Land Bill, a step in the right direction

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The Hindu Business Line, April 02, 2015

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015 ? also knows as the land acquisition bill ? has kicked up a storm. Given that the title is the objective of the Bill, one wonders why it could not be labelled simply as Fair Land Acquisition Act. It would replace the old 2013 Act unanimously adopted by the parliament. Faced with implementation problems, the current government has sought to make it simpler and is being labelled as anti-farmer. Alas, as in all such cases, politics may trump economics.

The UPA went overboard wooing farmers’ votes through the populist 2013 law, but that did not impress them. People were fed up with corruption, non-performance, and unemployment, and voted in the NDA government. This means the NDA must create new jobs and eradicate poverty. Manufacturing and infrastructure are some of the ways forward and that demand land. Creating jobs Poverty in India is concentrated in villages where most people either do not own land, or at best have a meagre plot. If one looks at the percentage distribution of rural labour households by the size of the land cultivated, 59 per cent of households are landless and 28 per cent are marginal farmers possessing cultivated land between 0.01 and 0.40 hectares.

This totals up to a neat 87 per cent, a whopping figure. The drafters have, therefore, provided for a job to landless labourers in the amendment and not the farmer. Most farm labourers are either wage workers or sharecroppers, who earn a pittance. This is one reason that MGNREGA has become popular and the new government continues to support it. Therefore, to say that the government is pro-business and not pro-poor is patently wrong. The big challenge we will face soon is that new jobs will need to be created to provide opportunities to the youth. Land is a scarce resource and issues such as forced acquisitions, meagre compensation (coupled with delayed payments), land mafia, un-utilisation of acquired land are widespread. Many States do have huge land banks which can be offered to entrepreneurs.

A hotel entrepreneur tells me that he has been able to overcome the problem on his various sites by astute negotiations with the farmers, who are happy with the compensation and job offers. Clear them all We had been operating with the regressive Land Acquisition Act, 1894, till 2013. Regulatory hurdles and delays can cause significant time and cost overruns which have impacted business. Many State governments, including those ruled by the Congress, have complained that acquiring land under the 2013 law is an uphill task. Several projects have been stuck up, and we may not know how many entrepreneurs have decided to sit on the fence rather than test the law. One study by HSBC Global Research states that a third of the 100 stalled projects are stuck due to land acquisition problems.

Another study states that out of the 67 projects worth above ₹1,000 crore, seven are stalled solely due to land acquisition issues, which make up 13 per cent of the total stalled investment. Railways and highways suffer the most. Perhaps, compensation was not a major factor. The compensation amounts mentioned in the Bill are incongruous, for in deals like this the buyer has to negotiate with the seller and give them the best offer. Our own studies on SEZs have shown that farmers are happy to sell at the best possible price. There have been instances of land being acquired lying vacant for long for which the five-year window was provided in the 2013 Act ? which stated that land unutilised for five years after acquisition ? has to be returned. This number is ambitious as the numerous processes coupled with delays in approvals can cause significant delay.

The new Bill has wisely revised this to five years or any period specified at the time of starting the project ? whichever is later. In the spirit of cooperative federalism, the new law allows States to implement all the provisions. Already, several States have used their own powers to acquire land to expedite new projects. The Gujarat model is worthy of emulation by other States. The new capital of Andhra Pradesh and the Expressway project in UP are good examples of how States can acquire big chunks of contiguous land to implement their projects.

The way ahead One thing that puzzles me is why the government ? which follows market principles in various endeavours ? is not using the auction method in acquiring land as well. It could also think of establishing an independent land regulator at the Centre and States, which can operate at an arms length from the government and the vested interests to ensure that land owners get the best deal. Land will also be required for urbanisation and efforts should be made by States to offer them (including for industries) far away from existing cities, so that there is reduced concentration and newer development. The Delhi Mumbai Industrial Corridor offers such an opportunity.

In the past many new townships developed far away such as Jamshedpur or Bokaro and various other habitats. Many policies are formed without imagination or are mired in a political slugfest. This is compounded by lack of proper consultation or estimation of the resulting impact, which implies that a small group decides on matters affecting millions. Such poor policies cause more harm than good and end up favouring one group of stakeholders over another. There is rarely a policy acceptable to all and the key is to strike a balance given the resources and conditions of the country and seeking the optimal solution to all groups.

The writer is secretary general of CUTS International. With inputs from Tunisha Kapoor of CUTS

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