The Rajasthan test PDF Print E-mail
Tuesday, 19 August 2014 00:00
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Its land acquisition law hikes payments, scraps SIA

Rajasthan is testing the waters again. Its labour law amendments, granting factories the right to close without state permission if they employ under 300 persons is currently awaiting the President’s assent. Under Article 254(2), if a state law runs counter to the central law, it can be allowed to pass as long as it gets the President’s assent. While the state has already passed a highways Act that has no provision for a social impact assessment (SIA) unlike the Centre’s Land Acquisition, Rehabilitation and Resettlement (LARR) Act—this is also awaiting the President’s assent—one of the exceptions this allows is highways. The state’s land acquisition Bill—public comments to the draft are open till August 26—proposes to do away with SIAs altogether. Indeed, the preamble to the Bill makes this clear when it says the purpose is ‘to provide for, and expedite the process of, land acquisition for public purposes ...’.

At a broad level, LARR arrives at a value of land based on historical sales in the region, allows for this to be multiplied by a ‘factor’ of up to two times to come to a value; a ‘solatium’ equal to the value arrived at is to be added to this; and on top of this, there has to be R&R as well. The ‘factor’, however, is left to each state and Maharashtra, for instance, has a factor of 1 for rural areas as well; so, if the last sale of a piece of land is determined to be X, this will also be the value determined for the compensation; add in the solatium, and 2X is to be paid to the land owner. Maharashtra has a threshold of 1,000 acres for R&R if a private person is doing the buying; for any land acquisition with the help of the state, for even a bus stop, SIA and R&R are compulsory.

What Rajasthan is proposing is to hike the compensation levels. So, let’s say the last transacted value of the land is X. Depending on the type of land, the ‘factor’ can go to as high as 4.5. Add the solatium, and a buyer can end up paying 9X as compared to a 4X in Maharashtra’s rural areas. So, under sections 107 and 108 of LARR, Rajasthan is merely bettering the compensation and so passes muster. Where the law could run in to problem is the section that caps R&R benefits at 30% of the compensation. On the face of things, this looks worse than LARR, but since the compensation is higher than Maharashtra’s for instance, it does seem more practical and benefits everyone. Landowners get a higher compensation and industry gets the land much faster than it would under LARR—existing timelines suggest a period of around 5 years is normal. If the President passes the Rajasthan law, this sets a precedent for other states, and is one way of getting around LARR which ensures few projects, including even godowns for the Food Security Act, can take off quickly. The other and tougher way is for the Centre to amend the LARR Act.


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