India’s Big Government

by Vivek Kaul

  And what does all this mean in plain English? As Jairam Ramesh and Muhammed Ali Khan write in Legislating for Justice—The Making of the 2013 Land Acquisition Law: “Acquisition of property is founded upon the universally recognised principle of ‘Eminent Domain’…. At its most basic, Eminent Domain refers to the inherent authority of the Government to acquire private property on the payment of fair compensation for a use that benefits [the] public at large…. The concept enjoys recognition under international law with the caveat that entities… whose land or property is being acquired must be justly compensated.”450

  In some countries, like Australia and Hong Kong, eminent domain is referred to as ‘resumption’. The term rests on the assumption that all land essentially belongs to the government in perpetuity and, whenever it takes over land for public purpose, it is only resuming its ownership. Ramesh and Khan call eminent domain a necessary evil, given that the government needs land for roads, airports, railway stations, hospitals, public schools, playgrounds for children, etc.451

  The Land Acquisition Act of 1894 gave the power of eminent domain to the government. Before India’s Independence in 1947, the colonial rulers used the Act to acquire land to build roads and canals. It was also used to serve other strategic colonial interests such as the building of cantonment areas, garrisons, telegraph offices and the railways.452

  The question remains as to why this Act continued even after Independence? Article 372 of the Constitution of Independent India, which came into force from January 26, 1950, allowed British-era laws to be incorporated into the Indian union unless they were explicitly repealed.453 The land acquisition law wasn’t repealed.

  This was primarily because the government decided to launch a massive industrialisation plan itself. As Arvind Panagariya writes in India—The Emerging Giant: “Nehru wanted India to be independent of foreign markets in a relatively short period of time. This meant… the development of the machinery sector, so that future investments would not have to depend on external sources of supply.”454

  This saw the start of many public sector enterprises. As mentioned earlier, in 1951, the government of India owned only five public sector enterprises, but the number exploded in the years to come. There was a basic difference between the land that was acquired by the British government before Independence and the land that was acquired by the Indian government after Independence.

  The British acquired land for infrastructure and governance, as well as to serve their own strategic interests. On the other hand, the Indian government, other than acquiring land for creating physical infrastructure and governance, also compulsorily acquired land for commercial activities, like manufacturing and trade. This increased the scope of the compulsory acquisitions of land carried out by the state.455

  Other than launching many public sector enterprises, the 1950s and the 1960s were also the years when the big dams as well as the big steel plants were built. All these ‘temples of modern India’ basically needed land. And for this, the government needed a readymade legislation which would help it acquire land quickly and without too much of a headache. This is why the Land Acquisition Act of 1894 continued to hold after Independence.

  The Act had a very wide-ranging definition of the public purpose under which the government could acquire land by using its eminent domain. This included land for: a) village sites or “the extension, planned development or improvement of existing village sites”; b) town or rural planning; c) planned development from public funds in pursuance of any scheme or policy of the government; d) any company owned or controlled by the government; e) homes to be built for the poor or the landless, or people residing in areas affected by natural calamities, or people displaced by the implementation of any scheme undertaken by the government; and f) education, housing, health or slum clearance schemes sponsored by the government.456

  This wide-ranging definition of ‘public purpose’ allowed the government to acquire land for the infrastructure that it was trying to build. It also allowed CPSEs operating throughout the country to acquire land that was needed to get these enterprises going. It also allowed the government to build new cities, like Chandigarh, as well as expand cities like Delhi (actually, New Delhi), where the central government is based.

  In fact, many dams and steel plants were started and built between the late 1940s and the early 1960s. The Bhakra Nangal dam in Punjab and Himachal Pradesh, the Damodar Valley Project in West Bengal and Jharkhand (then Bihar), and the Hirakud dam in Odisha (then Orissa) were all started in 1948. They were completed between 1953 and 1963. The steel plants in Bhilai in Chhattisgarh (then Madhya Pradesh), Rourkela in Odisha, and Durgapur in West Bengal had also been commissioned by 1961. Each of these projects needed more than one lakh acres of land. The only way for the government to acquire this land quickly was to use the public purpose provision of the Land Acquisition Act of 1894.457

  As per the 1894 Act, the landholder whose land was taken over was to be paid the market value of the land at the date of the publication of the notification announcing that the government intended to take over the land. Over and above this, the government had to pay a solatium of 30 per cent on the market price because of the compulsory nature of the acquisition. This was only after 1984. Until 1984, when several amendments were made to the Act, the solatium was limited to 15 per cent of the market price.458 A solatium is essentially a compensation given by the government for an emotional harm, rather than a physical or financial one. The government also had to compensate for any trees or crops on the land as well as movable and immovable property.459

  At least, this is how it was supposed to work in theory. But, as is the case with most things Indian, it did not. Take the case of the Hirakud Dam. As Sanjoy Chakravorty writes in The Price of Land—Acquisition, Conflict, Consequence:460

  In the case of [the] Hirakud Dam, the payment was Rs. 50-200 per acre (about Rs. 1,500-6,000 per acre in current prices)…. There are estimates that Rs. 12 crore were budgeted for compensation, reduced later to Rs. 9.5 crore, but the eventual pay-out totalled Rs. 3.32 crore…. Some 6,000 families are yet to receive compensation. Their claims, and the claims of the landless people who were also evicted but never considered for compensation, remain a live issue in Odisha politics.

