It’s reconfiguring politics. It’s forcing companies to relocate or reconsider projects worth thousands of crores. It’s arousing men and women to speak out. There’s plenty converging around land acquisition. Singur and Nandigram, unfortunate as they were, established the need to review a land acquisition law that dates back a century, and falls way short in protecting the interests of landowners while meeting the needs of industry. Quickly. Because it is a deterrent to companies to expand. Because it is fuelling unrest among farmers, tribals and rural landowners.

Unfortunately, the sense of urgency is missing. The UPA government did come out with two progressive legislations: The Land Acquisition (Amendment) Bill, 2007, which lays down the rules for land acquisition, and The Rehabilitation and Resettlement (R&R) Bill of 2007, which defines benefits for the displaced. “They are very farmer-friendly, unlike the 1894 law,” says Raghuvansh Prasad Singh, who, as Minister for Rural Development, had introduced the R&R Bill in the Lok Sabha in December 2007. The Bill was hurriedly passed in February 2008, in the final days of that House, but it was rejected by the Rajya Sabha. The Bill lapsed and is yet to be reintroduced.

More than two years on, the antiquated 1894 law still holds. However, its fairness and relevance is being questioned left, right and centre. It’s also become a trump card for the Mamata Banerjee-led Trinamool Congress, which led the unrest in Singur and Nandigram. Those protests helped turned around the party’s fortunes in the 2009 general elections and gave it clout in the ruling coalition. It’s why it wants to keep the issue alive till the 2011 West Bengal assembly elections, where it hopes to end the three-decade rule of the Left parties. Politics aside, though the 2007 Bill is a vast improvement on the original Act, it can get better on six pivotal points.

1. Who Buys The Land?

Under the current law, the government can acquire all land for a private player, so long as it is used for an activity covered under the definition of ‘public purpose’ (more on that later). The government decides what ‘public purpose’ is, and has the powers to get its citizens to cede their land holdings. But, when should it exercise this power and how much? “The government should not acquire land for private industry,” says MS Swaminathan, noted agricultural economist and Rajya Sabha member. “It should instead ask companies to negotiate directly with farmers.”

The proposed law is silent on what kind of land can be acquired and what is out of bounds.

The current law lets state governments buy such land on behalf of private players. A case in point is Singur, where the industrial arm of the West Bengal government bought the land for the Tatas for their Nano project, before they were forced to shift to Sanand, Gujarat. The proposed law significantly dilutes the government’s role in land acquisition. Barring defined exceptions, the government won’t acquire land for private players. And even in those exceptions, it will step in only after the private player has acquired at least 70% of the land it needs for a project.

There are three types of projects for which the government can step in. There’s defence, there’s infrastructure. And, lastly, there are projects that come under the broad head of ‘other purposes useful to the general public’, under which private industrial projects will approach the government for help. So, if a proposed steel mill generates employment for locals, it could make a claim. It’s up to the government to approve. But unlike before, when it was left to a company’s bargaining power on when and how much it could get the government in, the proposed method is more precise—the 70:30 formula—and gives greater rights to land owners.

Yet, there are differing views about the 70:30 formula—the reasonable public quorum suggested by the Bill for a project to go ahead. It’s acceptable to industry. “It is preferable to stay with the 70:30 rule,” says Arun K Nanda, President, Infrastructure Development Sector, Mahindra & Mahindra. “It is the way forward,” adds Rajeev Chandrashekhar, Rajya Sabha member and head of Jupiter Capital, a venture capital firm.

The political establishment is, however, seeking a greater vote of approval from those displaced by a project. Trinamool Congress leader Mamata Banerjee, who pushed the Tatas out of Singur and who has come to be the invisible stamp the government needs for the Bill to become law, wants the government to stay completely out of land acquisition.

However, Raghuvansh Prasad Singh says 100% private sector might be anti-development. Since most landholdings are fragmented, even if a private player acquires most of the project land, there could be tiny pockets that refuse to sell, scuttling the project. “Here, the government should intervene, but without force,” says Singh.

In fact, during his tenure, the Ministry of Rural Development is said to have originally proposed a 90:10 formula. The Cabinet, however, opted for 70:30. Congress sources now indicate that 85:15 is being considered to win Trinamool’s consent. “The percentage is not an issue and the Cabinet could change it further,” says CP Joshi, the present Minister of Rural Development. M&M’s Nanda says that could be a problem. “85:15 is unreasonable,” he says. “If you’re only dealing with farmers, it can work, but not for us.”

