India’s Big Government

by Vivek Kaul

Several states have decided to offer the same compensation for both urban as well as rural areas. Take the case of Haryana. The compensation has been fixed at twice the market value and the value of the assets on the land irrespective of whether the land is in a rural area or an urban area. Defending the decision, a senior bureaucrat of the Haryana government said that this had been done “to avoid discrimination and dispute”.521 Of course, it also brings down the total amount of money that the government would have to pay for land.

  Madhya Pradesh also follows the same compensation formula as Haryana, at two times the market value and value of the assets on the land. The newly formed state of Telangana offers a compensation of three times the market value and value of the assets on the land in rural areas. The compensation is four times in rural areas in tribal belts. In Andhra Pradesh, the compensation is two and a half times in rural areas and three times in rural areas in tribal belts. In the case of Maharashtra, the compensation has been fixed at a little over two times for any kind of land within the state. In Karnataka, the compensation has been fixed at four times, unless the land is within five kilometres of municipal limits, in which case the compensation is three times.522

  Interestingly, in cases where the land is being acquired for a company, the company can offer the landowners compensation in the form of shares of the company. This compensation cannot be more than 25 per cent of the total compensation that needs to be offered.

  Other than recognising consent and offering compensation, which is much greater than what was offered under the 1894 Act, a Social Impact Assessment is required for all land acquisitions under the 2013 Act. There was no such provision under the 1894 Act. There are multiple objectives that a social impact assessment seeks to attain:

  a)It needs to be ascertained whether the land being acquired serves a public purpose.

  b) An estimation of the number of families that would be displaced due to the land acquisition and an accurate inventory of their holdings needs to be done. In fact, this was one of the major reasons of dispute at Singur in West Bengal, where Tata Motors wanted to establish their plant for the Nano. Many landowners in Singur were undercompensated because their land had been misclassified as low-grade, mono-cropped land rather than high-grade, multi-cropped land.523

  c) It needs to be ascertained whether the acquisition of land at an alternate place has been considered and found to be infeasible.

  d) It needs to be ascertained whether the total land area that is being acquired is the bare minimum that is required for the project under consideration.

  e) Also, the extent of lands, public and private, houses, settlements and other common properties that are likely to be affected by the proposed acquisition needs to be ascertained.

  The social impact assessment also needs to carry out a cost-benefit analysis, through which the land acquirer has to show that the objective which the project seeks to achieve justifies the cost of displacing the people who own the land as well as that of the people living off the land.524

  Section 5 of the 2013 land acquisition Act has also made it mandatory for the government, when acquiring land, to take into consideration “the impact that the project is likely to have on various components, such as [the] livelihood of [the] affected families, public and community properties, [and] assets and infrastructure, particularly roads, public transport, drainage, sanitation, sources of drinking water, sources of water for cattle, community ponds, grazing land, plantations, public utilities, such as post offices, fair price shops, food storage godowns, electricity supply, healthcare facilities, schools and educational or training facilities, anganwadis, children’s parks, places of worship, land for traditional tribal institutions, and burial and cremation grounds”.525

  The social impact assessment is mandatory, except for irrigation projects, and needs to be carried out within a period of six months. It has to be carried out in consultation with the representatives of the Panchayati Raj institutions. The reports that are prepared are to be shared with these individuals in the local language along with a summary.526 Also, the government which is acquiring land needs to ensure that the social impact assessment report is evaluated by an independent multi-disciplinary expert group.

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  The 1894 Land Acquisition Act had no provisions for rehabilitation and resettlement. As mentioned earlier, many people were displaced because of the land acquired under the Act. The government had been the primary acquirer of land under this Act. Nevertheless, it never got around to maintaining a record of the number of people displaced by land acquisition. Furthermore, other than the people who own land, in India there are people living on the land and also living off the land. Hence, the number of those displaced due to land acquisition is usually more than just that of the people who own the land.

