One Step Forward, Two Steps Back: The case of land acquisition in India

By Prashant Rayaprolu (special to CDHR)

LogoIn 2013, in response to a number of protests regarding forceful and arbitrary expropriation of land, the Land Acquisition and the Right to Resettlement and Rehabilitation Act (LARRA 2013) was passed with support across party lines. This law replaced the colonial 1894 land Acquisition Act, which was coercive in nature and legitimized arbitrary expropriation of land by the state. In India, historically and until today, land is acquired by agencies of the state government such as the state level development authorities. The land is then either given to the private sector or used by the state. The responsibility of land acquisition in India lies with the states and the center, with state governments free to improve upon a law passed by the central government. The freedom exercised by the state governments with regard to land acquisition have led to varied outcomes across states.

Prior to the LARRA 2013, Tamil Nadu had passed their land acquisition law in 1999. The act had allowed for residents to voice their grievances after the states expresses its intent of acquiring land. Simultaneously, the state’s development agencies have made a conscious effort at forming land banks, which are sold to industry or used for developing public infrastructure.[1] On the other side of the spectrum, we see West Bengal, a state that had undertaken land reforms, but has failed to industrialize over the years. West Bengal has used the colonial act of 1894 in order to acquire land for industry. The recent case of the failure of the Tata’s pulling out of West Bengal because of peasant protests against the expropriation of land illustrates this failure.[2]

Given that manufacturing only contributes to 14.07% of the GDP – with Gujarat, Tamil Nadu and Maharashtra contributing to the bulk of it – and given the poor state of infrastructure in the country, the government has made its intent clear to increase the share of manufacturing as well as to invest more in public infrastructure.[3] The government’s position is that one of the major requirements for achieving a high level of growth in manufacturing and improving public infrastructure is availability of land. Taking West Bengal and Tamil Nadu as examples, the relative ability of the state to acquire land for industry in a relatively peaceful manner in Tamil Nadu has led many to believe this to be one of the major factors in achieving high levels of industrial growth. On the other hand, the protests in West Bengal, in response to coercive methods employed by the state, may be a contributing factor to the low levels of manufacturing in West Bengal.

Amendments proposed by BJP-led government.

On December 31st, 2014, the Bharatiya Janta Party (BJP) led government passed an ordinance to amend LARRA 2013 on December 31st 2014. This ordinance sought to exempt land acquisition for “national security or defence, rural infrastructure or electrification, affordable housing, industrial corridors, and infrastructure and social infrastructure projects”[4] from receiving consent from landowners and a social impact assessment (SIA). This exemption is applicable for private entities and public-private-partnerships acquiring land for the previously mentioned purposes. The LARRA 2013 had mandated consent from 80% of landowners for acquisition for the private sector and consent from 70% of landowners for acquisition for PPP-sector. The part of the Act that has remained intact is the resettlement and rehabilitation and compensation. The compensation package was stipulated at four times the market rate for rural areas and two times the market rate for urban areas. Largely intertwined with LARRA 2013, the Forest Rights Act is also in the process of being diluted by the BJP-led government.

India has witnessed an era of jobless growth following the economic liberalization policies of 1991. Most of the jobs in this era were created in the services sector and specifically in the information technology (IT) sector. To a small extent, there is evidence to show that there are a growing number of non-farm enterprises that are extremely small and generally provide goods and services to meet the growing material demands of the village. The growth of this non-farm sector is seen as a failure of manufacturing to absorb the surplus labour in India.[5] Building on this mixed record of industrialization in India, the new government had promised to make India a manufacturing hub through the ‘Make in India’ program. According to the dominant discourse in the country, and evidently according to the government, acquisition of land was one of the major barriers to industrialization and thus a barrier to ‘Make in India’. For their Make in India dream to be a reality, the government had eased the rules governing attaining the consent of the landowners and land-inhabitants and also the rules governing social impact assessments.

Critique of proposed amendments.

While the government may be well intentioned in its attempts to revive industrial growth in India, the approach to land acquisition is inherently flawed in many ways. Firstly, LARRA 2013 has not been implemented in many states, and as such, there is insufficient evidence to assess the success or failure of LARRA 2013.

Secondly, does removing the consent clause imply there will be no resistance to state-acquiring land? Given how active the civil society, media, judiciary and grassroots movements are in India, it would be naïve to assume that there would be no resistance to coercive attempts at acquiring land. A report jointly authored by Rights and Resources Institute and Promotion of Watershed Development finds that there are at least 250 conflicts between 2013 and 2014 on account of land expropriation.[6] Far from aiming to stall projects, the consent clause aims to move projects ahead with consent rather than through force. The consent clause is also a departure from the idea of people as an obstacle or cost to people as a part of development. Unfortunately, the BJP government’s amendment reflects a revival in the idea of people as being a cost to development.

