The ground beneath your feet

The real action on economic policy is set to take place outside the Budget. A major move on the cards (which Rural Development Minister Nitin Gadkari sought to downplay late last week) is to amend the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act to reduce the cost of land for industry. Is the country prepared?

This newspaper had reported that the ‘consent clause’ in the LARR Act may be amended. At present, private projects require the consent of 80 per cent of the affected parties, while government ones require 70 per cent. The proposed reduction in the consent requirement is not just an attempt to expedite land acquisition but also bring down the market value of land by reducing the sellers’ bargaining power.

As for the compensation norms, a multiple of 2-3 times the market price stated in the law for urban and rural areas, respectively, is no big deal when the registered sale price is 10-20 per cent of the market value. Therefore, industry, which finds this Bill unacceptable, would rather press for diluting the consent clause and restricting the application of the law to much larger parcels of land than at present. Now, it is 50 acres for urban areas and 100 acres for rural areas.

How will this pan out? The law is an outcome of numerous agitations over land acquisition — at Singur, Nandigram, Kalinga Nagar, Raigad, Greater Noida, Kochi — which questioned both the terms of acquisition and the ultimate use to which the land would be put. As regards the terms, the idea was to create a level playing field between the buyers and the Government on the one hand, and sellers on the other. The law does mark a step forward in this respect.

However, issues of land use, raised by the Singur agitation, remain unresolved. Simply put, is the social value of a car factory more than that of three crops of paddy in a year? Do we need more cars or rice? The question assumes a different meaning, depending on the industrial good in question and the productivity of the land. If, for instance, degraded land is taken over to set up a rail factory, the social value of the industrial project will perhaps exceed that of its farm output.

But the really disturbing part is, what if any industrial project begins to look good only because farming is in crisis? The innate value of the land is then not captured by the market price. That dips because of the farmers’ willingness to exit. To take away the consent clause when farming is under pressure seems like a double whammy. The market value then falls well below the true value of land.

We may see a subtle consensus towards keeping farming depressed in regions where industry is keen on land acquisition.

There could be large-scale acquisitions and a dip in market values in a drought year, when despondency among farmers peaks.

The law is farsighted in that it goes beyond market-based compensation for land. But both this government and the UPA have not engaged with the question of land use. It is fine to aim at moving large sections of people out of agriculture, but that should be achieved by retaining the land for cultivation. Today, both farm land and the people are moving out, without the Government giving a thought to food security consequences.

Despite the crisis in small-scale farming, the Government is taking a big political chance if it believes that the willingness to exit will lead to easy acquisitions. We could see more Singurs and Nandigrams.

Political unrest may also break out if the Government pushes projects in fragile environments by amending the existing law that calls for the approval of the gram sabhas concerned. (Environment agitations, it is not generally understood, are basically around livelihood issues.) The Niyamgiri bauxite mining project was held up on this score, as were some ventures in Goa. Generally speaking, a rise in legal disputes is on the cards.

But it appears that New Delhi does have a political formula up its sleeve. The Prime Minister’s exhortation to make “development a mass movement” basically indicates that the large, vocal, young and aspirational urban and semi-urban population will be given a political voice. They backed this government; for them acche din is the good life that is so achingly within their grasp.

Their impatience could drive our growth and development engine — while the rest put up with the consequences. Or will they?

COMMENT NOW