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What the states got right

Centre must learn from models of land acquisition satisfying both buyer and seller.

Written by Dhanmanjiri Sathe |
Updated: March 31, 2015 12:01:21 am
 land acquisition, land acquisition law,  land acquisition bill, land bill, BJP land reforms, modi landi land bill, Narendra Modi, Venkaiah Naidu, BJP government, NDA government, UPA government, Dhanmanjiri Sathe column, ie column In both Gujarat and Maharashtra, the acquiring agency has flexibility to negotiate with farmers, unlike in the 2013 act.

The pace of land acquisition, which has been taking place in India since Independence, increased after liberalisation. In more cases than not, it has been successful, that is, both buyer and seller have been satisfied with the outcome. But today, land acquisition is being portrayed as next to impossible. This perception is not based on reality and needs to be changed. The farmer is wrongly being portrayed as extremely emotional, irrational and unwilling to part with land.

A dispassionate look at the facts would clear some misconceptions. First, according to the National Sample Survey Organisation, in 2005, 40 per cent of farmers did not want to engage in agriculture. This figure would have increased substantially over the last 10 years in the face of farm distress. Logically speaking, a large number of farmers should be willing to accept a viable alternative — the operative word here being “viable”.

Empirical work by many researchers supports this view. Second, in places where industrialisation and urbanisation have proceeded smoothly and at a fast pace, land acquisition has taken place peacefully to facilitate these changes. We find that it is mainly in the southern and western states that industrialisation and, by inference, land acquisition has taken place in a big way — though it has also happened in a few pockets of Haryana and western Uttar Pradesh. And though there have also been agitations in these states, some of them quite vigorous, by and large, the process has been peaceful. These states are quite advanced and have a vibrant press and electronic media. It is hard to make the claim that the government apparatus has always been repressive and acquisition not kosher. In many of these states, the party in power has changed repeatedly (in Tamil Nadu, for instance), but industrialisation has continued, buttressing the view that the process, including land acquisition, has cross-party acceptance.

This is not to say that no repression has ever been unleashed in these states or that farmers have always been satisfied with the compensation. But satisfactory — for both seller and buyer —  acquisitions have also taken place. We should learn from these cases and build on them. Drawing from the experiences of the states is also in keeping with the Central government’s emphasis on cooperative federalism.

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So what are the models that these “successful” states have developed and adopted? Contrary to popular belief, since Independence, most states have substituted the colonial law of 1894  with their own land acquisition laws. If Parliament passes the new law, state governments will be expected to alter their legislation in accordance with the Central act. But successful states have laws that have stood the test of time, worked well and are probably better than the 2013 act.

The problems with the 2013 law are clear when we compare with the acts of Gujarat and Maharashtra — both successful industrialisers. In fact, according to an Accenture report on best practices across Indian states, Gujarat has the best land policy in the country. Just to focus on a few issues, in both Gujarat and Maharashtra, the acquiring agency (the Gujarat Industrial Development Corporation and Maharashtra Industrial Development Corporation, respectively) has the flexibility to negotiate with farmers, unlike in the 2013 act. Even if all farmers do not have similar negotiation capacities, it is important to allow for this. Acquiring land without negotiation is not a workable idea.

These states also pay a multiple of the market price. But they have not been restricted by the “two and four times clause” of the 2013 act. It is not clear if the payment of two and four times of the market price for urban and rural land, respectively, sets the floor or the ceiling. This clause has made the law extremely mechanical, even though the acquirer may have to pay more at times to secure consent, and less at other times. The question that needs to be asked is this: Is it the purpose of this kind of a law to lay down norms in such detail? This sort of legislation should delineate the overall framework, direction and even philosophy for the implementation and interpretation of the law. For example, the divorce law does not specify what fraction of the husband’s salary should be paid as alimony. That would have made it dysfunctional.


Further, as per the acquisition laws in both these states, the farmer can be offered developed land as part of the compensation. In Gujarat, 10 per cent of the differential between the acquisition price and the land price recovered by the GIDC is also paid to the farmer.

All this goes to show that acceptable and fair models of acquisition have been and can be developed and implemented. The Tamil Nadu, Karnataka and Andhra Pradesh examples could serve as other alternatives to chose from. It makes sense to look at successful states and examine what they did right.

The writer teaches at the department of economics, Savitribai Phule Pune University

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First published on: 31-03-2015 at 12:00:29 am
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