  Also, those who were displaced because of land acquisition were usually not the ones who benefited from it. As Chakravorty explains:527

  Dams and reservoirs are built upstream from the regions that get the benefits of irrigation; the electricity generated goes to urban centres, industrial users and farmers who still have the land to run their pumps. Roads and rails carry goods and people through the taken land, enabling commerce elsewhere. Factories built on the taken land make steel or aluminium to be sold in national or international markets. The new townships around these factories house their officers and workers, not the unskilled farmers whose land the factories are built on.

  And so the story goes. In fact, once land is acquired and the area develops, the land prices in the area go up. Of course there is no way that people whose land has already been acquired can then benefit from it.

  The question is: Why were there no protests until the 2000s, when the government started to acquire land for private companies under the SEZ Act of 2005. In the fifties and the sixties, much of the acquisition was carried out to build public sector enterprises, dams and other physical infrastructure. Hence, there was a feeling of having contributed to the national cause.

  In fact, Nehru was aware of people being displaced because of land acquisition by the government. At the stone-laying ceremony of the Hirakud Dam in Orissa on the banks of the Mahanadi river, he had said in his speech to those who were displaced because of the project: “If you have to suffer, you should do so in the interests of the country.”528

  Also, it is safe to say that the number of people who gained because of land acquisitions clearly outnumbered the number of people who suffered from it. Chakravorty writes that “‘winners’ outnumber ‘losers’ by a factor of well over 100”.529

  This changed after the government started to acquire land under the SEZ Act. People whose land was acquired or was to be acquired could smell a real estate scam. Over and above this, the explosion of the media and the involvement of non-governmental organisations with the cause had huge roles to play as well.

  The 2013 land acquisition Act makes rehabilitation and resettlement of those displaced because of the acquisition of land mandatory. Here are some of the points that the Act lays down with regard to resettlement and rehabilitation:

  a) If the land being acquired is in a rural area and has a house built on it, then the family losing the house shall be provided with a constructed house as per the specifications of the Indira Awas Yojana. If the house that is lost happens to be in an urban area, then a constructed house which will not be less than 50 square metres in plinth area shall be provided.

  b) If the affected family does not own the land that is being acquired, but has been living on it for a period of not less than three years preceding the date of notification of the affected area, it shall also be provided with a house. If the family living in an urban area does not want a new house, it shall get a one-time financial assistance for house construction, which shall not be less than one lakh, fifty thousand rupees. In the case of a rural area, the equivalent cost of the house may be offered in lieu of the constructed house if the family does not want a constructed house.

  c) Each family
which loses land in the case of an irrigation project and whose status has been reduced to that of a marginal farmer or a landless labourer because of the acquisition needs to be provided, as far as possible, with a minimum of one acre of land in the command area of the project.

  d) If the land is being acquired for urbanisation, then “20 per cent of the developed land will be reserved and offered to the land-owning project-affected families, in proportion to their land acquired and at a price equal to [the] cost of acquisition and the cost of development. In case the project-affected family wishes to avail of this offer, an equivalent amount will be deducted from the land acquisition compensation package payable to it”.530

  e) In case the land that is being acquired is for a project which will create jobs, then the affected individuals (one per family) are to be provided with a job, after providing suitable training and skill development, at not less than the minimum wage. Another option is to give a one-time payment of Rs. 5 lakh per affected family. The third option is to give an annuity policy to every affected family. This policy should pay at least Rs. 2,000 per month per family. The amount needs to be adjusted for inflation ever year using the Consumer Price Index for Agricultural Labourers.

  f) Also, each family that is displaced due to land acquisition shall be given a monthly subsistence allowance equivalent to three thousand rupees per month for a period of one year from the date of awarding.

  g) Each affected family which is displaced shall get a one-time financial assistance of fifty thousand rupees as transportation cost for the shifting of the family, building materials, belongings and cattle.

