Aiming to strike a balance between the needs of India Inc on the one hand and landowners and other stakeholders on the other, the land acquisition Bill, while running the risk of falling between two stools, contains a slew of pragmatic clauses that have been broadly welcomed by corporate India, and the Centre can best hope that the legislation will serve as a benchmark for states
The Right to Fair Compensation, Resettlement, Rehabilitation and Transparency in Land Acquisition Bill, 2011, first-tabled in Parliament in September 2011, was passed by the Lok Sabha on Thursday after vetting by the relevant House committee and the formation of an all-party near-consensus in April this year on some of the key provisions. The Bill, which has taken several years to take shape, seeks to annul and replace the Land Acquisition Act, 1894, which, for its opaque ?eminent domain? clause reminiscent of the colonial-era, became a tool in the hands of many administrations to usurp private property from the weak and hapless under the garb of public purpose and transfer it, by stealth, to the favoured.
For the record, the proposed piece of legislation aims to bring transparency and optimum ease in acquisition of land by the state for its own use and in aiding private enterprises to get land for activities defined as ?public purpose?, which includes production of goods and provisioning of services.
That the jury is still out on the efficacy of the Bill is clear from rural development minister Jairam Ramesh, the architect of the Bill, receiving both bouquets and brickbats. Ramesh has tried to strike the ?right balance? between the industry?s mandate to prosper and propel growth and defining, reasonably and justly, and the right of the land owner/farmer to decide whether to part with his property and also his right to fair compensation in case of alienation of land and adequate rehabilitation. The Bill is, therefore, equipped with a consent clause, a compensation clause and a resettlement and rehabilitation (R&R) clause ? all well-defined.
The Parliamentary standing committee had argued against the government acquiring land for private firms or PPP projects even when public interest is involved. Ramesh, however, retained the proviso for acquisition of land by the government for PPP projects. Also, in a pragmatic approach, and in what would increase land availability for industry, the Bill provides for acquisition of up to 5% multi-crop land of a district as ?last resort?, with a rider that an equal area of wasteland in that district will have to be developed.
Industry ? hamstrung by long delays and procedural hurdles in getting land for their projects ? has broadly welcomed the Bill, as modified following the April consensus, even as it is unconvinced that the codification in the Bill would create uniformity of norms and standards across states and would keep the cost of land acquisition at reasonable levels. One view is that the courts might strike down the R&R obligations on the industry, for Parliament?s lack of jurisdiction to impose such conditions on private purchase of agricultural land.
India Inc also feels the compensation and R&R requirements proposed would increase the cost of land acquisition by six to seven times (The Bill says compensation for the owners of the acquired land shall be four times the market value in rural areas and twice in urban areas). The Bill also prescribes that consent of 80% of ?affected families? is a must for acquisition for private-sector projects and 70% for PPP projects for the defined public purpose. The government will acquire land for larger projects while industry can directly purchase land subject to an upper limit of 100 acres in rural areas and 50 acres in urban localities. India Inc believes that this is too onerous. It could be extremely time-consuming, if not frustrating, to secure such consent.
Purchase of large parcels of land by private companies is what will lead to R&R obligations. The industry contends that application of R&R to purchase land from willing buyers defies economic logic. The industry is worried that it needs to pay for 25 infrastructure facilities as part of R&R; further, it wants its R&R contribution to be put in an escrow account and ongoing commitments like annuities and other benefits to be administered by another designated agency.
Another concern of the industry is about the reported plan to provide in the Bill for land to be leased to industry in addition to acquisition. The stated purpose of this move is to ensure that ownership remains with the farmer and he gets a regular income. Industry body Ficci says although a lease might significantly reduce the front-end outlays, it has inherent uncertainty regarding renewals, particularly when the period is short. Besides, Ficci says, a lease may restrict flexibility over development and operations, and leased land would impact mergers & acquisitions as there are obvious limitations to the automatic transmission of leases in rearrangements. The Bill stipulates that where acquired land is sold to a third party for a higher price within 10 years of the acquisition, then 40% of the appreciated land value will have to be shared with the original owners. While land owners would wholeheartedly welcome this, the industry won?t.
The new land Bill is undoubtedly an improvement upon the current state of affairs, which is marked by an absence of transparent pan-India system for land acquisition by industry and by the government for development purposes. But it falls short of being ideal for various reasons mentioned above. Land policies being on the State List of the Constitution, what best the Centre can expect is that states would adopt the central law as a benchmark while framing their policies.