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Lok Sabha TV Insights: Land Acquisition Ordinance

Lok Sabha TV Insights: Land Acquisition Ordinance


The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2013 was passed by Parliament in September 2013.

Key features of the Act were –

  1. Public purpose: The Act shall apply when land is acquired for ‘public purpose’. This includes land acquisition for defence purposes, infrastructure development, housing for the poor, etc.
  2. Consent: Consent is not required for government projects. Private projects require the consent of at least 80% land owners. Public-private partnership projects require the consent of at least 70% land owners.
  3. Social Impact Assessment (SIA): Conducting an SIA is mandatory for all acquisition cases except irrigation projects where an Environmental Impact Assessment has already been done or those cases exempted under the urgency provision.
  4. Compensation: Compensation for land shall be two to four times the market value of land in rural areas and two times the market value of land in urban areas.
  5. Rehabilitation and Resettlement (R&R): R&R will be given to all affected families, including land owners, and families whose livelihood is primarily dependent on the acquired land. R&R must be provided in case land is purchased (not acquired) by a private company, when the area to be purchased is more than that specified by the state.

The provisions of this Bill shall not apply to acquisitions under 16 existing legislations including the Special Economic Zones Act, 2005, the Atomic Energy Act, 1962, the Railways Act, 1989, etc.

One interesting feature is that, in case land is further sold without any development, 20% of such incremental profit in every case shall accrue to people from whom land was acquired.

Amendments as per ordinance –

  1. Section 105 of the existing Act has been amended to include 13 statutes previously exempted from the rigors of payment of compensation. These Acts were listed in the Fourth Schedule of the existing Act.
  2. The 13 statutes are Ancient Monuments and Archaeological Sites and Remains Act 1958, Atomic Energy Act 1962, Damodar Valley Corporation Act 1948, Indian Tramways Act 1886, Land Acquisition Act 1885, Metro Railways (Construction of Works) Act 1978, National Highways Act 1956, Petroleum and Minerals Pipelines Act 1962, Requisitioning and Acquisition of Immovable Property Act, 1948, Coal Bearing Areas Acquisition and Development Act 1957, Electricity Act 2003 and Railways Act 1989.
  3. The new amendments allow a fast track process for defence and defence production, rural infrastructure including electrification, housing for poor including affordable housing, industrial corridors and infrastructure projects including projects taken up under Public Private Partnership mode where ownership of the land continues to be vested with the government.

 Discussion on Insights

This law came out to be hugely obstructive. Procedure is cumbersome, and is expected to take 3-5 years for a project to get through. This is lose-lose situation for both industry and farmers. This is said to victory of over-ambitious civil society and bureaucracy.

This delay increases capital cost for industrialists and puts farmer into perpetual uncertainty. As a result, it increases whole transaction cost significantly, which benefits none.

But doing away with consent requirement was not desirable either; consent requirement could have been reduced to 50% in certain cases. This was also requested by Kerala and Haryana.

Industrialization is good for people in general and economy as a whole. A single agricultural acre, provide livelihood to single family. But same if used for industry employs hundreds of people. Urban areas have just 6% land and handles 38% of the population in India.

But there’s is need to ensure that –

  • Farmer/occupants get proper compensation and rehabilitation.
  • Industry utilizes acquire land for stated purpose.
  • Participation of farmer/occupants in benefits of that industry.
  • Public purpose should observe carefully.

It is said that even private purpose of putting up an industry does some sort of public good and should be supported. In past we have seen shopping malls and upscale residential tower have been built on the acquired land. This is good if above conditions are satisfied.

Further, government should tax vacant properties to bring down property prices and increase tax-GDP ratio which is very low at 15-16%. And also, focus should be on development of wasteland. Industry’s land requirement should be looked into and only ‘land required’ as per capacity should be allotted.

Government naturally avoids industrial use of fertile land to ensure food security. But in exception circumstances, if such land comes in between project, it has no option but to acquire.

Interested parties are – 1) people in general 2) farmers 3) industry 4) Government

If government is paying 4 times the market rate, then consent cannot be considered sacrosanct. It is seen small and marginal farmers keenly sell their land to bigger landlords. These people then create pressure to get significant hike in compensation. Upcoming project information is used by insiders to acquire land at cheaper prices and then demand exorbitant prices.

Arguments against Compulsory land Acquisition

Motive behind original law (2013) was set right a historical wrong i.e. farmers are not dispossessed now and to move toward participatory development. Concept of compulsory acquisition is in itself undemocratic. In most of the countries development is based on ‘purchased land’ not on ‘acquired land’. In India, significant component of land price is black money, this renders government determined market price very low.

Further, sudden compulsory influx of cash in rural society is connected with many social ills.

But, India can’t join the all purchase concept like other countries. This is because there are faulty and missing land records.

In present case, in order to end policy paralysis culture, government has to resort to ordinance route, only the growth, employments, tax collections will revive. There are projects worth Rs 30 Lakh crore, which are halted because of this Law.