Ordinance raj

The Narendra Modi government adopts the ordinance route to amend the Land Acquisition, Rehabilitation and Resettlement Act, 2013, by subverting Parliament and the consultative process.

Published : Feb 04, 2015 12:30 IST

Members of the Tamil Nadu Vivasayigal Sangam burning copies of the LARR Act, 2014, published in the Gazette of India, in Salem on January 5.

Members of the Tamil Nadu Vivasayigal Sangam burning copies of the LARR Act, 2014, published in the Gazette of India, in Salem on January 5.

IF there is one singular and consistent characteristic of the Narendra Modi-led National Democratic Alliance (NDA) since it assumed power in May 2014, it is its pro-industry tilt. The signs, which were palpable when amendments to crucial labour laws were made despite protests from Central trade unions, have now become apparent with the government approving certain amendments to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (LARR) Act, 2014, to meet the “twin objectives of farmer welfare along with expeditiously meeting the strategic and developmental needs of the country”.

On December 29, the Union Cabinet chaired by the Prime Minister approved the amendments through the ordinance route. The Act replacing the Land Acquisition Act, 1894, came into effect on January 1, 2014. It went through a fairly prolonged course of discussions in Parliament and also in a Standing Committee constituted for the purpose.

Not only is the ordinance route problematic, but the amendments propose radical changes to the consent clauses and social impact assessment (SIA) pertaining to certain sectors and in public-private partnerships (PPP). They introduce a new chapter, 3 A, to the existing Act seeking to widen the definition of public purpose. It allows for easy acquisition of multi-crop land. The amendments do away with the consent clause and the SIA required for land acquired for projects pertaining to national security, defence and defence production, and rural infrastructure, including electrification, building of industrial corridors and housing for the poor, and projects in PPP mode where the ownership of land would be with the government. All this has been done in the name of fast-tracking development and security-related projects and without compromising on the compensation and R&R for farmers.

The existing Act provides that the consent of 70 per cent of the affected families is needed to acquire land for PPP projects and 80 per cent for private projects. Interestingly, in the previous drafts of the Act, the consent required for PPP was 80 per cent but was reduced to 70 per cent following a clamour from industry. Even so, the Act had certain urgency clauses such as war and natural disasters where no consent was required. With the exemption of consent and SIA for PPP projects in the sectors proposed in the amendments, the majority of the projects will actually fall in this category given the increasing trend of the PPP model for development. It is possible that the land acquired could be multi-crop land, the acquisition of which is not guaranteed under the existing Act.

The reason given for the amendments is that they were proposed in order to remove the various difficulties in the implementation of the Act and help strengthen the provisions that ensured protection to the affected families. “In the process of prolonged procedure for land acquisition, neither the farmer is able to get the benefit nor is the project completed in time for the benefit of society at large. These projects are essential for bringing in better economic opportunities for the people living in these areas and would also help in improving the quality of life,” states the official release. In addition, procedural difficulties in the acquisition of lands required for important national projects required to be mitigated.

It was also emphasised, without giving any specifics, that “states, ministries and stakeholders had been reporting many difficulties in the implementation of this Act. Several suggestions came up in interactions with State Revenue Ministers and key implementing Ministries.” It was clearly on the basis of such undisclosed discussions that the amendments of far-reaching consequences were made, subverting not only Parliament but the entire consultative process that had preceded the 2014 Act.

One thing is apparent. India Inc. has welcomed the ordinance whole-heartedly. While realty stocks surged the day the Cabinet cleared the amendments, the Confederation of Indian Industry (CII) took credit for the decision and described it as a serious commitment to economic reforms. It said in a release: “CII whole-heartedly welcomes the fact that the government has incorporated our suggestion to exempt projects in certain important sectors like defence, rural electrification, rural housing and industrial corridors from the mandatory 80 per cent consent from affected families.” Assocham, another industry body, stated that “Indian industry whole-heartedly welcomes the much-needed changes in the Land Acquisition Act. The government has achieved a good balance between interests of farmers and development needs.” The Congress, the Communist Party of India (Marxist), the Trinamool Congress, the Pattali Makkal Katchi, the Samajwadi Party, the Rashtriya Lok Dal and the Indian National Lok Dal criticised the government’s move on various grounds, including its adoption of the ordinance route.

The ostensible reason for the ordinance was to strike a balance between farmers’ interests and industrial growth. Finance Minister Arun Jaitley, while briefing reporters, explained that the ordinance was necessitated as 13 Central Acts exempted from the purview of the main Act had to be brought in. But the announcement hardly revealed anything new. It may be recalled that Jairam Ramesh had made an assurance on the floor of the House, when he was Union Rural Development Minister in the previous United Progressive Alliance (UPA) government, that within a year all the exempted Acts would be brought under the main Act and that the clauses pertaining to compensation, rehabilitation and resettlement would apply to them as well.

It was never clear why the Acts were kept out in the first place even though the Left parties from the very start had demanded that they be included. The Standing Committee on Rural Development, which examined the Act, had recommended that the Central Acts should not be kept out. The NDA government has not broken new ground; it was bound to bring all the pieces of legislation under the main Act by virtue of the fact that it was an assurance made on the floor of the House on the persistent demand of various political parties and was in accordance with the recommendation of the Standing Committee.

The 2014 Act was considered restrictive by industry; in truth it was not. The 1894 Act had to be amended as it had become outdated, but issues such as conflicts over land acquisition and inadequate compensation to landowners prompted the UPA to amend the Act. In addition, the new Act was seen as furthering its own model of economic and industrial development for which land was required urgently. The 31st report of the Standing Committee on Rural Development, headed by none other than the present Speaker of the Lok Sabha, Sumitra Mahajan of the Bharatiya Janata Party, had prevented the UPA from expanding the definition of public purpose indiscriminately.

