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Column: A balancing actM R Madhavan Posted online: Wednesday, Aug 14, 2013 at 0000 hrs

The Land Acquisition Bill is slated to be taken up for consideration and passing by Parliament in

the next few days. The government had circulated an amendment list in the last session ofParliament. We discuss some of the major features of the Bill (including the changes proposed in

the Amendment list), and associated issues that Parliament may need to consider while

deliberating on the Bill.

Economic growth and job creation require efficient usage of land resources. It is important that a

fair and transparent process for purchase and for acquisition of land is followed. For the purchase

of land, a key concern is the authenticity of land titles, and the government has drafted a Land Titlin

Bill for this purpose. In the case of land acquisition, the following questions need to be addressed.

What are the end-uses for which public interests will trump private property rights, and justify

acquisition of land from a person who is not willing to part with it? What should be the process

followed? Since there is no market mechanism of discovery of prices in these cases, how shouldcompensation be computed? Is there a need to address non-land owners who may be displaced b

the acquisition process? Does the acquisition process get completed in a reasonable amount of

time, and is there finality to the acquisition? In sum, do both sidesthe acquirer and the land owne

perceive the process to be fair?

The current Bill addresses these questions in the following manner. It defines public purpose to

include infrastructure projects (as defined by the finance ministry, with some exclusions); projects

related to agriculture, agro-processing and cold storage; industrial corridors, mining activities,

national investment and manufacturing zones; government administered or aided educational and

research institutions; sports, healthcare, transport and space programmes. It also enables the

government to include other infrastructural facilities to this list after tabling a notification inParliament. The significant difference from the current Land Acquisition Act, 1894, is that land

cannot be acquired for use by companies unless they satisfy any of the above end-uses.

The Bill includes a requirement for consent of the land owners in some cases. If the land is acquire

for use by a private company, 80% of land owners need to give consent. If it is for use by a public

private partnership (PPP), 70% of the land owners have to agree to the acquisition. The rationale o

having differential consent requirements based on ownershipincluding the lack of any such

requirement if the land is for the use of the government or a public sector undertakingis not clear

Why should a land owner, who is losing his land care, whether the intended project is to be

executed by the government or a private company?

The Bill specifies that the compensation will be computed in the following manner. Three factors artaken into account: the circle rate according to the Stamp Act; the average of the top 50% of sale

deeds registered in the vicinity in the previous three years; the amount agreed upon, if any, in case

of purchase by a private company or PPP. The higher of these three amounts is multiplied by a

factor, which varies from 1 in urban areas to a number between 1 and 2 in rural areas, depending

upon the distance from the urban centre. To this amount, the value of any fixed assets such as

buildings, trees, irrigation channels etc is added. Finally, this figure is doubled (as solatium, i.e.

compensation for the fact that the transaction was made with an unwilling seller). The justification

given for the multiplier ranging from 1 to 2 is that many transactions are registered at a price

significantly lower than the actual value in order to evade taxesthe moot question is whether such

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under-reporting is uniform across the country?

The Bill states that all persons who are affected by the project should be rehabilitated and resettled

(R&R). The R&R entitlements for each family includes a house, a one-time allowance, and choice o

(a) employment for one person in the project, (b) one-time payment of R5 lakh, or (c) inflation

adjusted annuity of R2,000 per month for 20 years. In addition, the resettlement areas should have

infrastructure such as a school, post office, roads, drainage, drinking water, etc.

The process has several steps. Every acquisition, regardless of size, needs a social impact

assessment, which will be reviewed by an expert committee, and evaluated by the state

government. Then a preliminary notification will be issued, land records will be updated, objections

will be heard, rehabilitation and resettlement survey carried out, and a final declaration of

acquisition issued. The owners can then claim compensation, the final award will be announced,

and the possession of the land taken. The total time for this process can last up to 50 months. The

big question is whether this time frame would hinder economic development and the viability of

projects?

The Bill provides for an Authority to adjudicate disputes related to measurement of land,

compensation payable, R&R etc, with appeals to be heard by the High Court. There are several

restrictions on the land acquired. The purpose for which land is acquired cannot be changed. If land

is not used for five years, it would be transferred to a land bank or the original owners. Transfer of

ownership needs prior permission, and in case of transfer in the first five years, 40% of capital

gains have to be shared with the original owners.

Recent cases of land acquisition have been followed by public protests, and the stalling of the

acquisition. Whereas some of these may be driven by political agendas, the old Act was perceive

to be unfair to land owners in several ways. The challenge for Parliament is to examine the new Bil

and craft the law in such a way that it is fair (and perceived as such) to land owners, while making

acquisition feasible and practical for projects that are required for economic development and oth

areas of public interest.

The author is president, PRS Legislative Research, New Delhi