by Vivek Kaul
The really large categories of displacement impact are really entirely in the domain of the state—water (over 38 per cent of displacement), transportation (almost 15 per cent), welfare and administration (almost 13 per cent), and environment (over 9 per cent) are the top categories. The two categories where the private sector has a significant, but not exclusive, role are industry and mines, which together account for less than 15 per cent of the total impact. Remember that really large industrial projects are steel plants and [the] attached townships created by the state, and big mining items like coal and oil are almost entirely under state ownership. Also note that a really large state project, like the Sardar Sarovar Dam, which needs several hundred thousand acres (estimates vary), is several hundred times larger than a cause célèbre like the Nano factory at Singur [which never really took off], which needed a mere 1,000 acres.
All this leads Chakravorty to conclude that the private sector has been responsible for only 10 per cent of the impact, whereas the governments (both the central government as well as the state governments) have been responsible for 90 per cent or more when it comes to displacing people.
A distinction needs to be made here between the land acquired before 1991 and that acquired after 1991. In fact, 1991 was the year when the PV Narasimha Rao government initiated economic reforms. Since 1991, the government has been acquiring more and more land for private companies.
While public sector enterprises may not have been the best way to go about creating economic growth in India, given that India’s primary strength was labour, they did fulfil some amount of public purpose. As Michael Levien writes in a research article titled ‘From Primitive Accumulation to Regimes of Dispossession—Six Theses on India’s Land Question’:505
Since 1991, India has passed from a regime that dispossessed land for state-led industrial and infrastructural expansion to one that dispossesses land for private—and increasingly financial—capital. Between 1947 and 1991, the Indian state largely dispossessed land for public-sector projects to expand the industrial and agricultural productivity of the country. The main forms of this dispossession were public sector dams, steel towns, industrial areas and mining.
Let’s take the case of steel towns, a major reason for which land was acquired after Independence. As Levien writes: “India’s public sector steel towns provided relatively high quality employment to tens of thousands of people, including many of those whom they [had] displaced…. They had huge linkages with the domestic economy and generated ancillary industries in their vicinity. And their revenues were captured by the state. Even dams, for all their many problems, at least produced electricity and provided irrigation to hundreds of thousands of farmers.”506
The same cannot be said for the land acquisition that has been carried out by the government for the private sector post-1991. As we have seen earlier, land was acquired by the government for the private sector for things like swimming pools and golf courses, which really did not serve any public purpose. Of course, the companies running these projects got the land cheaply as well.
In 2005, the Congress-led United Progressive Alliance (UPA) government passed the Special Economic Zones (SEZs) Act. In fact, SEZ, in the Indian case, is an umbrella term used for more specific zone types which include Export Processing Zones (EPZs), Free Trade Zones (FTZs), free ports, Free Trade Warehousing Zones (FTWZs), etc. Interestingly, India was the first country in Asia to set up an SEZ. The first EPZ, set up in Kandla in Gujarat in 1967, was Asia’s first SEZ. This was followed by the Santa Cruz Electronics Export Processing Zone (SEEPZ), which was set up in Mumbai in 1972. In 1984, four more EPZs were set up in Noida, Cochin, Falta (in West Bengal) and Chennai. In 1989, another EPZ was set up in Vishakhapatnam. These EPZs are referred to as the first generation of SEZs set up in India.507
But the real boom in SEZs came after the 2005 SEZ Act was passed by the UPA government. And this is when the real trouble started. In fact, hundreds of SEZs were approved over the next few years. Between 2006, when the rules of the SEZ Act were put forward, and mid-2010, 570 SEZs had been formally approved. More than 70 per cent of these SEZs were in Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu. While the total land that was acquired by these SEZs wasn’t huge, yet they did manage to create potential sites of conflict all over the country.508
This was primarily because of the way that the land acquisition policy for SEZs had been structured. If the promoters managed to buy 70 per cent of the land, the government would help acquire the remaining 30 per cent. In some cases, like Nandigram in West Bengal, the government even volunteered to acquire 100 per cent of the land for an SEZ to be developed by the Indonesia-based Salim Group. In fact, in March 2007, the West Bengal government sent 2,500 policemen to capture the land. In the firing that followed, as per the police records, 14 farmers were killed and over 100 were declared missing.509
The reason that the state government of West Bengal and other state governments wanted to acquire land for SEZs was to attract private investment in the state. As Nirupam Sen, the then Industries Minister of West Bengal, explained: “Providing land is one of the most important things, you see, because until and unless you get hold of the land, there is no question of setting up industry…. That is the most important input. If you don’t get it, if you cannot provide it, then they [i.e., private companies] will seek somewhere else where they can get that land.”510
This became a sort of a race to the bottom. As Levien puts it: “According to both government officials and industry representatives that I interviewed in seven states, the ability of state governments to dispossess peasants has become of critical importance in the inter-state competition for investment.”511
In fact, investor capital always has the option of fleeing to another state where the land prices are lower. As Levien puts it:512
Capital can always flee to states that are better able to politically manage giving lower [land] prices—Andhra Pradesh, Tamil Nadu and Gujarat, for example, all acquire land without giving particularly high compensation (though not without problems). This generates a race to the bottom. As an official with the Haryana Indus trial Development Corporation told me, since Haryana put into place its unprecedentedly high remunerative compensation policy at the behest of powerful farmers’ groups, high land prices have become a deterrent to investors, who are going to other states.
