Land Bill misses ground picture

It looks like the Land Acquisition, Rehabilitation And Resettlement Bill is going to be finally presented in Parliament for passage in the current session.

The full details of what is in the current Bill aren’t known because over 150 amendments may have been made to the last version that was available for public scrutiny. But the fundamentals haven’t changed.

Acquisition price will be quadruple of “market price” in rural areas and double in urban areas. Above certain size thresholds, three things will happen: (1) a rehabilitation and resettlement process will be triggered; (2) projects with private sector involvement will have to go through a “consent” process (public sector projects will not need consent); and (3) project affected people who aren’t landowners will have to be compensated. A new bureaucracy that may have five different layers or authorities will be created to manage the new process.

Will this work? Will the new law, if it passes, enable land acquisition for public and private projects in ways that are just and harmonious? These aren’t trivial questions because the hunger for land is palpable all over the nation — in rural populations where land parcels may be the most fragmented in the world and landlessness is massive and widespread; and in urban populations that need new land for infrastructure, industry, housing, and investment. But, as the American comedian Will Rogers said: “They ain’t making any more of the stuff.”

I believe that there are several reasons to be pessimistic about the new Bill. Instead of trying to squeeze all those reasons into this space, let’s consider the core reason for the pessimism.

It begins from an acknowledgement of the fact that the lawmakers face a very difficult task because of the tremendous variation in land needs, landownership patterns and ideologies, the interest groups involved, and legacies of the past.

This complexity cannot be simplified through a single national law, much as the lawmakers may desire to do so. The solutions can only come from the State level.

VARIED LAND MARKETS

Much of this complexity is manifested in the land market itself. The most basic question before us is: what is a just acquisition price? The assumption is that whatever it is, it is not market price. Why? For one, since an acquisition is not a voluntary transaction, it is necessary to pay something more, a “solatium”, for sufferings caused.

Fair enough. Also, it is a truism that the “nominal” or declared price of land does not reflect true market price in India. To solve these difficulties the land Bill assumes that there are two types of land in India — rural and urban — and plucks two numbers from thin air —four and two — to multiply their nominal market prices to create acquisition prices.

Think of the implications of this approach. Rural land in Punjab and Nagaland is assumed to be basically the same, as is urban land in Mumbai and Beed (also in Maharashtra). It matters little that Punjab and Nagaland have very different landholding sizes, very different traditions about the meaning of individual ownership of land, and radically different demand patterns.

The fact is, there is a real market for rural land in Punjab. Its prices are known or knowable, and these prices are among the highest for any rural land anywhere in the world, including the most developed nations. Farmland in Punjab costs several dozen times more per acre than equivalent farmland in the US or Europe. Similarly, land prices in central Mumbai are on par with prices of equivalent central land in cities such as New York and Tokyo. Prices on the edge of metropolitan Mumbai, where farmland is turning into urban land as I write this, are far higher than equivalent land on the edge of New York or Tokyo.

LIMITED FOCUS

The reality is that there are at least four types of land markets in India. First, in all of urban India and some parts of rural India (most of Punjab, Haryana, Kerala, and Tamil Nadu, for example) where there is no gap between the nominal and real price of land, the question here is: how much should the solatium be?

Second, there are peri-urban lands in some parts of India where there is a small but closing gap between the nominal and real price. Third, there are large parts of rural India, especially in regions remote from urban areas and in Scheduled Areas (where land markets haven’t developed because of protective policies created earlier) where there are significant but unknown gaps between the nominal and real prices.

The land acquisition Bill appears to have been designed with this Type-Three land in mind.

Fourth, there are lands which are priceless because of their cultural and subjective value. The Niyamgiri Hills in Odisha, at the centre of the Vedanta mining controversy, is an example. No law can help acquire this type of land without conflict — quadrupling the price won’t do it, making it tenfold won’t do it. Such land should remain off market.

RENT-SEEKERS

Type-One land, the most desirable land in the country because it is the locus of economic growth, creates special problems. Prices in this category have broadly quintupled in the last decade.

It is the source of windfall profits for its owners, much criminality, rent for political parties, blood-feuds between siblings, and endless dinner conversations for the middle-class. The likely consequences of doubling these already stratospheric and rising prices are sobering.

Once we take account of the real price of acquisition (not just purchase, but payments to non-owners, and rehabilitation/resettlement) the sobering prices become frightening ones. I calculate that, depending on the region, acquired land at the urban edge will cost between Rs 8 and Rs 40 crore per acre. Acquired farmland will cost between Rs 25 lakh (at its cheapest) and Rs 1.5 crore per acre. Many development projects will become unaffordable. Industrialisation and urbanisation will slow down. The politician-criminal nexus will make hay.

A regressive system of acquisition that created much injustice and misery in past decades will turn into a social taxation system that transfers wealth to a tiny minority of landowners fortunate to be living in these desirable places.

This land Bill is a blind shot at a moving target. It is such a large intervention that it may be impossible to anticipate all its long-term impact. But there is little doubt that it will influence development and regional outcomes in fundamental ways. In fact, it is likely to become the most significant development policy in the country — without intending to be so — and create unanticipated, fundamental, and far-reaching consequences.

The writer is Professor of Geography and Urban Studies at Temple University in Philadelphia and author of The Price of Land: Acquisition, Conflict, Consequence (Oxford University Press, 2013).