Karela Fry

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The land acquisition bill of 2013

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The new piece of legislation passed by the Lok Sabha yesterday is not new; it was discussed in the cabinet and press in 2011, when the draft was finalized. It was presented in parliament in 2012, and is passed in the Lok Sabha in 2013 only because it suits all parties to seem to be pro-agriculture as the general elections approach. The bill responds to the strong, sometimes violent, opposition to land acquisitions by landholding farmers in the preceding years. Agitation in Bengal and UP grabbed headlines: especially since irrigated land, suitable for crops was preferentially being given to industry. These battles threw out established governments and brought to power new groupings. Governments, over the years, used tax money to create massive irrigation projects, whose benefits would now go to the industry either directly or as a result of land transfer.

After the bill was passed yesterday, BS reported:

The Lok Sabha on Thursday adopted with an overwhelming majority a more consultative process of acquiring land — but also more rigorous and time-consuming — to replace an antediluvian law dating back to 1894. The Bill was passed with 216 votes in favour and 19 against it.

The ‘Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation & Resettlement Bill, 2012’ seeks to give a fair deal to farmers losing their land, especially multi-crop land, to industrial needs. But industry complained the law would push cost and timeframe for setting up new enterprises.

The policy to be adopted in the case of arable land had been left to state governments, Rural Development Minister Jairam Ramesh said, as three states — Kerala, Haryana and Punjab — represented to the Centre that all land in their state was multi-crop and if there was a bar on selling such land to industry, there would be no industrialisation in their states.

The Bill also offers industry the option of leasing land from farmers. It provides land losers compensation of up to four times the market value in rural areas and two times in urban areas.

The Bill says that the much maligned ‘urgency’ clause, under which land could forcibly be acquired on the ground of ‘urgency’, will cease to exist, except in the cases of defence, national security or natural disasters.

  • Condition: Land can be acquired by govt for private and PPP projects, provided there is 80% consent of land owners (70% for PPP)
  • Social impact: Land acquisition will be preceded by social-impact assessment to identify affected families to be compensated and whose consent has to be sought
  • Compensation: Affected families will get four times the market value of land acquired in rural areas and two times in urban areas; land losers and livelihood losers to get compensation
  • R&R: Includes a house, Rs 5 lakh or a job (if available), an allowance of Rs 3,000 a month for a year, and miscellaneous allowances of up to Rs 1.25 lakh
  • Retrospective: The new rules will apply retrospectively to cases where no land acquisition award has been made, besides those where land was acquired 5 years ago but no compensation was paid or no possession took place

It is interesting that Business Standard considers it to be a balanced law whereas ostensibly non-business newspapers like TOI and HT are stridently against the bill, calling it populist.

The most contentious aspect of past land acquisition has been the various governments’ roles in acquiring land for particular industries under the guise of being a public good. IT reports that this will continue:

The bill also defines “public purpose” to include: Mining, infrastructure, defence, manufacturing zones, roads, railways, highways, and ports built by government and public sector enterprises, land for project-affected people, planned development and improvement of village or urban sites and residential purposes for the poor and landless and government-administered schemes or institutions, among others.

WSJ has an interesting quote:

“The price of land in India is already the highest in the world, so this bill will just make land acquisition impossible,” said Sanjoy Chakravorty, a professor at Temple University who specializes in development and land issues in India.

Mr. Chakravorty said the price of land in India has jumped over the last decade as demand for housing has grown, and large sums of money have been invested in land, he said.

One concludes from this that the price of land is responding to market forces. The parliament seems to feel that four times the current price of agricultural land is adequate compensation for a farmer’s loss of livelihood. In fact, in terms of net social cost, it may be much higher, so the error may actually favour industry. The critical problem has not been removed: the government still remains a party to every land deal. A cleaner market-based solution would have been for the law to set a market regulatory condition and leave the rest to a negotiation between buyer and seller.

September 4, 2013

IBN-Live reports:

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2012, which got the nod of Lok Sabha last week, was passed by the Upper House by 131-10 votes with four new official amendments, proposed by opposition parties, including BJP.


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