Tag Archives: Land Acquisition Act

Land acquisition in India

Land acquisition in India refers to the process by which the union or a state government in India acquires private land for the purpose of industrialisation, development of infrastructural facilities or urbanisation of the private land, and provides compensation to the affected land owners and their rehabilitation and resettlement.[1]

Land acquisition in India is governed by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and which came into force from 1 January 2014.[2] Till 2013, land acquisition in India was governed by Land Acquisition Act of 1894. On 31 December 2014, the President of India promulgated an ordinance with an official mandate to “meet the twin objectives of farmer welfare; along with expeditiously meeting the strategic and developmental needs of the country”. An amendment bill was then introduced in Parliament to endorse the Ordinance. Lok Sabha passed the bill but the same is still lying for passage by the Rajya Sabha. On 30 May 2015, President of India promulgated the amendment ordinance for third time.[3][4][5][6][7] Union Government of India has also made and notified the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Social Impact Assessment and Consent) Rules, 2014 under the Act to regulate the procedure.[8] The land acquisition in Jammu and Kashmir is governed by the Jammu and Kashmir Land Acquisition Act, 1934.[9]

Contents

Purpose

As per the Act, the union or state governments can acquire lands for its own use, hold and control, including for public sector undertakings and for “public purpose”, and shall include the following purposes:

  • for strategic purposes relating to naval, military, air force, and armed forces of the Union, including central paramilitary forces or any work vital to national security or defence of India or State police, safety of the people;
  • for infrastructure projects as defined under the Act;
  • project for project affected families;
  • project for housing for such income groups, as may be specified from time to time by the appropriate Government;
  • project for planned development or the improvement of village sites or any site in the urban areas or provision of land for residential purposes for the weaker sections in rural and urban areas;
  • project for residential purposes to the poor or landless or to persons residing in areas affected by natural calamities, or to persons displaced or affected by reason of the implementation of any scheme undertaken by the Government, any local authority or a corporation owned or controlled by the State.[1]

The land can be acquired for private bodies for certain purposes:

  • for public private partnership projects, where the ownership of the land continues to vest with the Government, for public purpose as defined in the Act;
  • for private companies for public purpose.[1]

Issues

Some of the important issues surrounding the Land Acquisition are discussed below.[10] The major land acquisition and conflicts happen in the densely populated areas of the countryside.

Eminent Domain

The power to take property from the individual is rooted in the idea of eminent domain. The doctrine of eminent domain states, the sovereign can do anything, if the act of sovereign involves public interest. The doctrine empowers the sovereign to acquire private land for a public use, provided the public nature of the usage can be demonstrated beyond doubt. The doctrine is based on the following two Latin maxims, (1) Salus populi suprema lex (Welfare of the People Is the Paramount Law) and (2) Necessitas publica major est quam (Public Necessity Is Greater Than Private Necessity).[11] In the history of modern India, this doctrine was challenged twice (broadly speaking) once when land reform was initiated and another time when Banks were nationalized.[12]

The Constitution of India originally provided the right to property (which includes land) under Articles 19 and 31. Article 19 guaranteed that all citizens have the right to acquire, hold and dispose of property. Article 31 stated that “no person shall be deprived of his property save by authority of law.” It also indicated that compensation would be paid to a person whose property has been taken for public purposes (often subject to wide range of meaning). The Forty-Fourth Amendment of 1978 deleted the right to property from the list of fundamental rights with an introduction of a new provision, Article 300-A, which provided that “no person shall be deprived of his property save by authority of law” (Constitution 44th Amendment, w.e.f. 10.6.1979). The amendment ensured that the right to property‟ is no more a fundamental right but rather a constitutional/legal right/as a statutory right and in the event of breach, the remedy available to an aggrieved person is through the High Court under Article 226 of the Indian Constitution and not the Supreme Court under Article 32 of the Constitution.