  With these and many other such points, the hope was that the mistakes of the Land Acquisition Act of 1894 would not be repeated. In fact, providing housing as well as land to those displaced make up the major provisions of the rehabilitation and resettlement clauses under the 2013 Act. When the law was being drafted, some state governments were of the opinion that they would simply be unable to find so much land for rehabilitation and resettlement. But these clauses were not changed. As Ramesh and Khan write: “It was decided to stick with this requirement as it would act as a disincentive for wanton acquisition. It would also put pressure on State Governments to utilise their existing land banks more effectively.”531

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  Initially, there were sixteen (which were later reduced to thirteen) Acts under which land could be acquired without the provisions of the 2013 Act being applicable. This meant that provisions like compensation, social impact assessment, and rehabilitation and resettlement would not apply in the case of land that was acquired under any of these Acts. These remaining 13 Acts are as follows:

  1.The Ancient Monuments and Archaeological Sites and Remains Act, 1958

  2. The Atomic Energy Act, 1962

  3. The Damodar Valley Corporation Act, 1948

  4. The Indian Tramways Act, 1886

  5. The Land Acquisition (Mines) Act, 1885

  6. The Metro Railways (Construction of Works) Act, 1978

  7. The National Highways Act, 1956

  8. The Petroleum and Minerals Pipelines Act, 1962

  9. The Requisitioning and Acquisition of Immovable Property Act, 1952

  10. The Resettlement of Displaced Persons (Land Acquisition) Act, 1948

  11. The Coal-Bearing Areas Acquisition and Development Act, 1957

  12. The Electricity Act, 2003

  13. The Railways Act, 1989.

  Land acquired under most of the above-mentioned Acts would be for projects like roads, the railways, the metro, pipelines, powerlines, etc., which are linear (also referred to as row acquisition) in nature. What this means is that when land is acquired for such projects, landowners will not lose all their land, as could be the case with land being acquired for, let’s say, an SEZ.

  As the Secretary, Department of Land Resources, told the Standing Committee on the Land Acquisition Rehabilitation and Resettlement Bill, 2011:

  There is a slight difference in en masse acquisition and row acquisition. Row acquisition is like roads, railways, power supply and all, where very little land is being acquired. The reservation of these concerned Ministries is that if we are to apply rehabilitation and resettlement [R & R] to them, then they will have to provide… infrastructure… which is extensive. For rehabilitation, they will have to set up a school, community centres and other facilities, like post offices, roads, etc. Now, for a small chunk of land, they say that, if we have to be governed by R & R facilities as per the Bill, then it will not serve the purpose. That is why these Acts were actually considered and we thought that row acquisition should not actually form a part [of them].

  In fact, the 2013 land acquisition Act made it clear that its provisions wouldn’t apply to the above-mentioned thirteen Acts for a period of one year (i.e., until December 31, 2014). It further said that separate provisions would have to be made in order to pay compensation as well as rehabilitate and resettle the people affected by land acquisition under any of these thirteen above-mentioned Acts. The Bhartiya Janata Party-led National Democratic Alliance (NDA) government promulgated an ordinance in December 2014 and brought an amendment to this effect.

  It is interesting to point out here that, in the draft version of the 2013 Act, land acquired under the SEZ Act of 2005 was also a part of the exempted Acts. The Standing Committee of Parliament which looked into the Bill also pointed out the same. As they said: “Inclusion of [the] SEZ Act, 2005, in the Fourth Schedule is a case which doesn’t go well with the argument of [the] DOLR [Department of Land Resources] at all, as under this Act, en masse acquisition in thousand acres is done. Upto… March 2012, 587 approvals have been accorded for [the] formation of SEZs.”532

  The Fourth Schedule of the 2013 Act has a list of Acts. If land is acquired under any of these Acts, the provisions of the 2013 land acquisition Act do not apply. The Department of Land Resources had told the Standing Committee that exemptions under the Fourth Schedule are necessary because the land acquired under the exempted Acts was essentially row (i.e., linear) acquisition. But that wasn’t the case with the SEZ Act of 2005, where en masse acquisition of land was being carried out.