The per centage (how much land a company has to acquire) is not an issue. The Cabinet could change it further.CP Joshi, Minister of Rural Development

All the three big companies we spoke to—M&M, Tata Steel and Posco—believe the government will have to step in to deal with multiple title deeds, land grabbers and cultural issues. “Large-scale land acquisition may involve multiple villages, and a multi-cultural and a multi-lingual social profile,” says Partha Sengupta, Vice-President (Corporate Services), Tata Steel. “Only a government initiative will help bring them under one umbrella.”

Nanda says it is not as difficult to deal with farmers as it is with “land grabbers”. The moment they get to know a company is buying land, they pick up pockets in the middle. “They are the real troublemakers,” says Nanda. “They virtually blackmail the developer.” Adds Simanta Mohanty, General Manager-External Relations, Posco: “An artificial hike in land prices simply because it is meant for an industrial house calls for regulation.”

2. What Kind Of Land?

The proposed law is silent on what kind of land can be acquired, be it by a company or the government, and what is out of bounds. The rallying cry is, don’t touch agricultural land. “No land acquisition at the cost of agriculture,” says Bihar’s Deputy Chief Minister Sushil Kumar Modi, when asked about the Bihar government’s promise of providing land banks to industry. “If you force farmers to give up land, another Singur can happen,” he reasons. The Trinamool, too, wants farm land to be excluded. Swaminathan, former head of the National Commission of Farmers, which looked at ways to improve agri-productivity and livelihood of farmers, says a reduction in farm land will create food security issues for a country with a rising population and growing purchasing power.

An 85:15 private-government ratio is unreasonable. If you’re only dealing with farmers, it can work, but not for us.Arun K Nanda, President, Infra Development Sector, Mahindra & Mahindra

Several special economic zones (SEZs) approved during UPA’s last tenure were to come up on fertile agricultural land. Reliance Industries’ plans for an SEZ at Raigad, Maharashtra, hit a roadblock after fierce opposition from civil society, whose main contention was that Raigad is a flourishing rice-producing area. Social activist Medha Patkar points out that agriculture is included in the definition of ‘manufacture’ in the SEZ Act. “Ironically, SEZs are only displacing agriculture,” she says. “We are not against industrialisation, but that which is at the cost of agriculture and displacement of people,” she says.

Patkar is critical of the amount of land SEZ developers acquire and the prices they pay poor landowners. For instance, 50% of the land is to be made available for residential and recreational activities. “Why acquire so much for such activities,” she asks. SEZ developers can sell those developed plots at a huge mark-up. “In Chhattisgarh, if land is acquired for a project at just Rs 10,000 per acre, the same can be sold for lakhs within a short time.”

Under the Right To Information Act, the National Alliance of People’s Movements (NAPM) found that the Maharashtra Industrial Development Corporation (MIDC) had 80,000 acres of unutilised land. Given the requirement of 500-1,000 acres for a large industrial unit, that is big enough to meet industry’s current needs. “Why isn’t this being used for industrial or other purposes,” asks Patkar.

M&M’s Nanda says the existing land bank of states is not attractive. “Because India is not well connected, we are always vying for land close to highways,” says Nanda. “It would have been possible to buy land in the interiors if there was good infrastructure and good road connectivity.” Adds Chandrashekhar: “Land banks should be located close to markets.” He also says that land banks should exclude arable land; and, if agricultural land is unavoidable, it should be only single-crop lands. “Industries should look for land outside the agri-economy,” he says.

The absence of water-tight rules and the unmet needs of industry creates flashpoints like Singur and Nandigram. The Kalyan Singh-led Parliamentary Standing Committee, which reviewed the Bill, wants a strong law to prevent excessive acquisition of land and conversion of agricultural land. It also wants the government to make a list of unutilised land and develop wasteland.

3. At What Price?

Under the current law, the District Collector determines the price of the land or the compensation amount. The new Bill, however, gives it a greater market orientation. The price applicable to government purchases will be the highest of these three criteria: the base price of the land fixed by the government for stamp-duty purposes, the average price of at least 50% of registered transactions done above the base price in the past three years in the village or vicinity, the average price of 50% of the transactions done for the project above the base price.

“This is ambiguous,” says MR Madhavan of PRS Legislative, a non-government body that tracks legislations and Parliamentary proceedings. His main objection is to the 50% cut-off while determining market value. This goes against land owners, he says. “Taking a larger proportion of transactions will include lower-priced ones, and reduce the average value.”