State must pay compensation at the market value for such land, building or structure acquired (Inserted by Constitution, Seventeenth Amendment) Act, 1964, the same can be found in the earlier rulings when property right was a fundamental right (such as 1954 AIR 170, 1954 SCR 558, which propounded that the word “Compensation” deployed in Article 31(2) implied full compensation, that is the market value of the property at the time of the acquisition. The Legislature must “ensure that what is determined as payable must be compensation, that is, a just equivalent of what the owner has been deprived of”). Elsewhere, Justice, Reddy, O Chinnappa ruled (State Of Maharashtra v. Chandrabhan Tale on 7 July 1983) that the fundamental right to property has been abolished because of its incompatibility with the goals of “justice” social, economic and political and “equality of status and of opportunity” and with the establishment of “a socialist democratic republic, as contemplated by the Constitution. There is no reason why a new concept of property should be introduced in the place of the old so as to bring in its wake the vestiges of the doctrine of Laissez Faire and create, in the name of efficiency, a new oligarchy. Efficiency has many facets and one is yet to discover an infallible test of efficiency to suit the widely differing needs of a developing society such as ours” (1983 AIR 803, 1983 SCR (3) 327). The concept of efficiency has been introduced by Justice Reddy, O Chinnappa, very interestingly coupled with the condition of infallibility (Dey Biswas 2014, 14-15 footnote).

In India, with this introduction of ‘social’ elements to the property rights, a new phase had begun. K. K. Mathew, justice of KesavanandaBharati vs State of Kerala (cited in [13]) stated this precisely: “Property in consumable goods or means of production worked by their owners (use aspects of property) were justified as necessary condition of a free and purposeful life; but when property gave power not only over things but through things over persons (power aspect of property) also, it was not justified as it was an instrument of servitude rather than freedom” (See [14] for more on ‘Social’ Element of Property Rights as a Guiding Problem).

Legislative changes

The 2013 Act focuses on providing not only compensation to the land owners, but also extend rehabilitation and resettlement benefits to livelihood looser from the land, which shall be in addition to the minimum compensation. The minimum compensation to be paid to the land owners is based on a multiple of market value and other factors laid down in the Act. The Act forbids or regulates land acquisition when such acquisition would include multi-crop irrigated area. The Act changed the norms for acquisition of land for use by private companies or in case of public-private partnerships, including compulsory approval of 80% of the landowners. The Act also introduced changes in the land acquisition process, including a compulsory social-impact study, which need to be conducted before an acquisition is made.[15]

The new law, also has some serious shortcomings as regards its provisions for socioeconomic impact assessment and it has also bypassed the constitutional local self governments by not recognizing them as “appropriate governments” in matters of land acquisition.[16]

Monetary compensation

Major Indian infrastructure projects such as the Yamuna Expressway have paid about INR 2800 crores (US$500 million) for land,[17] or over US$25,000 per acre between 2007 and 2009. For context purposes, this may be compared with land prices elsewhere in the world:

  • According to The Financial Times, in 2008, the farmland prices in France were Euro 6,000 per hectare ($2,430 per acre; IN Rs. 1,09,350 per acre).[18]
  • According to the United States Department of Agriculture, as of January 2010, the average farmland value in the United States was $2,140 per acre (IN Rs. 96,300 per acre). The farmland prices in the United States varied between different parts of the country, ranging between $480 per acre to $4,690 per acre.[19]

A 2010 report by the Government of India, on labor whose livelihood depends on agricultural land, claims that, per 2009 data collected across all states in India, the all-India annual average daily wage rates in agricultural occupations ranged between IN Rs.[20] 53 to 117 per day for men working in farms (US$354 to 780 per year), and between IN Rs. 41 to 72 per day for women working in farms (US$274 to 480 per year). This wage rate in rural India study included the following agricultural operations common in India: ploughing, sowing, weeding, transplanting, harvesting, winnowing, threshing, picking, herdsmen, tractor driver, unskilled help, masonry, etc.

The compensation for the acquired land is based on the value of the agricultural land, however price increases have been ignored. The land value would increase many times, which the current buyer would not benefit from.[21] Secondly, if the prices are left for the market to determine, the small peasants could never influence the big corporate tycoons. Also it is mostly judiciary who has awarded higher compensation then bureaucracy (Singh 2007).

