Banking on land PDF Print E-mail
Saturday, 20 April 2013 00:00
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Discretion for states on land acquisition a good idea


That the BJP should agree to support the Land Acquisition, Rehabilitation and Resettlement (LARR) Bill, after demanding all this while that it be referred back to the Parliament Standing Committee on Rural Development, is good news since this is critical to India’s future growth. Around R8 lakh crore worth of projects are stuck right now, either because of lack of environment clearances or because of the inability to acquire land—it is the sharp slowing of investment that is responsible for the collapse of India’s growth in recent years. While it is true high-handedness by various state governments who used the emergency provisions allowed to them to bypass even the most rudimentary public consultation process—this is why the courts cancelled several land allotments in Uttar Pradesh last year—LARR didn’t help either. In its original form, and after being tweaked by the Standing Committee, the LARR made it next to impossible for industry to buy land. While the government’s help in acquiring land for the private sector has all but been ruled out, the LARR has strict R&R requirements even in cases where the private sector is paying full compensation for the land—and the compensation amounts have also been raised quite dramatically. Indeed, the requirement for a social impact assessment for each purchase also makes the process of acquiring land that much more long-drawn—one of the other advantages of buying land through a state government notification is that there is no title dispute later, a big factor in a country which has very poor land records.

Many of these provisions remain even today—on the BJP’s insistence, some new clauses have been added such as to provide compensation for those who sold their land at lower rates in the last two years since the Bill was first announced. The saving grace, however, is that the states have been given flexibility to decide on the threshold levels at which the R&R and social impact assessments (SIA) are required. Even so, the R&R/SIAs are open to abuse since it is not certain which state, and which government in each state, will notify what thresholds. The R&R clause in the amendments, for instance, is not very clear about who will have to do the R&R. Apart from what the R&R will cost, India Inc is obviously uncomfortable about having to undertake what is clearly not its core competence. There is a provision that the company doing the acquiring could simply pay the money to the government which will do the R&R. But this is open to the discretion of the Collector who will decide if the R&R “can be quantified into monetary amount”. Apart from not helping industry acquire land—getting 70-80% of land-losers to agree to giving up their land is a mammoth task—the Bill’s other big lacuna is the lack of thought applied to acquisition of land for new cities. If India is to move 250-300 million more persons into urban spaces over the next two decades, McKinsey estimates the country needs to build 700-900 million square metres of commercial and residential space each year—that’s more than two Mumbais each year. Hopefully the more progressive states will take this into account while implementing the Bill on the ground.


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