Land(ing) In Trouble

Where is the country headed? I am certain this question has been bogging your mind just as it has been troubling me. The passing of the Land Acquisition Bill by the present government clearly reflects its desperation to secure votes by selling hope and derailing the momentum of growth in our economy.

What is the government trying to achieve by bringing in this new Land Acquisition Bill? A better deal for land owners, or so it says.

However, take a look at the various provisions of the bill and you would find that most of them actually serve as deterrents to rather than facilitators of better deals for landowners. Not a single provision that the law enacted seeks to enforce stands in the interest of the purported beneficiaries.

According to the provisions of this Act:

• Private companies will be required to implement resettlement and rehabilitation in case the land acquired is more than or equal to 100 acres in rural areas and more than or equal to 50 acres in urban areas.
• Every acquisition requires a ‘Social Impact Assessment’ by an independent body in consultation with the Gram Panchayat.
• 80 per cent consent of the landowners, including Project Affected People, is now required for acquisition. 
• A maximum of five per cent irrigated, multi‐cropped land may be acquired in a single district. For the same project, viz. railways, highways, ports, power, irrigation projects, ‘consent’ requirement is only for private companies and not for PSUs.

A large developing economy is starving to consume several thousand projects which would need a land bank exceeding 100 acres to sustain its growth rate. Thus, one can assume that every industrialist or business entity wanting to feed our economy with development will now have to play the role of a resettler and rehabilitator. This will adversely impact the value proposition of such projects by enhancing the costs and the time required to execute them. Also, there is no guarantee that an industrialist or a business entity would do justice to resettlement and rehabilitation as this is not their core area of expertise. I can understand that the government by enacting this is clearly trying to shy away from its responsibility and at the same time is trying to create a third entity who could be conveniently blamed for shoddy development.

“Social Impact Assessment” by an independent body is adding another hurdle in acquisition of land and this could indefinitely delay projects. Ideally, a progressive government should run annual surveys independently to identify land banks which have the least social impact and create zones for development and establishment of projects. Doing such an assessment on a case-to-case basis can completely miss the holistic impact and also result in ad hoc clearances based on the whims and fancies of independent bodies which are created by the authorities under political influence for the purposes of clearing and obstructing such acquisitions. Such decisions will lead to more litigations and unplanned development that risk impacting the society adversely.

Getting the consent of 80 per cent of not just landowners but also the Project Affected People for acquisition is a ridiculous proposition and will act like a double-edged sword. The rich and the powerful will surely deploy the services of “Goondas” to get consent forcibly, leaving the farmer with an additional force to deal with and eventually leaving him with just hope and no monies. This could also be used as an arm twisting tool by the land owners (supported by local leaders) for extracting monies from progressive industrial groups and multi-‐nationals, thus paving way for more Goondaism and more corruption in this already corrupt nation.

The most glaring and presumptuous provision is in relation to the pricing of the deal. The earlier Act provided for the determination of land prices based on market value. The new Act has devised a unique method of land pricing. Accordingly, market value will be the higher of either (a) the value specified for stamp duty, or (b) the average of the top 50 per cent by recorded price of sale of land in the vicinity. For rural areas, the market value is doubled, while it remains the same for urban areas. Over and above, the value of all assets (difficult to count and value) such as trees, buildings, etc. on the land has to be added. On this amount, a 100 per cent solatium (extra compensation for forcible acquisitions) is added to arrive at the final compensation figure. In case of urgent acquisitions, a further 75 per cent needs to be paid.

This results in the price for rural land going up by four times the market value, while it would be double for urban land. These are very interesting mechanics for fuelling the real estate bubble, which has been growing over the years and making the land affordable only to those who belong to the elite class with large amounts of unaccounted money. An inflated real estate will only attract speculators and not real investors, putting our economic situation to further risk. Or maybe a lot of the land is already hoarded by the kith and kin of the present government and this is a great trick to help them grow their wealth exponentially. But I am sure this will not bring prosperity to the farmers and will add one more empty promise to the long list of growing false promises.

It seems that this bill has been developed in the offices of some strategists who are living in Ivory towers far away from the realities. Inflated cost of land coupled with delays in acquisition will surely repel genuine investors and attract only speculators and hoarders. The only means of creating sustained prosperity would be to have investors utilising our land for development and not speculators and hoarders who are trading on the land to maximise and multiply their wealth.

It is now evident and clear that this government has been working hard to deliberately stall a promising economy for its immediate gains. By the passing of this bill, I am convinced that India is destined to struggle further to regain its economic independence and deliver on the expectations of its vast population. I am hoping that the next government sees through the potential permanent damage that these two bills will cause to our nation and that they push for amendments or revocation of these hurriedly passed bills. On a lighter note, I must admit that this is the most efficient use of the national exchequer to buy votes by selling false hopes of a richer future to our poor farmers.