Should government buy land for industry?

Last week, the clock was turned back to the pre-liberalisation era when the National Advisory Council (NAC) proposed to prevent private companies from buying land directly from land owners where more than 400 families were to be displaced. This is reminiscent of a period when government controlled prices and enjoyed unfettered powers over industry. Ironically, the proposal has come while the country is looking at increased transparency for industry. In fact, the government has set up a committee to suggest transparent ways for allocating natural resources, including land.

The NAC is apprehensive that if left completely to private hands, it would result in cheating in rural areas where farmers and tribals are unaware of market conditions. This suggestion has come even when the State has failed in many regions to provide land to industry along with an acceptable compensation package to land owners. One of the major problems for land acquisition is to arrive at a fair value of land. In many countries, the valuation is done by independent licensed evaluators and in others by the buyer and seller. In India, typically the State plays a key role in determining the price of land and in the past this has been a major reason for conflict and dissatisfaction. Land owners perceive that they have been made to accept unfair compensation packages by the State under the ?Public Purpose? clause.

Gujarat and Haryana have successfully facilitated land acquisition to industry while addressing the concerns of land owners. Both states have encouraged the purchase of land directly from land owners by the private sector. Government interference is low and the private sector is permitted to directly engage in bargaining with land owners. Gujarat requires the market price of land to be determined by an independent institution like the Centre for Environment Planning and Technology University. The Union government can consider adopting the Haryana model of compensation, which provides for payment of annuity in the form of royalty for a period of 33 years for land owners. It could also consider making local employment mandatory within the project that is established on the acquired land.

The need of the hour is to provide a structured negotiating framework between the buyer and seller that would enable them to arrive at a mutually acceptable package. It is essential that this framework ensures participation of land owners and affected people.

Industry should be allowed to function in the market-based system for land acquisition and pay market determined prices to land holders, enabling them to sell their land voluntarily.

The author is head, manufacturing, Ficci. Views are personal

Bharat Wakhlu

Often problems that have a simple answer get confounded when those expected to solve them lose sight of the basic issues that are being solved. The same thing seems to be happening to the government?s endeavour to find a lasting and well-intentioned solution to the problem of land acquisition and the resettlement and rehabilitation of those displaced. It is, therefore, essential to revisit the basic points that we collectively need to address.

The first is that the archaic Land Acquisition Act of 1894 has to be dumped?not because land acquisition will not happen but because land as a scarce factor of production needs to be handled delicately and in a way that all stakeholders benefit from the process. The second point is that land will continue to play a pivotal role in stimulating economic growth in the country. Not just through better agriculture, which would require larger tracts of land, but even for the creation of urban metropolises, industrial development and a whole host of other requirements, which we may not even foresee today. Broadly, this is the definition of the problem.

Given the fact that land, along with labour and capital, is a very critical factor of production, it would stand to reason that no government that understands the nuances of this issue would ever suggest that it would have no role in the process of land acquisition or land-zoning. What distorts the process of arriving at a clean and wholesome solution to this problem is the mistaken belief, in certain quarters of the political leadership, that the enactment of policy solutions must not rile their political constituencies. Therefore, if the country needs progressive policies where some degree of land acquisition needs to be done for the greater good of the nation, those people who may be impacted by this have got to be given a fair deal and told clearly why such an arrangement has to be made. One cannot shy away from this important role that the political leadership has got to play from time to time. Expecting to implement decisions which everybody will embrace and happily accept all the time is a myth.

In the light of this, it should be clear to all concerned that the state and central governments will have to play an active role in the acquisition of lands, in zoning of all lands, and in digitalisation and the ?cleaning up? of all land records. When this is done, only then can governments play an active role in resolving critical issues such as food security, employment generation, urbanisation and industrial development. All of which will collectively assure that the lives of Indian citizens improve as the nation prospers.

The author is resident director, Tata Group, New Delhi