The committee had recommended that land should not be acquired for use by PPPs and private companies and that the definition of “public purpose” be confined and limited to state-sponsored projects. It had even recommended the deletion of the clause that gave wide discretion to the government to define infrastructure projects. It had recommended a greater role for the gram sabha not only in matters of consent but in all matters. In fact, the Left and some UPA constituents, including some within the Congress, had objected to the dilution of the consent clauses, exemption of the 16 original Central Acts (three of which were brought under the ambit of the LARR Act), and acquisition of multi-crop land (this is now allowed under the amended Act).

While many of the Standing Committee’s recommendations have been bypassed in the LARR Act, 2014, on the grounds that the government was not bound to follow every single word of the committee, the amendments proposed by the NDA have gone a step further. The Sumitra Mahajan Committee recommended that changes to the schedules in the Bill, since they dealt with core issues of compensation and R&R entitlements, should be made only through amendment Bills. The UPA maintained the schedules could be changed by a Central notification. But neither the Standing Committee nor the Left agreed to this.

“This is not a land acquisition ordinance; it is a takeover. Anything can come under rural infrastructure or industrial corridor or even the PPP. The Mumbai and Delhi airports are PPP projects. If the government wants to move an amendment, an amendment Bill should be prepared and it should go to the Standing Committee first where the voices of the various stakeholders can be heard. The previous Standing Committee on Rural Development was chaired by a BJP person,” said P. Rajeev, Rajya Sabha member of the CPI(M). He pointed out that when the Chairman of the Standing Committee on Finance submitted a report on the Companies Bill, the UPA government added new clauses to it. “The Chairman, Yashwant Sinha, wrote to the then Speaker, Meira Kumar, saying that the committee did not get a chance to examine the new clauses and that the Bill should be referred back to the committee. It was done,” he said, adding that the BJP leader set a precedent.

The Central Committee of the CPI(M) stated: “The Modi government has shown its contempt for Parliament and democratic norms by adopting the ordinance route in its eagerness to satiate the demands of corporates and FDI [foreign direct investment]. The ordinance is both authoritarian in its method and utterly anti-farmer and anti-rural poor in its substance.”

The new ordinance was worse than the provisions in the 1894 Act as it did not differentiate between government and public sector projects and the private sector.


The Centre has been at pains to defend the ordinance route; it even announced that a joint session of Parliament may be called to pass it. Rather than issue a detailed statement on the issue, Finance Minister Arun Jaitley posted an article on social media which gave a “real picture” on the amendments to the land acquisition law. At the World Economic Forum in Davos in January, he said foreign investors had no problem with the ordinance route.

In his article, he did not dispute the need to amend the 1894 Act and the need to enact the LARR, 2013, which provided for higher compensation, and better R&R. However, he argued that Section 105 of the 2013 Act exempted 13 Acts which were placed in the Fourth Schedule, making the provisions of the Act inapplicable to them. Further, the section envisaged that the government could issue a notification and direct any provision of the Act relating to compensation and R&R applicable to the exempted Acts. He explained that as December 31, 2014, was the last day for such a notification, which would have to be placed before Parliament for approval in the Budget session, the government decided to amend Section 105. Justifying the five exceptions where the “complicated process” of acquisition would not apply, the Minister wrote that a “highly complicated process of acquisition, which renders it difficult or almost impossible to acquire land, can hurt India’s development”, and that the 1894 law amended in the 21st century must provide for a 21st century compensation and cater to the development needs of the 21st century. Also, he wrote that the government could not completely ignore the developmental needs of society.

The Minister argued in his article that defence and security, which the 2013 Act had ignored, had been exempted on purpose and that the rest of the exempted categories, such as rural infrastructure and irrigation, would add value to farmers’ lands. The exemption, he explained, was entirely in the interest of rural India. Affordable housing and housing for the poor was another exempted purpose, which would benefit rural migrants; likewise an industrial corridor would benefit thousands of villages by generating employment opportunities and enhancing the value of land. “Infrastructure and social infrastructure projects, including those under public-private partnerships, where ownership of the land vests with the governments. This is bound to benefit the entire country, particularly the people in rural areas where infrastructure and social infrastructure is inadequate. Almost all the exempted purposes benefit rural India. They would enhance the value of land, create employment and provide rural areas with better infrastructure and social infrastructure. This is in addition to the enhanced compensation and R&R provisions being expanded to the thirteen exempted acts,” he wrote.

He also pointed out that the 2013 Act had over 50 drafting errors. He justified the amendment of the clause that provided for the return of unused land to the owner five years after acquisition. Jaitley argued that the creation of smart cities, townships, industrial corridors, business centres, defence projects, cantonments, ports, nuclear installations, highways, irrigation projects and dams had long gestation periods. “If the earlier provision is to be effected, we would be a nation of incomplete projects on account of defective legislative drafting,” he wrote. Moreover, as hospitals and educational institutions were required to be provided in townships, the ordinance provided for acquisition of land for private educational institutions and hospitals as well, something the 2013 Act had proscribed. “Will they only have a civil hospital and a government school/college and no other health care and educational institutions will be allowed to be established there?”, he asked rhetorically, ignoring the fact that private educational colleges and hospitals had mushroomed in the past two decades in comparison with government expenditure on health or education in the form of setting up institutions.

There are sufficient indications that a joint session of Parliament may be called to get the amendments through. The President of India, in his Republic Day address, expressed certain concerns pertaining to the promulgation of ordinances. Not only is the propriety of the ordinance route under a cloud, but the larger public good seems to be at stake going by the LARR ordinance.

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