  The Standing Committee Report also quotes a response which they received from the Madhya Pradesh government and which summarised the feelings people had towards land acquisition being carried out for SEZs at that point of time: “There are 16 legislations which are being temporarily protected, which include even the SEZ Act, which gave birth to all these controversies on the question of land acquisition.” Other than the SEZ Act, the Cantonments Act, 2006, and the Work of Defence Act, 1903, had also been originally placed in the list of exempted Acts. But the Defence Ministry clarified to the Standing Committee that it had not asked for an exemption from the Bill (which would become the 2013 land acquisition Act) and that it would undertake all the compensatory provisions.533

  Finally, these two Acts, along with the SEZ Act were dropped from the Fourth Schedule of the 2013 land acquisition Bill when it was passed. Nonetheless, the interesting thing is that something similar to a Special Economic Zone seems to have found its way into the Act. Section 2 of the Act allows acquisition of land for “national investment and manufacturing zones, as designated by the National Manufacturing Policy”.

  The National Manufacturing Policy defines national investment and manufacturing zones as “large areas of developed land with the requisite eco-system for promoting world-class manufacturing activity”. The national investment and manufacturing zone “would have an area of at least 5,000 hectares in size”.

  The size of land required to start a national investment and manufacturing zone is much bigger than that required to start an SEZ. The minimum amount of land required to start a multi-product SEZ is 500 hectares. This was revised in September 2013 from the earlier 1,000 hectares. For a sector-specific SEZ, the minimum land required is 50 hectares instead of the earlier 100 hectares. The point being that the land required to establish a national investment and manuf
acturing zone is many times that of an SEZ. Hence, it will not be as easy to get a real estate scam going in the name of a national investment and manufacturing zone as it was with an SEZ.

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  Before the 2013 land acquisition Act was passed, land acquisition by the government for itself or for a private company was basically more or less a cakewalk. The 2013 Act changed all that and land acquisition has now become extremely difficult. In fact, Jairam Ramesh admits in his book that the idea was to discourage land acquisition. As he and Khan write in Legislating for Justice: “The law was drafted with the intention to discourage land acquisition. It was drafted so that land acquisition would become a route of last resort.”534

  After the enactment of the 2013 land acquisition law, the total number of shelved, abandoned or stalled projects went through the roof. Data from the Centre for Monitoring Indian Economy (CMIE) suggests that, in 2013-2014, projects entailing a total of Rs. 6,26,000 crore of investment were shelved, abandoned or stalled. This was the highest in Indian history. The total number of projects shelved, abandoned or stalled stood at 524.535 Of course, the difficulty in acquiring land was not the only reason for the stoppage of these projects.

  As per the CMIE, the major reasons listed were difficulties in land acquisition, the promoter’s lack of interest and a delay in getting environmental clearances. In fact, the Economic Survey of 2014-2015 had listed the land acquisition problem as the top problem for the stalling of government-owned projects.

  Actually, the number of stalled projects, expressed in terms of both value as well as volume, had begun to rise in early 2009. Between 2000 and 2008, the average quarterly stalling of projects was around Rs. 14,300 crore. This number started to rise after 2007-2008, when the global financial crisis started in September 2008, after Lehman Brothers, the fourth largest investment bank on Wall Street, went bust. In 2008-2009, the value of the stalled projects rose to Rs. 58,600 crore. In 2009-2010, it was at Rs. 57,300 crore. It fell in 2010-2011 to Rs. 40,200 crore. The quarterly average of stalled projects jumped to Rs. 1,20,000 crore in 2011-2012. It was at Rs. 1,10,000 crore in 2012-2013 and Rs. 1,60,000 crore in 2013-2014.536