Column: Fixing the land acquisition law

Updated: May 12 2014, 10:52am hrs
The recently enacted Land Acquisition, Rehabilitation and Resettlement Act 2013, that replaces the earlier Act of 1894, was required to lend greater transparency in the land acquisition process. However, a review of the new Act shows that there are several critical issues emanating from its various provisions and which make the acquisition process extremely complex, lengthy and difficult, besides having huge cost implications. In fact, large ongoing government projects are already facing extreme difficulty in acquiring land as implementation of the Act has become nearly impossible. That the implementation of the Act is a major concern has been acknowledged even by senior government officials. Moreover, while the Act has come into force from January 1, 2014, the accompanying rules are yet to be finalised. Even as we wait for the final set of rules, it is clear that a comprehensive review of this Act is a must.

One of the critical issues that need to be addressed relates to the rehabilitation and resettlement (R&R) provisions. While it is important to provide fair compensation to land owners and ensure livelihood security of affected families, the Act seems to have overplayed ownership of land as a means of ensuring livelihood security by making R&R mandatory for all land acquisitions, including private purchase. In reality, true livelihood security comes from sustained employment opportunities, which can be achieved through rapid industrial development. Land is a critical resource for setting up industries and related development projects. If the acquisition ensures fair compensation as decided between a willing buyer and a willing seller and consequent industrial development takes care of livelihood security, then R&R provisions for private purchase have little merit for application.

Nevertheless, state governments are currently framing rules related to threshold of R&R provisions. FICCI has suggested that Central government should prescribe a model criterion for minimum threshold to ensure harmony in guidelines across states. The threshold for R&R applicability for private acquisitions could be set at either of the following: (a) number of affected families is less than or equal to 400; or (b) land to be acquired is less than or equal to 500 acres, or (c) employment generated is more than or equal to 1,000 numbers. If any one of these conditonalities is met, then R&R provisions should not apply.

A related issue that merits consideration is the provision on compensation to the land owners, wherein consented amount is placed as one of the criteria for determining market value of land. The consented amount already takes into account the expectation of the land seller and is not the discounted price and hence should be excluded from determining the market value. It would be unfair to offer a multiplier over and above this price. In fact, this would have inflationary impact and raise future land prices unreasonably.

Further, there are ambiguities in the Act with respect to definition of affected families and land owners. In the absence of clarity in definition, there are bound to be litigations which would delay projects. FICCI suggests that for the purpose of consent, the definition of affected family should mean 70-80% of the land owners, regardless of the percentage of land they own. Likewise, clarity in definition of urban and rural areas is also desirable as it is a key parameter for determining compensation. Urban and rural areas should be defined by the appropriate government and a pro-rata factor should be used to determine the relevant factor value to ascertain compensation in the rural areas.

Another issue that needs to be resolved relates to timelines. The procedural steps laid out in the Act would take at least 50 months from the date of initiating the process until the possession of land. Industry feels that the actual time taken will be much higher, as there are likely to be delays at each stage due to absence of timelines and implementation difficulties. The Act should set clear timeframes for each procedure and build in appropriate checks and balances to ensure adherence.

To ease the overall land acquisition process, it is also suggested that the government undertakes zoning with prior social impact assessment (SIA) in such zones. This would not only shorten the time period involved in acquiring land but also ease the cost burden for the industry. Other standardisation initiatives such as preparation of model terms of reference (ToR) to be followed by agencies conducting SIA as against preparing new set of ToR for each proposal of land acquisition must also be taken up.

The Act at present restricts the change in land use. Ficci is of the view that change of land use (CLU) should be notified within a month after completion of R&R and in the absence or delay of such notification beyond one month, it should be deemed to have been notified.

Appropriate amendments in the Act and greater clarity in rules are urgently required to reduce uncertainties and delays, lend transparency, streamline the process and lower the overall land acquisition costs. The government should in fact demonstrate the best way to acquire contiguous land of 500 acres for (say) extended railway, road or PSU projects without invoking special rights and on terms as applicable to industry. The government should also undertake measures such as setting up of Land Bank Corporations at the Central and state levels to create a repository of large tracts of unused land, which can be allocated to industry. States should also be incentivised to undertake digitisation of all land records.

The new government should address these issues on a priority basis as any further delay in remedying the anomalies could only prolong the phase of slowdown in the economy and bring industrial development to a halt. More importantly there must be recognition of the fact that in its present form, this Act would neither help meet the aspirations of the farmers and land owners nor support the development objective. The intent to have a win win situation for both sides has been marred by the inherent complexities that abound. There was a need to create a balance between the interest of land owners and land buyers. However, the Act is defeating the very purpose for which it was envisaged.

RV Kanoria

The author is chairman, Ficci Task Force on Land Reforms and Policy