11 February 2013 National land acquisition new bill

People, The Real Estate

A new land acquisition bill readies for budget session. How will it fare?
People, The Real Estate
People, The Real Estate

Bill Of Blights

  • Defines “public purpose” too broadly, allows govt to acquire land for PPPs
  • Less landowner consent required for PPPs than private-only projects
  • The bill’s compensation norms likely to face strict challenges in the courts
  • States have been given R&R powers but could lead to arbitrary outcomes
  • Doesn’t consider govt projects where compensation, R&R are neglected


The outdated 1894 law on land acquisition is set for a challenging reintroduction in Parliament. But nearly all connected with this law rue it; be it farmers, industrialists or displaced people awaiting resettlement. Even Union minister for rural development Jairam Ramesh, who negotiated, debated and fussed over every detail, says the process was so stressful it made his “hair turn grey”. The bill is, after all, a critical aam aadmi legislation for the UPA at a time when its popularity chips are down and elections loom ahead.

Even so, it’s not going to be smooth sailing. There are many fundamental issues—compensation, powers left to the states, the sweeping definition of ‘public purpose’, amongst others— that have been raised by numerous stakeholders, the opposition parties, and state governments.

Political parties sought more time to study the bill last winter, but this time the rural development ministry has found a kind of compromise. Parties, including the CPI(M), JD(U), SP and BJP will send their views, and their suggestions will be considered in the budget session. “We have asked for an all-party meet prior to the budget session on this bill,” says CPI(M) leader in the Lok Sabha, Basudeb Acharia. “Furthermore, acquisitions for government projects—including by railways and defence—often go without compensation and relief and rehabilitation (R&R). We want suitable amendments on these.”

“Acquisitions by govt—railways and defence—often go without compensation and relief and rehabilitation.”
Basudeb Acharia, CPI(M) leader in the Lok Sabha

Indeed, compensation is a key issue and the renamed Right to Fair Com–pensation and Transparency in Land Acquisition Bill fixes a maximum compensation of four times the value of rural land and double the value of an urban plot, plus a 100 per cent premium. The problem is that the courts have (in the past) often awarded compensation so much higher than government or companies that the new bill is likely to face a serious challenge.

In a recent analysis of 525 court verd–icts in Delhi between 2008 and 2010, Prof Ram Singh of the Delhi School of Economics found that, in 86 per cent of the cases, people got significantly hig–her compensation than what land acq–uisition commissioners (appointed under the 1894 Act) fixed. Appeals sec–ured a further hike in 96 per cent cases. In one case Singh cites, the compensation rose by nearly 1,500 times. On average, compensation rose by 290 times. “It could be that courts give too much,” says Singh, “but it is more likely, from what I’ve seen, that government and companies give landowners too little.”

“Settling land disputes is part of the bill,” says B.B. Srivastava, secretary, land resources. “People can still approach courts if there are land disputes.” The negotiations and changes this bill has had to deal with since 2007 boggle the mind. ‘Industry-friendly’ ministries, for instance, wanted the proposed national manufacturing investment zones out of the bill’s R&R purview. sezs were exempt earlier, but now will be included—after one year—in perhaps a nod to civil society and farmers. In all, 26 substantive and 28 minor amendments have been made.

Noida Ext, acquisition gone awry. (Photograph by Jitender Gupta)

Critical among these is the power left to states to guide land acquisition (land is a state subject and land acquisition is on the central list). So now the limit after which R&R provisions will apply in private acquisitions, the bars beyond which multi-cropped or agricultural land cannot be acquired, and the size of each acquisition will be decided locally. Unutilised acquired land can be, at state discretion, returned to original owners.

“One of our main recommendations was that the govt not acquire land for pvt firms or PPPs. It hasn’t been accepted.”
Sumitra Mahajan BJP MP

In this way, the bill promises to clear the future R&R landscape. “Acquisition norms and relief to land-losers in every state may still vary but at least there will be a standard to follow,” says Anirban Roy, who runs SEED, a CSR company that helps corporates expand in rural areas. But that’s a double-edged sword as sta–tes can set arbitrary R&R laws.

Perhaps the most contentious issue is how the bill defines “public purpose”—and this is linked with the position on PPPs or public private partnership vent–ures. “One of our main recommendati–ons was that the government not acqu–ire land for private firms and PPPs. That has not been accepted,” says BJP MP Sumitra Mahajan who heads the parliamentary standing committee on rural development. The BJP has said it wants to debate how “public purpose” is def–ined when the bill comes to Parliament.

Linked to this are the benchmarks for how much consent is needed before land acquisition. The draft bill settled it at 70 per cent for PPPs and 80 per cent for private-only projects. Significantly, this excludes the most needy stakeholders—landless labourers and other non-owners—though they’ll be entitled to R&R. The bill’s sweeping definition of public purpose—to include public, private and PPP—would see government acquiring land for private enterprises. “There will be a rush for PPPs to avoid the 80 per cent consent norm. This is exactly what made the 1894 law seem draconian,” says Bhara–tiya Krishak Samaj chairman Ajay Vir Jhakar.

According to Prof Singh, while it’s impossible for any law to fully satisfy both developers and farmers, the government does have a creative way out with PPPs. “PPP is a catch-all term but the category is very diverse. It’s a mistake to club all together. The government should distinguish PPPs centred around real estate from PPPs that provide public goods and services,” he says.

“We also have to accept government presence in acquisition as the only way to ensure accountability. The priority should be to ensure displacement is always the last resort,” says Harsh Mander, director, Centre for Equity Studies. He says the terrible impact on tribals and the poor when private companies acquire or resettle without government oversight nullifies the notion of consent on paper.

For all we know, the UPA will successfully manage these dissenting voices—some from within the Congress. The government has taken a give-and-take approach to fine-tune the draft (it’s no longer public). “We want the 1894 law scrapped and a new law,” says Acharia. “But the bill needs further provision for tribal interests. The standing committee has not seen the current draft yet.”

While that to-and-fro continues, the reality is that, apart from land acquisition, over 20 other laws impact land ownership, transfers, resettlement and compensation in India. In many cases, there are no land records and landless peasants and tenants are excluded. Skilful floor management may well see the UPA through but not without many hurdles along the way.


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