Another issue that may arise is where private companies, on the pretext of creating schools and hospitals, may get land and use it for their offices or business. India’s Special Economic Zones (SEZs) have been the best case of land-use change as land was initially acquired for increasing the share of manufacturing in the GDP as well as to absorb the surplus labour from a faltering agriculture sector. However, SEZs became a hub for real estate broker as opposed to manufacturing hubs. A large number of the industries that were set up in SEZs were in the IT sector. Unlike manufacturing, the IT sector primarily requires high-skilled labourers, thus not providing large-scale employment. In a report in 2009, the Reserve Bank of India had reiterated that loans for SEZs should come under the Commercial Real Estate as they found that SEZs were becoming a hub for real estate developers.[7] In a report on SEZs by the Comptroller and Auditor General, they first found 54% of the SEZ’s were used for the IT sector while only 9.6% of them were used for multi-product manufacturing units.[8] They also found that among six states, Andhra Pradesh (AP), West Bengal (WB), Gujarat, Odisha, Maharashtra and Karnataka, 14% of the notified land was de-notified once the prices of land started to appreciate. With special reference SriCity in Chittor in Andhra Pradesh, they found that out of the 3158.70 hectares of land allotted, 1512 ha land was notified SEZ land and 2070.12 ha was non-SEZ land. In October 2010 and November 2011, 449.5 ha were de-notified and sold to private developers at an unknown price. They further found that in 4 states –Andhra Pradesh, Maharashtra, West Bengal and Karnataka – eleven developers had raised 6309 crore rupees worth of loans through mortgaging their SEZ land.[9]

Farmers protesting corruption in land acquisition process (Ram Lila Maidan, New Delhi, August 2011): photo by Mitu Sengupta
Farmers protesting corruption in land acquisition process (Ram Lila Maidan, New Delhi, August 2011): photo by Mitu Sengupta

The past experience of SEZs begs the question as to whether the pursuit of private profits constitutes a public purpose. On careful reading of the ordinance, Nitin Sethi in the Business Standard comes to the conclusion that the exemptions from SIA and consent from landowners is applicable to for to the private sector as well. This has been done by carefully replace the word “private company”[10] with “private entity” as private entities covers any entity that it is not a government entity.[11] While acquisition of land for a public good’s like public infrastructure, public schools and hospitals, irrigation, public housing is needed, the apprehension towards including acquisition of land for the private sector and PPP under “public purpose” lies in the possibility of changing the land-use for more profitable areas like real estate development.

While the government has said that the resettlement and rehabilitation clause has not been diluted, Nitin Sethi in another report for the Business-Standard points out that no official can be tried in court under the Land Acquisition Act.[12] He points out that in the preceding law, if the landowners or inhabitants were not paid their compensation, they had the right to claim their land back. The removal of this clause becomes an issue, as it is a step back from achieving accountability of public officials. It is also a setback in giving the landowner the right to rehabilitation and compensation.

The compensation package, which remains the same in the amended version and the original version of LARRA, is an issue because of the variation in land markets across India. In urban areas, the price of land tends to be higher because of speculative financial capital flowing into real estate in these areas. On the other hand, rural areas tend to have fragmented land markets, and furthermore, terrible maintenance of land records. This becomes an obstacle in the determining the market price of land in rural areas.[13]

Way Forward and Conclusion

As Michael Levien’s article points out, in the Nehruvian model of state-led dispossession, there was an attempt to convince the people that the state-led model of development was in the ‘national interest’, even when the compensation was extremely low.[14] In another article, Levien characterizes the Nehruvian regime of dispossession as “land for production”, while characterizing the current regime as “land for the market.”[15] In present day India, a country with a vibrant and active civil society and media, there is little chance that public protests against coercive acquisition would not gain attention. Instead of removing the consent clause, there must be a greater dialogue between the state and those affected by dispossession. These dialogues should aim at building trust between the institutions of the state and those affected by dispossession.

One of the biggest concerns within civil society and among those who are being dispossessed is that the idea of ‘national interest’ is being construed to serve the interests of a narrowly composed business, bureaucratic and political elite. The aim of achieving higher levels of industrial growth may indeed be in the national interest, as there is evidence to show that such growth leads to large-scale employment. However, the government of the day must convince those who would be dispossessed as a result of land acquisition that this in their interest as well as the national interest. Along with effective communication between the State (center and provincial) and citizens, there must be a shift to a bottom-up decision making system close to that of a participatory budgeting system in Brazil. Decisions regarding acquisition of land for social infrastructure as well rural electrification and infrastructure can be done at the local level by empowering local governments and reforming them to make them more participatory, avoiding elite capture.

