Lording it over

A dynamic model of land acquisition, as opposed to a one-size-fits-all Central formula, would make landowners willing stakeholders in development.

At a time when India Inc has virtually stopped investing — the latest industrial output data for May has shown capital goods production declining yet again year-on-year, the ninth time in 11 months — the significance of the successful execution of a mega infrastructure project such as the Delhi-Mumbai Industrial Corridor (DMIC) cannot be overemphasised. So, when the Managing Director of the DMIC Development Corporation, Mr Amitabh Kant, sees the Centre’s proposed Land Acquisition, Rehabilitation and Resettlement Bill as a potential threat to the project’s basic viability, it is a matter of utmost concern.

What Mr Kant has questioned is the very need for a Central law, when many States have evolved their own unique models to acquire land for industrial and infrastructure development purposes. Gujarat, for instance, has a ‘town planning’ scheme, where land belonging to different owners in a given area is pooled together, of which 40 per cent is deducted pro-rata from their individual holdings and used by the authorities for the intended public purpose. The remaining 60 per cent from the reshaped and readjusted pool is returned to the original owners, who may end up having less, but far more valuable, land with better infrastructure provision and access to services. Haryana, likewise, offers farmers an annuity over and above the usual compensation for 33 years, with these payments subject to a fixed annual escalation. The Centre’s Bill, by contrast, imposes a uniform formula of computing the so-called market value of the land and paying owners twice that value – which is to be applicable across the country irrespective of the nature of the land being acquired. Enacting such a law, Mr Kant rightly points out, totally undermines the “genius” of the States to device methods of acquisition and compensation packages suited to their specific local situations.

The correct approach when it comes to land acquisition by government agencies for a project of the scale of DMIC — which seeks to create 24 fresh manufacturing hubs and associated infrastructure along a 1,483 km-long dedicated rail freight line, connecting the country’s political and financial capitals — would be one that incorporates two elements. The first is that the land being acquired is utilised for the stated purpose and within a defined period of time, failing which it should revert to the original owner. Secondly, the landowner may be entitled to some share of the appreciation in the property value between the time of its acquisition and completion of the project. These can be payable in the form of annuities linked to market prices. Such an approach, amenable to tweaking from State to State as opposed to a one-size-fits-all Central formula, would make landowners willing stakeholders in the development process. And it would also make projects like the DMIC, which envisages some $90 billion of investments, financially viable and bankable.

Published on July 12, 2012
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