Development Issues

Private interests & public resistance

Print edition : August 18, 2017

Displaced persons of Vamsadhara phase-2 project on protest at Hiramandalam in Srikakulam district of Andhra Pradesh, demanding compensation under the new Land Acquisition Act, in March 2016. Photo: K. SRINIVASA RAO

As part of the agitation against land acquisition for the Posco steel plant, members of the Posco Pratirodh Sangram Samiti and residents of Dhinkia panchayat of Jagatsinghpur district in Odisha guard the entrance to their village to prevent the State administration and Posco personnel from entering it. A February 2011 picture. Photo: Lingaraj Panda

The recent turnaround in the role of the state from one that would push progressive redistribution of land in favour of the landless to one that would redistribute it in favour of big private capital seems to be the most crucial political economy issue in contemporary India.

THE economic reforms that started in India in the 1990s have created a growing demand for land in anticipation of gains through land transactions. This speculative nature of the land market overwhelms the demand for land in the recent period, which is intertwined with the increasing demand for land for non-agricultural purposes—for infrastructure, industrial expansion, mass housing projects, resource extraction, and so on. The tendency to acquire more land than needed for industrial projects to be set up by private entities shows how land is being commoditised. Yet, the growing demand for land cannot be met by the simple working of the price system as the maximum price that the prospective buyer is willing to pay typically falls far short of the minimum price that the seller is willing to accept. Furthermore, the overwhelming presence of smallholders in rural areas makes the transaction costs high for the buyer who wants a large chunk of land. The “friction” of this kind in the land market has ostensibly given rise to the state’s intervention in the form of direct acquisition of land from the smallholders in the name of “public purpose”, even though the real purpose often transcends the meaning of the word “public”. The definition of public purpose has been stretched to include any economic activity irrespective of whether it will be conducted by a public agency or a private entity.

Land acquisition by the state and its redistribution in favour of private capital with the ostensible objective of industrialisation, resource extraction and material development, which has been characterised by scholars as “accumulation by dispossession”, triggered protests and resistance, and eventually the state was forced to balance the small-holders’ interests with the requirements of land for public purposes by enacting in 2013 the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act (Land Act, for short). However, the notion of “fair compensation” can hardly be settled as there seems to be a perennial conflict between the economists’ justification of land acquisition in terms of macro level efficiency of transferring land from agriculture to high-value uses and the micro level rationality of small-holders to hold on to their small pieces of land in the absence of better exit options.

This recent scenario around the issue of land acquisition by the state comes in sharp contrast to the earlier scenario where the state was expected to redistribute land in favour of the landless, the formal expression of which was the series of Land Reforms Acts passed in the 1950s and the 1960s. One should also note in this context that the redistribution of ceiling surplus land in favour of the landless was only one of the several components of the land reforms agenda, and one of the least accomplished as well. The recent turnaround in the role of the state from one that would push progressive redistribution in favour of the landless (at least in terms of intentions if not in deed) to one that would redistribute in favour of big private capital seems to be the most crucial political economy issue in contemporary India. As the land issue frequently overwhelms the popular discourse because of the development-dispossession dynamic, it is hard to step back from the rough and tumble of the short run and take a hard look at the larger picture of how land fits into the contemporary Indian political economy. In this context, one might refer to the much-discussed phenomenon of global “land grab” in the contemporary world, particularly in some African and Latin American countries. However, the major difference between the contemporary reality of land dispossession in India and these countries is that it is domestic capital rather than foreign capital that is responsible for large-scale expropriation of land from the peasants.

Public policy outcomes can largely be explained in terms of the choices resulting from conflicts among competing interests that take place within political institutions. Politics over land can therefore be seen as a distributional struggle between various classes, with the state and other institutions heavily influencing the outcome of the struggle. There is considerable pressure to transform land into a commodity to be bought and sold in the market for non-agricultural purposes. The motivation behind this dramatic turnaround in how land is used is driven by India’s contemporary economic development concerns, such as industrialisation, development of infrastructure and special economic zones (SEZs), and real estate expansion. This is not inconsistent with capitalist development thus far and the possibility of even greater capital accumulation over the longer term. What is fundamentally different now is that land no longer acts as the source of economic surplus nor is there any motivation on the part of the state to make agriculture dynamic in the capitalist sense. On the contrary, acquisition of land today is entirely directed at non-agricultural development. For example, in the well-known Singur case, the State government acquired land on behalf of a business group to set up an automobile factory. The conversion of agricultural land or dispossession of Adivasis for various industrial and infrastructural projects is not new in India. What has changed is the role of the state in securing land by way of “eminent domain” or using the “public purpose” argument, in some instances coercively, less for itself and more on behalf of business.

Accumulation sans dynamic agriculture

As a source of providing livelihood for a large number of people in rural India, the importance of land has been declining, even though its importance has been increasing as a form of asset that is mainly perceived as a store of value rather than one that yields a regular flow of income. The 70th round of the National Sample Survey (NSS) reveals that an average agricultural household earns less than Rs.6,500 a month from all sources, and for a large number of such households the reported net income from agriculture is negative. Clearly, agricultural land can hardly be seen as a source of economic surplus, which is partly because of the fact that subdivision and fragmentation of land have made a typical holding rather small and therefore unviable as a production unit. More importantly, the failure of the state to make the sector dynamic with a good dose of public investment has further exacerbated the declining potential of agricultural land as producer of economic surplus.

NSS data further show that the average area owned per rural household has declined from 0.725 hectare in 2002-03 to 0.592 hectare in 2012-13, and about 83 per cent of rural households own less than one hectare each. While the percentage of total area owned by large landowners has declined, that by marginal owners has increased. This does not mean that the average size of land owned by the marginal category has increased, since the percentage of households in this category has also increased. What is to be noticed is that the distribution of land is still very unequal as the top 7 per cent of the rural households own close to 46 per cent of land area and the top 2 per cent of households own 24 per cent.

