Comments received from the Ministry of Commerce and Industry and the Ministry of Urban Development, copies of which are with Frontline, indicate that there is considerable pressure to dilute the consent, compensation and rehabilitation features.

Two rounds of meetings of the GoM have taken place, and by all standards, it appears that the consensus is on making the final version of the Bill investor-friendly. Among the various investor-friendly amendments, one is that the Bill will apply prospectively, not retrospectively, for new acquisitions. Earlier, the Bill was to apply retrospectively, that is, to ongoing land acquisitions where the award has not been made or possession not taken. Now a minor concession has been made in that the Bill will apply with retrospective effect but only under certain conditions. The overall changes that have been introduced mark a significant shift from the original Bill and the report of the Standing Committee on Rural Development.

Standing Committee Recommendations

The original Bill defined public purpose in broad terms, which included acquiring land for for-profit private companies. The Standing Committee on Rural Development opposed this very broad definition of public purpose. It stated: Thus, instead of restricting land acquisition by the state to defined public purposes and infrastructure projects, the Bill throws the doors wide open for any kind of land acquisition by the state for Companies, whether these be state enterprises, private enterprises or public-private partnerships. Such a wide ambit for discretionary action by the executive amounting to arbitrariness can hardly be reconciled to the high objectives proclaimed in the preamble to the LARR Bill, 2011. It, accordingly, recommended that the clauses that place wide discretion in the hands of the executive to define public purpose and infrastructure projects for for-profit enterprises be deleted. However, all cases of land acquisition must entail obligations for adequate compensation, rehabilitation and resettlement to all land losers and other affected persons, it said.

The GoM, headed by Union Agriculture Minister Sharad Pawar, has instead accepted further widening of the definition of public purpose in its clarification to objections raised by the Ministry of Commerce and Industry that the definition was narrow. It has clarified that an existing particular clause on acquisition of land for private companies is amenable to a wide definition including planned compact area-based industrial development and manufacturing investment. This means public purpose is to have the widest possible definition. Public purpose would also include acquiring land for the National Investment and Manufacturing Zones and industrial corridors in Delhi and Mumbai.

Objections were also raised on the consent clauses as recommended by the Standing Committee and the original Bill. The objections from the Commerce Ministry and investor lobbies are that seeking the consent of 80 per cent of the landowners will lead to a rise in the price of land and create impediments. The 80 per cent consent requirement was initially toned down to 67 per cent or two-thirds of the land losers. It also does not include all affected families as was stipulated in the original draft.

The original draft defined affected families as those that did not own any land, including a member or members of such family who may be agricultural labourers, tenants, sharecroppers or artisans or may be working in the affected area for three years prior to the acquisition of the land, whose primary source of livelihood stands affected by the acquisition of land.

In the case of PPP projects, consent has been reduced from 80 per cent to 70 per cent and only the consent of the landowners, not all land losers, has been stipulated as being required. Eighty per cent consent will be required only in cases where private companies are involved. At the moment, the PPP model is what the government seems to be interested in, and it will suit private profiteers to enter into PPP arrangements, given the diluted consent norms. In the original Bill, compensation and resettlement and rehabilitation (R&R) were to be given to both land losers and livelihood losers.

Seated on unlit pyres, people of Bujbuja village in Katni district of Madhya Pradesh protest against land acquisition for a power plant, on December 2.-A.M. FARUQUI

Another demand made by the Ministry of Commerce and Industry, that private entities be included in the PPP mode in the provision of urban sites and planned development undertaken by the government, was accepted by the GoM. Interestingly, the GoM turned down the demand by the same Ministry to reduce compensation on the grounds that higher compensation may discourage investment. The problem is that even the compensation provided in the original Bill was not considered satisfactory by several sections. However, it accepted the plea of the Commerce Ministry that the market value for compensation was too high and that such rates would make projects unviable and hence the multiplier effect of calculating the market value should be left to State governments.

A plea to remove caps on the acquisition of multi-cropped irrigated land districtwise was also accepted; the GoM conceded that the caps on acquisition of irrigated multi-cropped land and agricultural land had been left to the discretion of State governments. Earlier, the extent of multi-cropped irrigated land that could be acquired had been capped at 5 per cent. A cap was also placed on the extent of net sown area that could be acquired. Ironically, the draft Bill talks about strict restrictions on the acquisition of multi-cropped land, stating that it has to be done as the last resort.

