Opinion The price of land,the price of power

The UPA government believes that acquisition is the last resort and should only be applied for the government’s use or for a “public purpose”. We believe it is most important that an offer is made that landowners find hard to refuse.

A farmer is reluctant to part with his land even when the compensation price is attractive,because he does not possess the skills to do other kinds of work. Therefore,the cost of acquisition should incorporate the cost of replacement. In spite of agriculture no longer being lucrative,his land is the only security that a farmer can bank upon. The moment the government’s intention to acquire land in a particular area becomes known,the notional value of land goes up,even in surrounding districts. As a result,farmers are greatly disadvantaged — because the cost of purchasing new land becomes much higher than the compensation received by them for their own land. The time gap between the announcement of land acquisition and the actual payment of compensation is another limiting factor imposed upon the farmer.

The rights of rural landowners are usurped by different government notifications. It is only recently that judgments in favour of farmers have been made. When land comes into the possession of industry,its value increases manifold. What differentiates farmers from industrialists putting up a similar project is mainly the ability to negotiate permissions and favourable terms. Normally,after every acquisition,the land use is changed. This change in land use (CLU) leads to a further increase in prices. The land acquired from the farmers in value per acre winds up being sold in value per square feet. This sort of injustice is unbearable.

The proposed bill has comprehensive rehabilitation packages for landowners and “livelihood losers” (the landless),which includes an allowance of Rs 3,000 per month per family for a year,and an inflation-indexed annuity of Rs 2,000 per month per family for 20 years. There are special provisions for scheduled tribes,too. There are also provisions for disciplinary proceedings against government officers,and a proper mechanism of redressal for those affected.

The bill clearly differentiates between acquisition for government holding and use,and for other public purposes,following a transfer. The purpose of use cannot be changed after the acquisition. As a safeguard,80 per cent of project land-affected families must give their consent before the government will begin the process of acquiring the remaining 20 per cent of the land. The government will not acquire land for the private purposes of private parties; and it will not acquire multi-crop irrigated land for any public purpose.

That is precisely where the problem can come for a state like Punjab,where much of the area is multi-crop irrigated. In such cases,deriving an acceptable price does become a problem. Take,for example,the case of the proposed power plant at Mansa. The Punjab State Power Corporation signed a memorandum of understanding with IndiaBulls Power for constructing a 1,320 MW coal-based thermal power project,for which the Punjab government acquired 880 acres of fertile land in five villages. The farmers were paid a compensation of approximately Rs 23.50 lakh per acre. Over 900 families depended on this land.

The total project cost is Rs 6,600 crore; the cost of acquiring land is only 3 per cent of that,Rs 205 crore. Simply put,if the value of the land could be increased to Rs 40 lakh per acre,the cost of the project would increase by only 2 per cent,and the project would still remain viable.

For the Rajpura power project,the Punjab cabinet had approved a rate of Rs 3.31 per unit with Lanco Infratech. The state regulatory authority rejected the process and the rate,and directed a rebid. Then the tender to install the power project went to Larsen & Toubro,at Rs 2.89 per unit — a massive difference,of 42 paisa. Consider for a moment what 1 paisa can do. For every unit of electricity produced at the power plant,1 paisa should be given to the farmers in perpetuity,with provisions that it increase alongside future power purchase agreements. At normal capacity utilisation,this would amount to Rs 11 crore a year; and each beneficiary would get Rs 1 lakh per year. Viability gap funding is given by the government to large corporations for putting up projects in particular sectors and areas. It is also important to provide similar viability gap funding to those whose livelihood is affected by land acquisitions. For example,the discounted value of a project 20 years hence is taken into consideration by financial institutions while funding projects. I think a similar methodology should be used to compensate those affected by land acquisitions.

If the compensation for land acquisition is good,it will reduce the gestation period for industrial projects and increase the certainty of their timely completion. The farmer should also get a choice of the type of compensation — and these should be transferable and tradable. Government promises are conveniently forgotten after the process of acquisition. Some years ago panchayats were asked to give up land for electricity substations on the promise of uninterrupted power supplies. These promises still remain unfulfilled.

The farmer has always yoked oxen and bulls to make barren land cultivable. Now he needs protection from the bulls of Dalal Street,trampling on him and his land.

The writer is a Congress MLA for Abohar,Punjab