Land is unequally distributed and is becoming fragmented , which suggests differential rates of growth across classes and pronounced social differentiation in the countryside. In India, neither the peasantry has completely disappeared nor has a large industrial proletariat appeared despite a fair degree of structural transformation through non-agricultural development. This raises questions about the inevitability of capitalist transition of the kind that is believed to characterise the Western experience. The land question in India today is less about transition (from pre-capitalist to capitalist mode of production) and more about the conflicts and the political economy of the differential benefits of circulation of land, often through involuntary exchange.

Land acquisition, violence and ‘double movement’

The colonial government enacted the Land Acquisition Act in 1894 and invoked the “eminent domain” argument to acquire land for many government projects—railways and irrigation in particular. The continued use of this proviso even in independent India was justified on the grounds that land was needed for public sector projects ranging from infrastructure to large capital goods industries. Constitutional amendments repealed the provisions relating to property rights so that those provisions no longer acted as hindrances to the acquisition process. Two amendments passed in 1962 and 1984 to the Land Acquisition Act of 1894 specified the procedure for land acquisition for private companies, and as a consequence, instances of the state resorting to “eminent domain” to acquire land on behalf of the private sector have been more frequent than earlier. Ironically, even the stipulations made in the 1984 amendment, which allowed the state to acquire land for private entities, have been violated.

A series of audit reports by the Comptroller and Auditor General of India (CAG) on land acquisition in a number of States in India provides a comprehensive account of acquisition of land over the first decade of this century. Odisha, for example, had acquired 29,769 acres (one acre is 0.4 hectare) of private land until 2012. Nearly half of this land—14,297 acres for 33 companies—was acquired under the section governing land acquisition for “public purpose”. This violated the law because land for private companies must be acquired under Part VII of the Land Acquisition Act, which was introduced in 1984. Part VII lays down rules for land acquisition for non-government companies and mandates that the government acquire land for private companies only after the company fails to buy land directly from farmers. The company must also sign an agreement not to use the land for any other purpose without the government’s approval. The agreement allows the government to take back the land in cases of misuse, non-use or partial use. An agriculture officer is consulted before acquisition of agricultural land, which can be done only if non-agricultural land is not found suitable for the project. All these mandates were violated by acquiring land under the wrong section. This clearly indicates the growing influence of Indian big business on state policies and a shift in the state-capital relationship.

Almost as an antithesis to this recent trend, resentment against the process of acquisition and against the use of the justification of “public purpose” has also grown over the years, with millions of people awaiting proper resettlement and rehabilitation. With the violence in Nandigram and Singur in West Bengal and the relocation of the proposed automobile factory to Gujarat by Tata, an intense public debate started in India in 2007. The acquisition of land and compensation and rehabilitation became the central issues in the debate. Article 246(3) of the Constitution of India assigns exclusive power to State legislatures to make laws relating to subjects in the State List, in the Seventh Schedule of the Constitution. Item 17 of this list relates to land, which gives State legislatures the exclusive power to legislate on matters relating to land. However, Article 249 empowers Parliament to legislate even on matters in the State List if not less than two-thirds of the members present and voting in the Rajya Sabha pass a resolution declaring that such legislation is necessary or expedient in the national interest.

The United Progressive Alliance (UPA) government managed to pass the Land Act on September 27, 2013, under this proviso. The ostensible aim of the Land Act was to block the increasing trend of invocation of eminent domain to acquire land forcibly to serve the myriad private business interests, including mining and real estate. The Act provides for compensation of up to four times the market value of the acquired land. It requires the consent of 70 per cent of the landowners whose land is to be acquired in the case of public-private partnership (PPP) projects and 80 per cent in the case of private sector projects. Compulsory social impact assessment by independent experts and local government representatives was made compulsory.

NDA’s dilution attempt

With the passing of this Act as well as others which had a clear pro-poor tilt, UPA leaders had hoped that it would help them regain popularity. But contrary to their expectations, the UPA failed to come back to power as the National Democratic Alliance (NDA) won with a thumping majority in May 2014. Soon after, the new government proposed 19 amendments to the Land Act. These amendments could significantly dilute the provisions of the new law, which were meant to protect the interests of the land losers. An amendment sought to eliminate the consent requirement for private or PPP projects in the case of defence, rural infrastructure, affordable housing, industrial corridors and infrastructure. Another sought to exempt the same five classes of projects from social impact assessment.

However, the Bill to make these amendments could not be passed in the Rajya Sabha, where the Bharatiya Janata Party government could not muster the required two-thirds majority. It was argued that the proposed amendments were required to unblock a large number of stalled infrastructure projects and revive the investment climate.

However, on close scrutiny it turns out that the Land Act has little to do with stalled projects, especially in the private sector. In its analysis of stalled projects, the Economic Survey 2015 did not even cite land acquisition as a factor for private sector projects. The major factors accounting for stalled projects were identified as unfavourable market conditions, lack of funds, raw material and fuel supply bottlenecks or loss of promoter interest.

This entire episode of forcible acquisition, violence and resistance movements culminating in a partially accommodating state reminds us of the well-known social thinker Karl Polanyi’s concept of “double movement”, which he used to analyse the late 19th and early 20th century England where complete proletarianisation of the working class was followed by workers’ struggle and unionisation. This in turn led to institutionalisation of social security by an accommodating state. To what extent the state will be forced to accommodate demands from below depends on a variety of factors, including the role of political institutions.

Achin Chakraborty is Director, Institute of Development Studies Kolkata.

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