While hailed by almost all other sections of society as a progressive legislation that was long overdue, the new Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill has been criticised by representatives of the Indian industry because there are certain clauses that will impact corporate India, make life a little tougher.
The captains of industry, however, will do well to stand back from the detail and look at the larger picture that this bill was needed in the first place. The Land Acquisition Act of 1894 has been so thoroughly misused by state governments and often incurring capitalists in cahoots with government that it has made a mockery of people’s right to decide whether to sell land or not. So, this new Land Acquisition Act was required and various provisions are logical.
The old law was motivated by speedy acquisition of citizen land without due process of natural justice. There was a near unanimity of opinion across the social and political spectrum that the old law suffered from various shortcomings. Once the acquiring authority had formed the intention to acquire a particular plot of land, it could carry out the acquisition regardless of how the person whose land was sought to be acquired was affected. Even the Supreme Court had observed that the law had “become a fraud”, drafted with “scant regard for the welfare of the common man”. Holding that the Act had become outdated, it recommended that it should be “replaced at the earliest by fair, reasonable and rational enactment in tune with the constitutional provisions, particularly Article 300A of the Constitution. We expect the law-making process for a comprehensive enactment with regard to acquisition of land being completed without any unnecessary delay”.
The precondition of fair compensation, rehabilitation and resettlement in the new law will undoubtedly make land more costly for businesses. But it will also pre-empt Singur-type reversals and reduce the likelihood of social dissent climbing to levels that add to the ranks of Maoists. Moreover, the state governments still have considerable leeway in implementing the law and private businesses can find alternate arrangements to outright purchase of land from farmers with little other means of livelihood.
Lease is an instrument that needs to be actively tried out. Instead of buying out the farmers completely, it should be possible to lease the land from the farmers while they retain ownership, even if truncated. Ideally, the land in question can be transferred to a special purpose vehicle owned 50-50 by the project developers and farmers.
The project could pay a market-linked lease to the special purpose vehicle, which could pass it on to its owners, so that they have certainty of income even after traditional use comes to an end. There could be a lock-in period for sale of the farmers’ shares in the special purpose vehicle and the project developer could have the right of first refusal thereafter. That way, both sections would gain from the appreciation in land value brought about by the project.
Conversion of land use enhances land value immensely at present. This is because of the artificial scarcity of such land. If zones can be earmarked for urbanisation where the farmers can apply for conversion that would be available automatically, urban land scarcity would disappear and prices would stay reasonable.
The state needs to plan new towns in which industry can locate new projects, instead of industry having to acquire land for projects by itself. Noida and Greater Noida near Delhi are good examples in this regard, except for their failure to institute urban self-governance. In the case of mines and roads, the additional cost of land will have to be factored into mineral price and tolls. Avoiding social conflict has a price, worst paid as policing expenditure.
(The author can be reached at yogesh@newindianexpress.com)