Maharashtra has 80,000 acres of unutilised land. Why isn’t this being used for industrial or other purposes?Medha Patkar, Social Activist

The Standing Committee has tried to address Madhavan’s reservation on averaging. It junks the criteria of determining fair price from 50% of transactions. Instead, it says, the highest price from the registered sales of the last three years, plus a mark-up of 50%. For tribal areas, the highest registered price in the adjoining non-tribal village for the last three years, plus a mark-up of 50%. To give landowners a stake in the project, the R&R Bill gives them the option to take 20-50% of the compensation as shares in the project. “What do poor farmers know about shares?” says Vimalbhai of Matu People’s Organisation.

The Land Acquisition Bill covers the concerns that companies have while acquiring land as it makes the price fixation more transparent, says TV Mohandas Pai, Director, Infosys Technologies. But, he feels, the challenge is that of creating a market where land can be purchased at market prices. “Open up the market for land for greater transparency. And improve the process of land acquisition by making faster payments,” he says.

4. On What Other Terms?

While the current law is silent on rehabilitation and resettlement (R&R), the companion Bill is dedicated to this aspect of land acquisition. Under the new Bill, even tribals, forest dwellers and those with tenancy rights will be eligible for compensation. Giving a humane face to the land acquisition process, the Bill mandates the government to assess the social impact of land acquisition on those displaced.

Open up the market for land for greater transparency. And improve the process of land acquisition by making faster payments.TV Mohandas Pai, Director, Infosys Technologies

Before it goes ahead with the acquisition, the government will need to conduct a social-impact assessment study for projects that affect at least 400 families in plain areas and at least 200 in tribal/hilly areas. The study should cover the effects of displacement, a tribal development plan, and provisions for infrastructure development in these areas. If the government finds the social impact on the displaced to be adverse, it can cancel a project or turn down the private player’s demand for land.

Patkar says the assessment should be made for all projects, regardless of the number of families affected. If a project falls short of the minimum prescribed, the assessment could be skipped. Besides, the cut-off number is also a criterion for eligibility of a project for rehabilitation. That apart, there are ways companies can skip this assessment. A linear project like a road for, say, 500 km can affect 800 families. But if the private player breaks it into three projects, each below the threshold of 400 families, it can sidestep the assessment.” The objective in the policy being “to minimise displacement”, Patkar says it is necessary to have an “options assessment” and to choose one on that basis. This is not operationalised now. “The land owners in the 70% private bracket are not entitled to any R&R. Also, there is no clarity on R&R for those in the 30% government bracket if their numerical strength is below the threshold,” Vimalbhai adds. Once the government decides the R&R parameters, the onus of execution will be on the company. Vimalbhai says the Bill does not have a timeline for completion of rehabilitation. He also wants specifics related to location of the site, proximity to livelihood source, adequate housing, delivery of essential services, healthcare, education and transport spelt out. “A rehabilitation legislation without the articulation of minimum standards is meaningless.”

5. How Are Disputes Settled?

In order to quickly resolve issues related to the acquired land, the Bill takes away powers from the civil courts and hands it to a new authority. The Land Acquisition Compensation Disputes Settlement Authority, which will exist at both the state and central levels, will settle all disputes related to land acquisition.

Land banks should exclude arable land; and, if agricultural land is unavoidable, it should be only single-crop lands.Rajeev Chandrashekhar, Head, Jupiter Capital

However, some critical issues are not addressed. “It is not clear whether there is a mechanism by which a person may challenge the qualification of a project as ‘public purpose,’” says Madhavan of PRS. Then, though this authority will be a judicial body (same powers as a civil court), the government could populate it with members without judicial qualifications or experience. For instance, if bureaucrats are appointed, it will violate the ‘separation of powers’ theory, as the government would be seen exercising judicial powers as well. That is, one bureaucrat would be ruling cases against other bureaucrats.

6. How is ‘Urgency’ Defined?

Under Section 17(1) of the legislation, in case of ‘urgency’, land can be acquired by the government within 15 days of the publication of a notice. Although landowners will get an additional compensation of 75% of the market value of the land, this provision can be abused. “The term ‘urgency’ is not defined in the Bill,” says Vimalbhai. He says the clause can be invoked for nearly all infrastructure projects, obliterating the distinction between ‘public purposes’ where the ordinary process is to be followed and where the urgency clause can be moved. “Almost all projects classified as ‘infrastructure projects’ find mention in the urgency clause,” says Vimalbhai. “They can be implemented, evading the social/economic impact assessment.”

There are many issues involved: displacement, rehabilitation, food production and food security, and employment, among other things. Before hurriedly tabling another Bill, it would help if an inter-ministerial panel is set up that also includes Tribal Affairs, Social Justice and Environment ministries (not part of the earlier panel on land acquisition). It should also hear out civil society. And, most importantly, the fine print of the Bill should be in resonance with the noble intentions behind the changes sought. Or else, chaos will continue.

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With Ahona Ghosh