Fast economic growth in the last two decades has increased demand for land from many sources, such as infrastructure, industry, mining, and urbanisation, including real estate.
Even when many of these activities are funded privately and are driven by profit motive, they serve a social purpose-- as employment generation per unit of land is higher in non-agricultural uses than in agriculture. Growth through industrialisation and urbanisation would not only increase labour productivity but will also reduce pressure on farm land by pulling people away from land to non-farming occupations.
However, acquisition of land by government has lately drawn resistance in many cases due to inadequate and uncertain compensation for the land, loss of livelihood of the affected people and involuntary displacement without proper rehabilitation. The land acquisition law has been quite hostile to the interests of the landowner, as it attempts to make land available to government at a minimal price. So far the practice in most state governments has been to coerce people to give up their pieces of land by using the legal powers of eminent domain, and in some cases even through the use of force. So far the model followed has been--'let some people lose out so that others (this includes some enterprising poor too) may gain'.
Unfortunately the losers tend to be the poorest with little skills, often tribals, who are unable to negotiate with the market forces and cope with the consequences of their forced expulsion from land, and end up much worse off than before acquisition.
This problem needs to be sorted out by making radical changes in the Land Acquisition Act. The National Advisory Council (NAC) has recently suggested to Government of India that compensation should be increased to a minimum of six times the present registered value of that land, to be paid in monthly installments, if so desired by the affected people.
Second, whenever land acquired by government is transferred to an individual or a company for a consideration, 20% of the difference between such consideration and the compensation will be given to the original land owner. For future transactions too, there should be a capital gains tax on land value, a part of it to be shared with the people who lost land, so that they too benefit from the increases in future value of land.
Third, the landless who were dependent on that land would get ten times the minimum wages for that state (roughly R1500 per month and indexed to inflation), every month in her/his bank account for the next 33 years.
Finally, the entire land should be acquired by government but only when at least 70% of the project affected people have given their written consent. The proposal of the Ministry of Rural Development asking company to purchase 70% of land through private negotiations before government acquires the rest 30% is not desirable because it would result in large scale cheating and deception in tribal and forest areas where goondas will be hired by the land mafia and tribals will be forced to sign land transfer deeds to achieve the cutoff figure of 70%.
Besides, the landless would get nothing, and even the farmers will be deprived of the profits from future appreciation in the value of land.
NAC has calculated that in most cases, the total cost, which the industry will bear, will not be more than 1% to 2% of the project cost. For instance, the total project cost of POSCO is 54,000 crores and it will displace 700 households. If POSCO had decided to spend even 1% on the displaced people, each one of them would have received R80 lakh as compensation. Similarly, a 4000 MW thermal plant would cost about R20,000 crore and would displace about 250 households. Here again earmarking a little more than 1% would make each displaced family a crorepati!
Therefore, the industry should be very happy with the NAC's proposals because they would get quick possession over land plus good relations with the people. This will also help avoid delays in implementation of such projects. It is the delay which causes the escalation in the project cost.
Each large development project (affecting more than 400) must be first subjected to a legally binding holistic appraisal as to the desirability and justifiability of the project. The public, and particularly the people likely to be affected, must be given due opportunities of information and hearings, and allowed to examine all aspects of the project, including the 'public purpose', and also the possibilities of achieving the same objectives through non-displacing or less displacing alternatives.
Wherever the people are not willing to shift, it must be assumed that the fault is either in the package being offered, the progress of implementation or in the approach to the displaced communities.
The provisions of an enlightened rehabilitation and compensation policy must have legal backing so that not only the concerned agencies of the government but affected and interested citizens can ensure enforcement and legal intervention. Unfortunately law pertaining to rehabilitation has been on the anvil since 1998, but it has still not seen light of the day, though it is well established that more than three-fourth of the displaced people, especially tribals become worse off due to involuntary displacement.
For the displaced people, the new settlement must be as close to the factory site and new township as possible so as to ensure maximum access to the newly created economic opportunities. In such projects, a major responsibility of the project authorities should be training and capacity building of the affected families. In between intention to set up a project and displacement there is always a significant time gap. During this period, every project affected person (PAP) who consents must be made literate, and trained for semiskilled or skilled jobs as per the choice and educational qualifications.
To sum up, the impoverishment and displacement of rural communities due to improper land acquisition and rehabilitation can easily be avoided through a more imaginative set of policies that insist on informed consent of at least 70% of the affected people. Establishment of vocational training centres, water, sanitation and health facilities in the rehabilitation site should precede before actual displacement. Demonstrative implementation of rehabilitation and resettlement measures would bring down their distrust against administration, which is at present not only creating conflicts but even delaying irrigation and power projects.
About the author
The writer a former IAS officer and member of the National Advisory Council.
UP hits the NAC track
After the police firing in the greater Noida villages, the UP government issued a pro-farmer circular on land acquisition on June 2, incorporating some of the NAC suggestions.