Some fundamental concerns of industry remain unresolved in the Bill. The State needs to have a facilitating role in land acquisition

Sidharth Birla

It is a mathematical certainty that if the per capita income of the nation has to increase, persons employed at lower income levels must partially progress in favour of higher ones and, indeed, new additions to the workforce must find jobs with higher pay levels. As a natural corollary, the number of people employed in agriculture must shrink while production and productivity must go up.

In order to capitalise on our demographic dividend, the government has set a target of creating 100 million jobs in manufacturing in the next 10-15 years. Achievement of goals under the very desirable National Manufacturing Policy is one vital cog in the path to national progress. India cannot afford to neglect manufacturing, be it for the youth which increasingly needs productive employment outside agriculture, or to meet supply-side requirements for our domestic economy, or to build a sustainable base for exports without which our foreign exchange earnings will remain elusive. With any of these delicate balances going wrong, we risk major social upheavals.

Availability of land for the industry is one of the significant challenges for expansion of industry and for new investments. Land is a valuable resource. Indian business recognises not only the need for a fair compensation to sellers of land and their dependants, but also that the sale of land is an emotive issue per se.

In my opinion and based on reports so far available, the consensus reached at the political level on the Land Bill may perhaps have discounted to a degree the above larger perspective of overall social and economic well-being. Some fundamental concerns of industry seemingly remain unresolved in the decision of the all-party meeting. I would also like to share thoughts on the new concept of ?land lease? which is likely to be introduced.

One understands that, perhaps, in addition to acquisition, land could also be leased to industry, thereby retaining ownership with land owners. Neither the Parliamentary Standing Committee nor the government have gone into consequential issues relating to leasing. While it is possible to argue that a lease may significantly reduce the front-end outlays, leasing has its own set of challenges.

Leases have inherent uncertainty regarding renewals, particularly when the period is short. Certainly one human generation (where a benchmark of 20 years seems to be a common consensus) sounds long to an individual but is a short period when looking at a long-term investment; this is immediately apparent for any infrastructure or other business where planned longevity is a must on day one. We do not yet know which rules could differ by location as each state has rights to its own rules. A lease may restrict flexibility over development and operations, adding to the uncertainties. Potentially, leased lands will impact mergers and acquisitions as there are obvious limitations to the automatic transmission of leases in rearrangements. There may also arise generational difficulties and transitions on the side of the land owners.

One may justifiably argue that the state needs to have a facilitating role in land acquisition for industry. We appreciate that infrastructure and PPP projects are going to a ?public purpose?, thereby enabling the government to acquire land for use for such projects. How one may address the needs of large industrial projects and the last-mile challenge for land acquisition remains to be seen.

The time required to acquire land under current provisions seems to be 4-5 years on an average. The amount required for compensation and R&R is likely to increase by at least 5-6 times. This is because ?solatium? is set to increase from the current norm of 30% to 100% in the Bill and also industry will have to provide R&R and 25 infrastructural facilities as listed out in Third Schedule of the Bill as part of its R&R. Consent requirement of 70-80% and that too of affected families and not just of landowners creates vagueness and uncertainties, more so when the country?s land records are not in the best of shape. The humble suggestion here is that when we are in a race against time to boost development, can we really afford such time penalties?

It is suggested via media reports that all acquisitions carried out after September 5, 2011, will need to provide extra compensation to original owners. While there could be a good rationale to avoid speculative gains, this again creates great uncertainty. Retrospective application in legislation has serious pitfalls which are entirely avoidable.

In closing, nowhere does business suggest otherwise than a need for fair compensation for land. While doing so we advocate an approach which balances the interests of the acquirer and the seller, and provides certainty rather than potentially create ill-will and litigation.

We need to look at the larger perspective and overall growth and socio-economic development of the country. We need to look at the entire forest and not just the trees and it will be only proper not to throw out the baby with the bathwater.

The author is senior vice-president, Ficci