Factor markets have generally been untouched by reforms and these are typically in the Concurrent list. Forests, various aspects of labour and education are some instances. Agriculture and land are in the State list. As are various taxes, constraining both direct and indirect tax reform. Consider Entry 23 in the State list. This is on regulation of mines and mineral development, but is subject to Entry 54 on the Union list. Pressures of economic development have led to tensions over both land and mines, UP and Orissa being two (but not only) instances. There are three broad points that transcend specifics.
First, the Seventh Schedule was formulated when mindsets were of state intervention interpreted as licensing, not regulation. Are assorted entries reflective of an era when one is resorting to privatisation, where regulation becomes more important than licensing? Second, accepting that India has been overly centralised (compared to a country like China), shouldn?t one revamp the Seventh Schedule, with a trimmed-down Union list and an expanded State list, with a Local Body list inserted? That would enable states that wish to reform to go ahead with land (or natural resources) or labour market reforms. Third, much is said about protecting rights of stake-holders. But is that best served through the intervention by central ministries?
Consider the agitating farmers in western UP first. This is in relation to land acquired by the government for the Noida-Agra expressway, under the Land Acquisition Act of 1894. There are known problems with this colonial piece of legislation, including the definition of ?public purpose?, executive delays and quantum of compensation. Once land has been acquired, if that land is to be used by a private entity, there also has to be transparency about how that entity was chosen. After all, one cannot exactly float global tenders.
However, there are issues that transcend public acquisition and apply also to private acquisition, and amendments to the 1894 Act won?t solve the problem. Political parties have fished in murky waters in UP, seeking to embarrass the BSP. But each political party will confront similar issues once it is a party of the government. First, what is appropriate compensation? The UP problem may have been temporarily solved by hiking compensation, but the core issue remains. There isn?t a freely developed land market, with competitive rates one can invoke to make comparisons. Assuming one has such a benchmark, what happens if land values increase subsequently, as they inevitably do? Even if there has been a voluntary contract between buyer and seller, third party intervention (often bypassing democratic norms) challenges that contract.
Second, there are increasing demands consequent on urbanisation and even industrialisation. Agricultural land has to be converted to non-agricultural usage and this has been the norm since the advent of human civilisation. Indeed, agriculture itself has developed through domestication of forests. Resisting such conversion is neither here, nor there. Arguing that multiple-cropped agricultural land shouldn?t be thus converted is also a non sequitur.
Urbanisation hasn?t occurred in wastelands. So, demands for urbanisation and industrialisation will also typically occur in regions where agricultural land is relatively fertile. At best this should be reflected in compensation paid. (If agro reforms are introduced, there will be no food security issue, since productivity levels are abysmally low at present.) Much of agriculture is low-productivity, subsistence-level and small-holder agriculture. There is no future there. People need to be taken out of agriculture, not kept there.
There are also side issues about negotiating land sales with several small holders (as in West Bengal) and resultant high transaction costs (unlike in, say, Punjab). And there is no sensible way of compensating those who earn a living from agriculture, as opposed to those who have clear titles to land. Third, one must recognise that much of resistance is linked to the lack of skills. It is because those skills don?t exist that there is resistance and fear of the loss of livelihoods. That?s true of both agricultural land and forests. Surely, the answer is not that we go and look for land and mines elsewhere in the world.
In Orissa, there have been allegations of violation of the Forest Rights Act (FRA), Forest Conservation Act (FCA), Environment Protection Act (EPA) and Panchayats (Extension to Scheduled Areas) Act (PESA). Let?s take PESA. Who has violated PESA? Not Posco or Vedanta, but state governments. This was documented in a State of Panchayats Report done for the Planning Commission by IRMA and the offending chapter (about non-compliance with PESA) was censored out, until it was dug out by Tehelka. But one shouldn?t form the impression that there are no issues of incompatibility between PESA, FRA, FCA and the Land Acquisition Act. There also incompatibility issues between the gram sabha/gram panchayat modes and customary norms in tribal areas. Has the environment and forest ministry amended FRA and FCA to make these compatible with PESA? Has it made its joint forestry management compatible with PESA? Having done none of this, an impression is being conveyed that the private sector is culpable.
The author is a noted economist