The other major compromise to industry has been that the land-size thresholds on which R&R on private purchase of land becomes applicable has now been left to the discretion of the States. Further, the acquirer is now required only to make a one-off payment rather than be involved in the R&R infrastructure building until it is complete and R&R annuities until perpetuity. The only concession here is that families will not be displaced from the land until alternative R&R sites are ready for occupation.

Additionally, power has been given to take possession upon the payment of monetary components. Earlier, possession could only be taken when all payments and infrastructural amenities had been provided. A major concession has been that the definition of market value has been amended to ensure that acquisition price does not form the basis for compensation calculations in future acquisitions. The District Collector has also been given the power not to consider transactions that are felt to be outliers and not indicative of the true value while calculating the market value. This has been done to counter the danger of a price spiral as the price of the first acquisition in an area could be used for the calculation of the land price for any subsequent acquisition.

Of the 24 comments received by the Ministry of Urban Development, the GoM has rejected several but accepted several others that would have a disastrous effect. For instance, the plea that the acquirer be allowed possession of land regardless of whether resettlement of the dispossessed has taken place or not, especially in the case of time-bound infrastructure projects, has been accepted. The suggestion that the takeover by the Collector be allowed after the payment of compensation and not be contingent upon the payment of R&R has been accepted.

Land not used can be returned (not will be) to the original owners if the state so decides. The share in the sale of acquired land has been increased from 20 per cent to 40 per cent, though it is not clear how this will benefit the farmer.

In the section on protecting the interests of the Scheduled Castes and the Scheduled Tribes, even though a separate chapter has been provided, an updated note provided by reliable sources says that where acquisition takes place, it shall be done as a demonstrable last resort. It reassures that as far as possible, no acquisition shall take place in the Scheduled Areas and even where it does, it would be with the approval of the local institutions of self-governance. Fishing rights in the affected area will be given, including in hydel and irrigation projects; if resettled or relocated outside, the families will get a one-time entitlement of just Rs.50,000 and an additional 25 per cent R&R benefit. The affected S.T. families, the Bill says, will be preferably resettled in the same Scheduled Area in a compact block so as to retain their ethnic, linguistic and cultural identity.

While on the face of it, the Bill sounds progressive and pro-people, objections raised earlier by several sections have not been addressed, even though investor interests seem to have been factored in. The exemption of as many as 16 pieces of legislation listed in the fourth schedule of the Billsuch as the Atomic Energy Act, the Land Acquisition (Mines) Act, the Special Economic Zones Act, the Coal Bearing Areas Acquisition and Development Act, the Electricity Act, and the Railways Actand giving powers to the government to add on any other legislation keeping it out of the purview of the Bill has not been taken up seriously. There was a demand from the Ministry of Commerce and Industry to exempt the SEZ Act from the list of excluded Acts. The Act has now been removed though the GoM had argued that the LARR Bill should apply to the establishment of SEZs. The drafters of the Bill argue that the provisions of the Bill are in addition and not in derogation of these Acts. There has been a demand from farmer organisations, such as the Kisan Sabha, that the fourth schedule be scrapped. The second exclusion gives the government extraordinary powers to acquire land in emergencies, exempting such acquisitions from the purview of the Bill. The third exclusion allows the government to occupy land arbitrarily. It provides powers to the government to acquire land not only for temporary occupation for public purposes but also for private companies. The Collector has been given arbitrary powers to facilitate the occupation and use of land for three years and to fix the compensation amount to be paid to landowners and affected families.

In the last two decades, the development path that India has traversed has been one where the benefits have been distributed unevenly, not providing any viable opportunities for the agricultural population to shift to non-agricultural employment. At the same time, this path has generated in the narrow spectrum of its beneficiaries a great hunger for land at cheap prices, for infrastructure building, real estate, and sometimes industrial projects. The availability of such land has thus become, among other things, a key requirement for the investment and growth process being witnessed for some time. Acquisition of land, however, has faced increasing difficulties in the form of resistance from the losers or their demand for compensation commensurate with the gains accruing to the ultimate acquirers of that land. Against such a background, the Land Bill should be seen as an attempt to circumvent this political barrier without substantially increasing the cost of land.

With the Indian economys growth floundering now, the desperation to find a way to acquire land has become even greater. This explains the general character of the original draft Bill as well as the tendency to amend it more in response to protests from those representing the interests of the corporate sector rather than taking into account the serious criticisms that have come from organisations representing the interests of farmers and others whose livelihood is linked to land. The interests of the losers in land acquisition do not count for a lot in such a context.

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