The Land Acquisition Rehabilitation and Resettlement Bill, passed by the Lok Sabha on Thursday and expected to be passed by the Rajya Sabha next week, has been welcomed by politicians and social activists and criticised by industry. Both these positions are flawed.
To be effective, any law, especially one dealing with expropriation of private property, must be just and equitable. The new law fails this test miserably. To put the issue in perspective, this law does try to address many of the lacunae of the draconian Land Acquisition Act of 1894, also known as Act 1 of 1894, which governs the acquisition of land in India. Since Independence, the government has acquired millions of acres of land under Act 1 by paying inadequate, and, in many cases, no compensation.
The new law protects landowners from such arbitrariness but, in attempting to redress the balance, errs horribly on the side of compassion. It envisages payment of twice the market rate for land in urban areas and four times the market rate for land in rural areas — enough to make any project, public or private, economically unviable. Then, it calls for the consent of 80% of landowners before any acquisition can proceed.
Given the fragmented landholding pattern in India, the acquisition of, say, a thousand acres of land in Uttar Pradesh or Bihar would call for a mini panchayat poll to see if enough people support the decision. It makes a social impact study mandatory for land acquisitions. This will increase red tape and delay acquisitions for years, if not decades.
The Bill seeks, quite unequivocally, to be fair to the landowner who stands to lose his livelihood. Providing for fair valuation is a laudable goal. But this Bill goes much further — it provides for a windfall bonanza for landowners. This provision could well spell the end of India’s dreams of emerging as a manufacturing superpower. The only way to quickly lift what the western media pejoratively refers to as India’s teeming millions into the lower middle classes and then progressively higher, is to create industrial jobs.
The farm sector accounts for 16% of GDP but supports 60% of the population. This is clearly unsustainable. We need rapid industrialisation. And for this, we need land — not land that has been acquired from their owners for a pittance and given to industry cheap, but land that has acquired at a fair value and given to industry at a price that keeps projects viable.
However, industry must also be fair. Indian industry has, over the decades, got used to getting cheap land. It must get over that mentality and extend to landowners the same free market philosophy it espouses while seeking a level playing field from the government. The Bill, with all its warts intact, is likely to become law by next week.
But it will remain a non-starter as a tool for acquiring land and promoting progress. In this backdrop, we can only set out our wishlist: amend the new law at the earliest possible opportunity to marry equity with compassion. That will make the good intentions practical as well.