Delayed projects

Delayed projects due to mass unrest have caused a damaging effect to the growth and development of companies and the economy as a whole. Earlier states like Maharashtra, Tamil Nadu, Karnataka, and Andhra Pradesh had been an attractive place for investors, but the present day revolts have shown that land acquisition in some states pose problems.[22]

Consequences

The consequences of land acquisition in India are manifold.The empirical and theoretical studies on displacement through the acquisition of land by the government for development projects have so far focussed on the direct and immediate adverse consequences of land acquisition.[23] Most of the analytical as well as the descriptive accounts of the immediate consequences of land acquisition for development projects draws heavily from Michael Cernea’s ‘impoverishment risk model’, which broadly enumerated eight ‘risks’ or ‘dimensions’ of development-induced displacement. These eight risks are very much direct and basic in nature which are (i) landlessness, (ii) joblessness, (iii) marginalization, (iv) loss of access to common property resources, (v) increased morbidity and mortality, (vi) food insecurity, (vii) homelessness and (viii) social disarticulation ([24]). Recently L.K. Mahapatra has added ‘loss of education’ as another impoverishment risk in situations of displacement (Mahapatra 1999).

But apart from these direct and immediate effects of land acquisition there are more subtle and indirect effects of this coercive and centralized legal procedure, which have a bearing on various decentralised and participatory democratic processes, and institutions of the state power. Land reforms and the Panchayati raj institutions are the two most important areas, which are being vitiated by land acquisition.[25] Of all the states of India, the consequences and controversies around land acquisition in West Bengal has recently gained a lot of national and international attention. The peasant resistances against governmental land expropriation in Singur(a place in the Hoogly district) and Nandigram(a place in the East Medinipur district) has finally led to the fall of the communist party(Marxist) led government in West Bengal, which ruled the state through democratic election for 34 years.The communist led left front government of West Bengal under the economic liberalisation policy adopted by the Central/Union government of the country shifted from its pro-farmer policy and took to the capitalist path of industrial development, which at the micro-levels endangered the food security of the small and marginal farmers as well as sharecroppers who formed the vote bank of the left front government of West Bengal[26] The new anti-communist Trinamul Congress led government of West Bengal which came to power in the state in 2011 through a massive electoral victory is yet to develop any comprehensive resettlement and rehabilitation policy for the thousands of families affected by various development projects. The new government has enacted a law on 14 June 2011, in the West Bengal Assembly named ‘Singur Land Rehabilitation and Development Act, 2011’. With this law, the West Bengal government has reacquired about 1000 acres of farmland from the Tatas which wasgiven to the company for building a small-car manufacturing factory in 2006 by the then Left Front government. The Trinamul government’s intention was to return 400 acres of farmland to the ‘unwilling’ farmers around whom the agitation against the Left Front government was organised by the Trinamul Congress party. However, now the whole issue seems to have fallen into a long legal battle between the present state government and the Tatas, as the latter has challenged the ‘Singur Land Rehabilitation and Development Act’ in the court. As a result, the Trinamul government has not yet been able to return the land to those ‘unwilling farmers’ nor have they received any compensation (The Statesman, 12 January, 2012).In another case of governmental land acquisition for housing at North 24 Parganas district of West Bengal, the farmers began to cultivate their farmland which were acquired but remained unutilised. According to media report these farmers were assured by the Trinamul Congress party leaders before the election that their land, which is about 1687 acres would be returned to them if the party could come to power. However, now these farmers are turning their backs to the Trinamul Congress, since the party has not kept its pre-election promise (The Statesman, 11 February, 2012). Under the above disturbing episodes, it may be worthwhile to narrate the glaring incident of the opposition levelled by Mamata Banerjee, the present chief minister of West Bengal to the draft Land Acquisition (Amendment) Bill 2007 in the Lok Sabha. At that time Miss Mamata Banerjee was the Railway Minister of the Central Government. She opposed to a clause of the bill which empowered private companies to acquire up to 70 per cent land directly from farmers and landowners. The remaining 30 per cent could be acquired by the state government. Miss Banerjee wanted private companies to buy 100 per cent of the land, according to a report (The Statesman, 26 July 2009). It seemed that Miss Banerjee would have allowed the amended Bill to be passed if the Lok Sabha agreed to modify the 70/30 proportion to 100 per cent purchase by the companies under the principleof willing-buyer-willing-seller.[27]

Eminent domain doctrine has been widely used in India since the era of Independence, with over 21.6 million people in the period of 1951-90.[28] They have been displaced with large-scale projects like dams, canals, thermal plants, sanctuaries, industrial facilities, and mining (Pellissery and Dey Biswas 2012, pp 32–54). These occurrences are generally categorized as “development-induced displacement“.