  In fact, dams and other large public projects, the so-called temples of modern India, have inflicted some of the worst suffering in Independent India.461 As Ramesh and Khan point out: “While there is no comprehensive record of how many individuals have actually been displaced by land acquisition post-Independence, estimates put forth by credible studies find that close to 60 million [6 crore] individuals have been displaced since Independence. Worse still, only about a third of these have actually seen some measure of resettlement and rehabilitation.”462 These people, if they are alive today, must be very old.

  The 1894 Land Acquisition Act did not have any provision for rehabilitation and resettlement. What also needs to be mentioned here is that, when any government in India takes away land for a public purpose, it does not just impact the landowner. It impacts others as well. As mentioned earlier, Indian agriculture has huge disguised unemployment. This basically means that there are many more people involved in agriculture than are needed.

  Hence, when agricultural land is taken away by the government, it impacts those who work on the land as well. Furthermore, when entire villages, or a substantial part of a village, are taken over, it impacts the livelihood of the “people in the interstices of the economy based on land”. This includes domestic servants, menial labourers, potters, rickshaw pullers, etc.463 Estimates suggest that 25 to 40 per cent of the rural population is landless, but land dependent. This basically means that a significant portion of the population has been adversely affected by the land acquisition for public purpose carried out by the government. As far as the proportion of land is concerned, Chakravorty estimates that 10 per cent of the nation’s usable land (and not just agricultural land) has been adversely affected.


  What made the situation worse was the fact that the 1894 Land Acquisition Act had an urgency clause built into it. As Section 17 of the Act pointed out: “In cases of urgency, whenever the [appropriate Government] so directs, the Collector, though no such award has been made, may, on the expiration of fifteen days from the publication of the notice mentioned in section 9, subsection (1), [take possession of any land needed for a public purpose].”

  The urgency clause essentially allowed the government, operating through the Collector, to take possession of the desired land within a period of fifteen days. The nature of emergency could include natural disasters, emergencies on the railways or the maintenance of “any structure or system pertaining to irrigation, water supply, drainage, road communication or electricity”. The Act did not specify exact circumstances when the Collector could put the clause to use.464

  The British-era land acquisition law gave the Collector sweeping powers to invoke the clause. In fact, “what constituted an urgent situation was entirely a function of the Collector’s interpretation”.465 As Ramesh and Khan write: “Section 17 of the Land Acquisition Act, 1894, was used to forcibly dispossess people of their land in a frequent and brutal fashion by suspending the requirement for due process…. Section 5A… allowed for a hearing of objections to be made but put no responsibility on the Collector to take those claims into consideration.” So people could complain, but it was up to the Collector whether he wanted to listen to them or not. Furthermore, as mentioned earlier, the definition of urgency was also left “to the authority carrying out the acquisition”.466

  This clause allowed the collector to “take possession of the land within fifteen days of giving notice”. He could take possession of a building within 48 hours of giving notice.467 While the amount of compensation being offered could be challenged in court, yet Section 24(1) of the law made it very clear that the Court “shall not take into consideration… the degree of urgency which has led to the acquisition”. In the recent past, the urgency clause was used to acquire land for the Outer Ring Road project in Hyderabad as well as the Yamuna Expressway built in Uttar Pradesh.

  While the Outer Ring Road was a government project, the question is: How and why did the government acquire land for the Yamuna Expressway, which was a private project of the Jaypee Group?

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  Initially, the Land Acquisition Act of 1894 allowed the government to use the doctrine of eminent domain to take over land only if it was for a public purpose, like building roads, railways and canals, or a social purpose, like setting up government-run schools and hospitals. The Act also allowed the acquisition of land by the government for a company. Initially, the acquisition of land was restricted to railway companies. This is how things were until 1933, when an amendment was brought in allowing the government to acquire land for a private company for “the erection of dwelling houses for workmen employed by the Company or for the provision of amenities directly connected therewith”.468

  This was again changed in 1962. As the Standing Committee Report on the Land Acquisition Rehabilitation and Resettlement Bill, 2011, points out: “The ambit of the Land Acquisition Act of 1894 was then significantly expanded by a number of amendments in 1962, which permitted acquisition for a Company which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose.”469

