Although India has one of the largest land masses in the world, the many competing needs for land have led to a crisis in acquisition for industrialisation and urbanisation.

According to a CII analysis, land acquisition has emerged as one of the biggest hurdles delaying projects worth lakhs of crores. In this context, there is an urgent need to frame a balanced piece of legislation that would address diverse needs of landowners, project-affected families and industry is more acute.

Productivity of land in terms of incomes per worker is higher when it is used for industrial purposes. Hence, while India grows, it must look at how to manage the transition of land from rural to other areas to maximise incomes, create more jobs and promote inclusive growth.

Agricultural land must be preserved as far as possible for food security, but there is also land available for urban and industrial uses. The proposed Bill, ‘Right to Compensation, Resettlement, Rehabilitation and Transparency in Land Acquisition Bill 2011’ seeks to replace the Land Acquisition Act of 1894 which has outlived its utility. It must ensure that project viability remains attractive while, at the same time, balancing the interests of affected families.

Promising partnerships

The promising aspects of the Bill include Government support to industry in land acquisition, which is crucial given the fragmented nature of land holdings, multiple owners for any large tract of land, lack of firm records, and other anomalies in purchasing land.

By including industry in the definition of ‘public purpose’, the Bill would allow Government to play a prominent role in land acquisition.

Additionally, the Bill does well to include public-private-partnership projects for the production of public goods or provision of public services, as also provision of land in the public interest for private companies for the same purposes.

Today, such partnerships have become the defining feature of infrastructure creation in many sectors such as roads, ports, and so on. Large projects such as the proposed National Investment and Manufacturing Zones have also been included in the definition of ‘public purpose’ as per the amendments tabled in Parliament in Winter Session 2012.

However, industry continues to be concerned about some of the other proposed amendments. First, as per the current draft, the agreed compensation package for land acquisition would amount to four times the market value in rural areas and two times that in urban areas. CII estimates that this would push up cost of land acquisition alone by 3-3.5 times, which would make industrial projects financially unviable and could deplete the competitiveness of Indian industry. To reduce this cost, we recommend that no solatium (compensation for non-financial losses) will be applicable over and above the multiplier. If at all, solatium is given, it should be reduced to 30 per cent and the multiplier for urban areas be reduced to 1.5 instead of 2.

Two, as per the current draft, CII estimates that the R&R cost are likely to go up steeply by about three times. We suggest that instead of using a single term of “affected families”, families should be categorised according to losses suffered by them.

Getting consent

Compensation would accordingly depend on this gradation. For example, landowners and those who work on the land would have different compensation requirements.

Similarly, R&R provisions would need to be worked out separately for each category of affected families.

Three, consent of 80 per cent of affected families for private sector and 70 per cent of affected families for public private partnership projects under ‘public purpose’, as proposed in the tabled amendments is an issue of concern.

The process of obtaining consent is long drawn out and goes through various stages which can take several years. We would suggest that consent provision should be limited to 60 per cent of land owners.

Four, the Bill seems to have retrospective application regarding cut-off dates. Where land acquisition notification under Section 11 of LA Act 1894 has already been issued and the process of award initiated, land acquisition should be continued and not started afresh to avoid delays and cost escalation.

‘Land use’ plan

Several other issues must be addressed. For instance, threshold period for return of land if not used is five years, which may not be enough as per certain industry sectors. Industry can adhere to a ‘land use’ plan instead.

Also, in cases of direct land purchase from land owners, R&R entitlements need not be provided for, since sellers would have received the premium on land value. Instead, suitable R&R entitlements could be laid down for affected families who lose their livelihood as a result of such land acquisition in terms of direct purchase.

Further, acquisition stipulations for multi-cropped land should not be applicable to mining. Finally, land bank corporations could aggregate and acquire fallow, barren and unproductive lands, ex-ante , for allocation to industry in a transparent manner.

Digitisation of land records and zoning of land over a 100-150 year horizon must be conducted with the aid of new technologies for clear mapping, identification, segregation and systematic development of land for industrial use. At a time when growth is under pressure, a balanced and well-designed land acquisition law could encourage industry revival, and we hope Parliament would consider it favourably.

(The author is Director-General, Confederation of Indian Industry.)

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