On the political front, we see that it is not only the opposition parties that are protesting the changes to the land law. The BJP’s mentors are as well. The larger Sangh Parivar as well as the BJP’s allies, Shiv Sena and the Shiromani Akali Dal are opposed to the ordinance, with the argument that it is anti-farmer. On the positive side, there are reports emerging that the government is willing to compromise by giving priority to government owned land and wastelands, and that it is willing to make it difficult to acquire multi-crop and fertile land.

While the future of the land acquisition is currently in jeopardy, electoral compulsions should ultimately force the government to soften its stand and arrive at a middle ground. The government is correct in its emphasis on public infrastructure in rural and urban areas, as there is no doubt that India suffers from an infrastructure deficit. Along with this, emphasizing infrastructure has the ability to crowd in private investment from small non-farm enterprises to large factories. However, this must be pursued through a dialogue and with the consent of those who are affected.

Post Script:

This analysis largely pertains to the ordinance passed on December 31st 2014. As a result of protests from the BJP’s allies and the larger Sangh Parivar, along with the opposition parties, the government has decided to introduce into the parliament. The bill was passed in the Lok Sabha (Lower House) with 9 amendments. These amendments include making multi-crop land the last resort, acquiring the bare minimum required, removing private schools and hospitals and social infrastructure from the exemptions, acquiring only 1 km of either side of the road or rail line for industrial corridors, grievance redressing at the district level, and one job for a member of the affected family.[16] The bill is yet to be approved by the Rajya Sabha, where the BJP and its allies do not have a majority. Given the BJP’s position in the Rajya Sabha, it will be interesting to see how the final version of the bill takes shape. The Congress, Trinamool Congress, the Left parties, and other regional parties, who together hold a majority in the Rajya Sabha, have positioned themselves strongly against the amended version of the bill (Ordinance and the version passed in the Lok Sabha). Therefore, it would be interesting to see what the future holds for land acquisition in India given the current position.

 

[1] Vijayabaskar, M. “Tamil Nadu: The Politics of Silence.” In Power, Policy, and Protest: The Politics of India’s Special Economic Zones, by Jenkins, Rob, Loraine Kennedy, and Partha Mukhopadhyay, eds. edited by Rob Jenkins, Loraine Kennedy, and Partha Mukhopadhyay. Delhi: Oxford University Press, 2014. Oxford Scholarship Online, 2014. doi:10.1093/acprof:oso/9780198097341.003.0010

[2] http://www.epw.in/system/files/pdf/2006_41/51/Fencing_over_Singur.pdf

[3] http://www.livemint.com/Home-Page/FV4D1N28gnEIRp4v42IZnI/The-Make-in-India-dream.html

[4] http://www.business-standard.com/article/economy-policy/land-law-exemptions-extended-to-private-firms-115020500041_1.html

[5] Binswanger-Mkhize, Hans P. “The stunted structural transformation of the Indian economy.” Economic & Political Weekly 48, no. 26&27 (2013): 5-13.

[6] http://www.business-standard.com/article/economy-policy/250-conflicts-over-land-acquisition-recorded-in-2013-and-2014-114123100051_1.html

[7] http://www.business-standard.com/article/finance/sez-land-purchase-is-commercial-realty-rbi-109010801077_1.html

[8]http://www.saiindia.gov.in/english/home/Our_Products/Audit_Report/Government_Wise/union_audit/recent_reports/union_performance/2014/INDT/Report_21/Exe_Summ.pdf

[9]http://www.saiindia.gov.in/english/home/Our_Products/Audit_Report/Government_Wise/union_audit/recent_reports/union_performance/2014/INDT/Report_21/Chap_4.pdf

[10] Private Company is defined as a company with a paid-up share capital of at least rupees 1 lakh. http://www.business-standard.com/article/economy-policy/land-law-exemptions-extended-to-private-firms-115020500041_1.html

[11] http://www.business-standard.com/article/economy-policy/land-law-exemptions-extended-to-private-firms-115020500041_1.html

[12] http://www.business-standard.com/article/economy-policy/clauses-on-land-return-action-against-officials-diluted-115010200020_1.html & http://www.livemint.com/Politics/T2tN2OWzJIy9SuFgsGsmHN/The-evolution-of-the-Land-Acquisition-Act-from-1824-to-2015.html

[13] Chakravorty, Sanjoy. The Price of Land: Acquisition, Conflict, Consequence. New Delhi: Oxford University Press, 2013

[14] http://www.thehindu.com/opinion/lead/lead-article-dispossession-development-and-democracy/article6853389.ece

[15] Levien, Michael. “Regimes of dispossession: from steel towns to special economic zones.” Development and Change 44, no. 2 (2013): 381-407.

[16] http://www.business-standard.com/article/economy-policy/lok-sabha-clears-land-acquisition-bill-115031001362_1.html