  It needs to be pointed out here that even though the government was allowed to acquire land for companies under the 1894 Land Acquisition Act, it continued to own the land and collected rent from these companies. The land was leased to the private companies.470 In 1978, the 44th Amendment to the Constitution of India was brought in. This changed the Right to Property from a fundamental right to a legal one. This meant that no one could challenge the acquisition of private property by the government under the doctrine of eminent domain in the courts on the grounds that a fundamental right was being violated.471

  A major revision of the 1894 Act took place in 1984. In total, 21 sections were amended. Along with this, five new sections were added and one section was left out. This was the largest set of amendments that had ever been carried out to the Act in the nearly 120 years of its existence (between 1894 and 2013).472

  This significant amendment to the Act allowed the government to acquire land for a public purpose for a company. As the Standing Committee Report pointed out: “The amendments made in 1984 to the Land Acquisition Act, 1894, extinguished any differentiation between acquisition for a State purpose and acquisition for a private enterprise or State enterprise by amending Section 4 of the original Act to insert the words ‘or for a Company’ after ‘any public purpose’.”473

  This essentially opened the floodgates and led to the notoriety that land acquisition in India by the government has since come to be known for. In fact, state governments used this change to help acquire land for companies engaged in the manufacture of shoes, air conditioners, and even compressors. Land has also been acquired for hotels, swimming pools, and even golf courses, for that matter. And if all this wasn’t enough, land was acquired for housing colonies, ashrams and entertainment establishments.474 Many of these land acquisitions were made under the urgency clause. 475 This, of course, turned out to be a double-whammy for the landowners.

  Of course, none of these enterprises for which various state governments helped acquire land had a public purpose. It needs to be mentioned here that land happens to be listed in the State list of the Indian Constitution, which allows only state governments to make laws on land and land-related matters. But the acquisition and requisitioning of property happen to be on the Concurrent list, given that many national projects are of an inter-state nature, in particular those related to the creation of physical infrastructure, like roads and the railways.476 This gives both the central as well as the state governments the power to acquire land under the doctrine of eminent domain.

  In the 1975 Indrajit C Parekh versus the State of Gujarat case, the Supreme Court upheld the contention of the Gujarat government, which claimed that even a contribution of one rupee from the state exchequer by the state government was “sufficient to validate the acquisition” of land for private companies. This judgement has been used by various state governments over the years to justify the acquisition of land for private companies. In fact, some states have gone to the extent of contributing as little as Rs. 100 from the exchequer and then acquiring land for a private company.

  The Supreme Court has also gone on the record as saying: “The concept of public purpose has to be held to be wider than ‘public necessity’.” It has used this to permit the usage of the doctrine of eminent domain for the acquisition of land by state governments for the construction of a paper mill or a factory manufacturing (electrical) compressors.477

  States have also used such Supreme Court decisions to acquire land for a supposedly public purpose and then diverted it to a private company.478

  Take the case of the Yamuna Expressway. In 2009, the Uttar Pradesh state government acquired land from farmers and later sold it to the Jaypee Group at multiple times the price that had been paid to the farmers. This led to the farmers protesting. These protests turned violent, and several lives were lost as well.479 The Greater Noida Development Authority had bought land at Rs. 820 per square metre from the farmers and then sold it to real estate developers. When the land was sold to the real estate developers to build apartments, the cheapest rate that the Authority had charged was Rs. 35,000 per square metre.480 This was basically daylight robbery!

  There are several reasons as to why private companies like state governments buying land for them. First and foremost, land records in India are at best fuzzy. What we have in India until now is what the urban planner Swati Ramanathan calls presumed ownership. As she explains in a newspaper column: “The notion that a ‘sale deed’ is proof of ownership is misplaced.” The registration of property just acknowledges that “a transaction has taken place between two parties”. It does not guarantee in any w
ay that the seller of the property was the indisputable owner or that the buyer is the new owner.481 This explains why so many property cases end up in court. It is because a clear proof of indisputable ownership of land simply does not exist in India.

  As Morris and Pandey write in ‘Towards Reform of the Land Acquisition Framework in India’: “The deeds registration system is not guaranteed by the State and is inconclusive, typically leaving buyers with 30 years of title deeds to assess.”482

  However, it needs to be mentioned here that the state of Rajasthan has taken some positive steps towards establishing clear land titles in the recent past. On April 4, 2016, the Rajasthan Assembly passed the Rajasthan Urban Land (Certification of Titles) Bill. This legislation will give a statutory backing to land records. In the process, Rajasthan became the first Indian state to enact a law on property titles.

  With the Bill being passed, the Rajasthan government will have to get around to setting up the Urban Land Title Certification Authority. Anyone who wants a land title will have to apply to this authority. The act of applying for a title to this authority is voluntary.

  As Section 23 of the Act points out: “As soon as may be, after… receipt of [the] application… the Certification Authority shall scrutinise the information and the documents furnished by the applicant and seek their verification from the relevant record maintained by the State Government or any other authority to satisfy himself about the veracity of the information and authenticity of such documents.”