What was the Land Acquisition Act, 1894 written for?

It is the most handy tool for a district administration to obtain land for any project it wishes to execute. Of the 55 sections of the Act, section 4 allows the district administrator to declare a piece of land necessary for a public purpose and hence has to be acquired. It also gives the magistrate the powers to decide on the compensation payable. Section 5 details the right of the affected parties to a public hearing and section 6 details how the land will be acquired.

What is the current dispute about?

Different political parties want this Act changed to:

a) to define what is a recognised public purpose and to spell out if a state can acquire land for projects to be set up by the private sector, and

b) to vastly expand the scope of compensation and, therefore, determine the process of such compensation.

The current version identifies public purpose as a public sector project, a social benefit like a hospital or a government school and so on. In 1984, the Act was amended to broaden the definition to include commercial projects by the private sector as well. This was a response to the rise in the involvement of the private sector in the infrastructure sector. The government decided to acquire land on their behalf to set up the projects.

Has the Act worked well?

There was a historical necessity for the rates to be set low. In the colonial period, the government used the clause to acquire large tracts of land to set up the railway and irrigation networks.

How did this change after Independence?

Interestingly, lawmakers in the Constituent Assembly agreed that anybody who had land was broadly an enemy of the people. They almost decided that there will be forcible acquisition of land and, as a corollary, objected to any right over landed property. It was only with the intervention of Dr BR Ambedkar that it was agreed that the right to property should remain a fundamental right but ring-fenced with the largest number of restrictive clauses. The lawmakers and the interim government agreed there should only be a token compensation.

Did this work without a hitch?

The low level of compensation helped the government to bankroll its projects at a competitive cost. But the acquisitions ran into so many challenges in the courts that the government passed the first amendment to the Constitution to get out of this mess. It created the Ninth Schedule, through this amendment, which said that any law passed by the government and included in this schedule will not be subject to the scrutiny of the courts. All land acquisition orders were placed in the Ninth Schedule. The compensation principle of the Act said a land would be valued only on its historical value. This meant if a piece of land became more expensive due to developments in the surrounding area, the government would not take that into account. A sale data collection sheet recording at least 10 sales of comparable pieces of land was to be drawn up and the median value was to be assessed as the value of the land. This also helped the private sector to keep their costs low. This is, therefore, the reason why most industrialists want the land to be acquired by the government on their behalf.

What are the changes made in the proposed Bill?

It has modified clause 5 to allow public purpose to include those cases where a developer has acquired 70% of a piece of land and enables the state to step in to buy the rest. But there are still no mechanisms to assess what is the actual requirement of land by a company for a project. The Trinamool Congress wants the developers to buy all land without the support from the state while the Left parties want 100% of the acquisition to be done by the state.

What about compensation?

The Bill has accepted that the value of a land must include the developments in and around it to make the price far better for land holders. It has also incorporated the provisions of the Relief and Resettlement Bill 2007 to calculate compensation.

Annuity?

This is an afterthought. Since the amendment to the Act has not become a law, states have developed their own versions. The Centre has now decided to incorporate the Haryana model of annuity payment as a part of the Bill. Thus the corresponding provisions in the resettlement Bill also need to be amended.

Is this good enough?

Without modernisation of land records, payment of compensation is very difficult. In states like West Bengal, the ruling party at the panchayats hold the records and so will determine who is compensated. To ask the industry to fend for itself is difficult as companies need to be clear about whom they have to make payments to?the price paid and annuities are something that come up much later. Till the government is able to move on land titling, private sector land acquisition is pretty much a non-starter in most parts of the country.