Also, the SEZs were used to set up non-labour-intensive industries, like information technology. Estimates suggest that almost twothirds of the SEZs are in the information technology and information technology-enabled sectors. These companies like to set themselves up in SEZs because it gives them a tax advantage.
Furthermore, the acquisition of land for SEZs essentially morphed into a real estate scam. In the case of the Indian SEZs, the government’s role was limited to forcibly acquiring land. As a Commerce Ministry official put it, India’s SEZ model “is not strictly PPP [Public-Private Partnership] because the government is not putting a single penny in. It’s purely privatised”.513
The private companies were expected to build the SEZ, unlike in China, where the government actually built the SEZs. It was argued that the government itself could not build the infrastructure required at the scale that had been envisioned. And perhaps that was true as well. But the other option, i.e., of getting the private sector to build it, ultimately morphed into a land-grabbing exercise.
Initially, the processing area in any SEZ was supposed to be a minimum of 35 per cent of the total area of the SEZ. The processing area is essentially the area for the setting up of “units for activities, being the manufacture of goods or rendering services”. This was later increased to 50 per cent.
The remaining area was referred to as the non-processing area. The SEZ rules allowed residential and commercial complexes to be built in this area. As Michael Levien writes in ‘Regimes of Dispossession: From Steel Towns to Special Economic Zones’: “While the manufacturing sector lobbied for the liberal concession
s that were made available to exporting companies within SEZs, real estate companies and large corporate houses actively lobbied for the opportunity to privately develop them. An official overseeing the SEZ unit of a major Indian industry association explained to me that real estate developers lobbied for SEZs because they would be ‘very low cost’ as the government would ‘provide some benefits like basic infrastructure facilities… as well as [the] cheapest land’.”514
Hence, SEZs were seen as an opportunity to build residential complexes on cheap land on the outskirts of cities. As Levien puts it:515
Since the highest value land use is housing, most developers saw SEZs as an opportunity to build satellite cities on cheap government-acquired land at the urban periphery in the midst of an unprecedented real estate boom. Some profit could be made by reselling agricultural land as ‘developed land parcels’ — in the words of one SEZ executive — to industry; more profit would be made by developing housing and other urban amenities. Consequently, SEZs became an outlet for speculative real estate capital, which explains the scale and speed with which they spread across the country — 464 were approved in the first sixteen months.
This brazen acquisition of land by the governments using the SEZ Act was the tipping point. Years of discontent finally started to manifest themselves, and there were protests. Other than Nandigram, protests were seen in places like Singur in West Bengal, Raigad in Maharashtra, Kalinganagar, Niyamgiri and Jagatsinghpur in Odisha, and Bhatta Parsaul in Uttar Pradesh. There were also protests in Odisha at the site of the $12 billion steel plant which was to be established by the South Korean company POSCO. This was also India’s biggest foreign investment. The brazenness of the land acquisition also got the intelligentsia and the NGOs involved in the protests against the same.
Ultimately, these protests found their voice in Parliament as well, with the Members of Parliament (MPs) across party lines talking about it. Consider what Sher Singh Ghubaya, a Lok Sabha MP belonging to the Shiromani Akali Dal party, had to say: “In India, we have created about 550 SEZs in recent times. This is a very high number. Nowhere in the world have these many numbers of SEZs been created. It seems as if bungling, malpractices and irregularities at a large scale are going on in the creation of SEZs. The land mafia is indulging in loot and plunder in collusion with powerful and corrupt elements, whereas the original landowners have been left in the lurch.”516
Ajay Kumar, a Lok Sabha MP from Jamshedpur and belonging to the Jharkhand Vikas Morcha Party, had this to say: “Until now, 500 SEZs have been established. A newsreport had come [out] that said that, of these, 300 SEZs are not being used for the reasons they were originally established for.” 517
Asaduddin Owaisi, a Lok Sabha MP from Hyderabad and belonging to the All-India Majlis-e-Ittehadul Muslimeen Party, had this to say: “Land under SEZs around Hyderabad is going to the real estate companies. On the one hand, you say that you do not appreciate SEZs, and on the other, all the SEZ land has gone to the real estate companies. Blatant abuses of land are happening around Hyderabad.”518
In fact, in November 2011, the Supreme Court said: “It has been felt that the Land Acquisition Act, 1894, does not adequately protect the interest[s] of owners/persons interested in the land. For years, the acquired land remains unused. To say the least, the Act has become outdated and needs to be replaced at the earliest with fair, reasonable and rational enactment in tune with the constitutional provisions.”
