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Law must have two faces

The land acquisition bill should address the concerns of affected families while considering industry affordability

Written by Chandrajit Banerjee |
April 27, 2013 2:53:46 am

The land acquisition bill should address the concerns of affected families while considering industry affordability

Land acquisition has emerged as a critical constraint in India’s industrialisation and urbanisation,given pressures on limited landmass for multiple uses. The new law for land acquisition and resettlement and rehabilitation protects landowners and affected families. It must also encourage investments and promote development to create necessary jobs and foster inclusive growth.

The current draft legislation,the Right to Compensation,Resettlement,Rehabilitation and Transparency in Land Acquisition Bill,2011,replaces the archaic Land Acquisition Act of 1894. Industry hopes that it will serve as an instrument to impart impetus to sectors like manufacturing,construction and power,which are large employers and critical for the Indian growth story. It is imperative to streamline the land acquisition mechanism in a manner that balances the interests of affected families with industry affordability.

It is heartening to note that industry has been included in the definition of “public purpose” in the proposed bill,and that the government will help industry in land acquisition. The government needs to play a prominent role in land acquisition as purchasing land from numerous owners in a single tract is challenging for the corporate sector,especially in the absence of proper land records and with small,scattered land-holdings.

Equally commendable is the inclusion of public-private partnership projects for the production of public goods or provision of public services,and the provision of land in the public interest for private companies. Large projects of national interest such as the Delhi-Mumbai Industrial Corridor and National Investment and Manufacturing Zones have also been included in the definition of “public purpose”,as per reports. This is welcome.

However,going by reports on the all-party meet on the bill last week,industry has several concerns. First,the agreed compensation package for land acquisition is reported to be four times the market value in rural areas and two times the market value in urban areas. As per CII estimates,the land acquisition cost is likely to increase by 3-3.5 times,severely affecting the viability of industrial projects across the board and eroding the competitiveness of the Indian manufacturing sector. We suggest that no solatia may be imposed over and above the multiplier,and if at all the solatium is to be retained,it could be reduced to 30 per cent and the multiplier for urban areas be reduced to 1.5 instead of 2.

Two,industry is concerned about the possible steep increase in the cost of rehabilitation and resettlement (R&R). The key principle should be that affected families should be significantly better off after their land is acquired for more productive purposes. Under the current draft,CII estimates that the R&R cost is likely to go up by about three times. Instead of using a blanket “affected families”,categories of families need to be clearly defined and,according to their losses,suitable compensation packages should be laid down. Further,R&R provisions need to be justifiably different for each category,depending on what they lose as a result of land acquisition.

Three,we have also stressed that the consent requirement from landowners be reduced to 60 per cent and be limited to landowners. Consent of 100 per cent landowners is simply not practical. The process of obtaining consent,as provided in an earlier version of the bill,is laborious and time-consuming,going through multiple layers over several years. Industry is hopeful that the amended bill will be more efficient in acquiring land.

Four,another major concern pertains to cut-off date for applicability of the bill. In cases of land acquisition where the notification under section 11 of the 1894 act has already been issued and the process of award commenced,land acquisition should be continued and not started afresh to avoid delays and cost escalation,ultimately affecting the viability of projects. Recent reports mention that the bill would be applicable to all land transactions after September 5,2011,when the bill was first introduced. Such post-facto applicability adds to uncertainties and would lead to avoidable lengthy delays in land acquisition and consequent cost over-runs.

Five,the earlier draft bill stipulates the return of the acquired land if not utilised for a period of 10 years,which may adversely affect the future expansion plans of industries that have longer gestation periods and grow in phases. A proposed provision that states would be able to allow leasing of land instead of acquisition to protect ownership and incomes will have to be examined carefully. If land is not utilised for the purpose for which it was leased,returning it to the owner could be a lengthy and cumbersome process.

Instead,the government should constitute land bank corporations in states to facilitate acquisition of fallow,barren and unproductive as well as other land,ex-ante,and its disbursement for industrial use in a transparent manner. Digitisation of land records and zoning of land over a 100-150 year horizon will be the key for clear mapping,identification,segregation and systematic development of land for industrial use. Further,industry must be asked to submit and adhere to a “land use plan” and the provision of return of un-utilised land should be aligned to it. This can be monitored on a case to case basis by a committee under the chairmanship of the chief secretary of the concerned state.

Industry is hopeful that the revised land acquisition bill will be tabled in this session of Parliament and thoroughly discussed and passed with an aim to come out with a balanced piece of legislation that not only makes the lives of affected families better,post acquisition,but also takes into consideration industry affordability.

The writer is director general,CII

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