Finally, on September 5, 2013, Parliament passed the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act (RFCTLARR). This Act came into force from January 1, 2014. After nearly 120 years, the Land Acquisition Act of 1894 was finally given a state burial.
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So what were the salient features of the land acquisition Act of 2013 that made it different from the Land Acquisition Act of 1894? The definition of urgency has been curtailed under the new law. The enormous power that the government and the collector had in the 1894 law has been done away with.
As per Section 40 of the 2013 Act, the urgency clause to acquire land can be invoked by the government only in the following two cases: a) national defence and security purposes; and b) resettlement and rehabilitation that needs to be carried out in the event of a natural calamity, like a flood or an earthquake. The Act also allows the acquisition of land under the urgency clause for any other emergency subject to the approval of Parliament.
Hence, the totally random way in which land was being acquired in the past to serve a private purpose instead of a public one cannot happen under the new Act.
The term ‘public purpose’ was fairly loosely defined in the 1894 Land Acquisition Act. Almost anything could have been passed off as a public purpose. As the Supreme Court said in the Rajiv Sarin versus the State of Uttarakhand case on August 9, 2011: “In the last sixty years… the concept of public purpose has been given quite a wide interpretation.”
The 2013 land acquisition Act limited the definition of public purpose for the acquisition of land for: a) strategic defence purposes and national security; b) infrastructure projects, which does not include private hospitals, private educational institutions or private hotels; c) project-affected families; d) housing for residential purposes for the poor and the landless; e) housing for a specified income group; f) educational schemes run by the government; g) national investment and manufacturing zones as defined by the National Manufacturing Policy; and h) industrial corridor or mining activities, and so on.
What is interesting is that the Act did not make the acquisition of land for a private company illegal. The government could still acquire land for a private company or even for a public-private partnership as long as the activity being planned came under the definition of a public purpose.
Furthermore, the Act also requires the consent of the people from whom the land is being acquired. The 2013 Act needs the consent of 70 per cent of the families affected by the acquisition of the land in the case of a public-private partnership. If the land is being acquired by the government for a private company, then the consent of 80 per cent of the families affected by the acquisition is required. The affected families aren’t just defined as the landlords who own the land that is being acquired. It also includes families whose livelihood over the previous three years has been dependent on the land being acquired. In urban areas, any family living on the land being acquired would also be treated as an affected family.
This definition is in line with the fact that disguised unemployment in India is high and that not just landlords are dependent on the land that they own.
Jairam Ramesh, a minister in the UPA government and who was a key architect behind the 2013 Law, has clarified in his book Legislating for Justice that the 70-80 per cent levels had been thought through and were not just random figures. It was felt that the consent required should not be in a position to be manipulated, and hence, should be sufficiently wide. Secondly, it was important that the consent of a sufficiently large number of the people who are to be displaced by the particular case of land acquisition be taken into account so that they would also be involved in the development process.
Of course, there are cases in which consent isn’t required. Consent isn’t required if the government acquires land for its own use and control without selling it to private parties.
The 1894 Act provided a compensation of 1.3 times the market value of the land that was acquired. The 2013 Act’s compensation formula is a little more complicated than that. First, it pays the market value of the land. The market value is defined as the higher of “the minimum land value, if any, specified by the Indian Stamp Act of 1899 for the registration of sale deeds in the area where the land is situated; and the average of the sale price for a similar type of land situated in the immediate areas adjoining the land being acquired, ascertained from fifty per cent of the sale deeds registered during the preceding three years, where a higher price has been paid”.519
Secondly,
other assets on the land at the time of acquisition, like buildings, trees, wells, agricultural crops, etc., also need to be paid for. The market value of the land, along with the value of the other assets, forms the total compensation. A solatium of 100 per cent of the total compensation needs to be paid as well. This basically means that anyone living in an urban area and whose land is being acquired needs to be paid twice the value of his land as well as the total assets on the land.
When it comes to rural areas, a multiplier factor of up to twice the total compensation comes into play, depending on how far the rural area where the land is being acquired is from the nearest urban area. Hence, if the land being acquired is in a rural area, a payment of up to four times the market value of the land as well as the assets on the land has to be made (see Table 8.1).
Table 8.1: Multiplier factors for the compensation offered under the 2013 land acquisition Act.
Radial Distance from an Urban Area (km) Multiplier Factor
0-10 1
10-20 1.2
20-30 1.4
30-40 1.8
40-50 2
Source: The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act (2013) – An Overview.
Hence, if the land being acquired is within ten kilometres of an urban area, then the payment will be similar to the one being made if a similar piece of land were to be acquired in an urban area. If the land acquired is 20-30 kilometres away from an urban area, then the compensation would be 1.4 times the urban compensation. This would mean a compensation of 2.8 times (1.4 × 2) the market value of the land as well as the total assets on it. Also, it needs to be said here that the “sliding scale on the basis of which compensation is to be calculated (2-4 times the market value) has been left to the discretion of the State Governments”.520