The process of land acquisition in India has proven unpopular with the citizenry. The amount reimbursed is fairly low with regard to the current index of prices prevailing in the economy. Furthermore, due to the low level of human capital of the displaced people, they often fail to find adequate employment ([29]).

The draft of the government’s National Policy for Rehabilitation states that a figure around 75% of the displaced people since 1951 are still awaiting rehabilitation.[30] However, it should be noted that displacement is only being considered with regard to “Direct Displacement”. These rehabilitation policies do not cover fishermen, landless laborers, and artisans. Roughly one in ten Indian tribals is a displaced person. Dam projects have displaced close to a million Adivasis, with similar woe for displaced Dalits. Some estimate suggests 40 percent of displaced people are of tribal origins (Fernandes, 2008).

There have been a rising number of political and social protests against the acquisition of land by various industrialists. They have ranged from Bengal, Karnataka, and Uttar Pradesh in the recent past.[31] The acquisition of 997 acres of land by Tata motors in Bengal in order to set up a factory for the cheapest car in India was protested (Singur Tata Nano controversy).At least a decade before the Singur episode similar events occurred in West Bengal, although the opposition parties and other civil society organisations remained silent at that time.[32] Similarly, the Sardar Sarovar Dam project on the river Narmada was planned on acquired land, though the project was later canceled by the World Bank (Bøås and McNeill 2003, pp 121-122, 125, 142-43 and more).

The Land Acquisition Act of 1894 allowed the government to acquire private lands. It is the only legislation pertaining to land acquisition which, though amended several times, has failed to serve its purpose. Under the 1894 Act, displaced people were only liable for monetary compensation linked with market value of the land in question, which was still quite minimal considering circle rates are often misleading (Singh 2007). Land acquisition related conflicts during the post-reform period in India has shown three distinctive tendencies; (1) Technocracy and Bundle of Rights, (2) Power-land Regulation Nexus, and (3) Disappearing Commons.[33]

Controversy Over Proposed Amendments by Narendra Modi Government

The current Narendra Modi lead National Democratic Alliance (India) government driven Land Acquisition Amendment Bill[34] in the Lok Sabha on 10 March 2015 has seen a tough resistance from key position parties in India who have called the proposed amendments “anti farmer” and “anti poor”. The proposed amendments remove requirements for approval from farmers to proceed with land acquisition under five broad categories of projects.[35] While the bill was passed in Lok Sabha, it still needs approval from the Rajya Sabha, where the current government does not have a majority, for the proposed amendments to become effective.

The following are the main “disputation points”:[36]

The National Democratic Alliance (India) government came under heavy attacks from opposition parties and farmer organization for the proposed Land Acquisition bill amendments. The opponents of the Land acquisition bill claim the bill to be “anti-farmer” and “pro corporate”. They claim that the amendments are aimed at “benefiting the large corporate houses”.

The opposition Indian National Congress has opposed the bill in and out of Parliament. Sonia Gandhi, the chairperson of UPA and Indian National Congress, called the bill “anti-poor” and “anti-farmer”. She alleged that the bill will “break the backbone of India”.[37]

Samajwadi party leader Mulayam Singh Yadav said the Modi government is “taking anti-farmer stand” and is “favoring industrialists”. [38]

Not only the opposition parties but also other organization that traditionally supported Bharatiya Janta Party such as Mazdoor Sangh, Bhartiya Kisan Sangh and Akhil Bhartiya Vanvasi Kalyan Ashram have come heavily against the amendments proposed by the Narendra Modi lead NDA government. As per the Bharatiya Kisan Sangh, the Modi government’s land ordinance tweaks the fundamentals of the The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 passed by the UPA government and supported by the BJP two years ago. [39] [40] [41]

Displaced Tribals [42]
Project State Displaced Population Tribal Percentage
Karjan Gujarat 11,600 100
Sardar Sarovar Gujarat 2,00,000 57.6
Maheshwar Madhya Pradesh 20,000 60
Bodhghat Madhya Pradesh 12,700 73.91
Icha Bihar 30,800 80
Chandil Bihar 37,600 87.92
Koel Karo Bihar 66,000 88
Mahi Bajaj Sajar Rajasthan 38,400 76.28
Polavaram Andhra Pradesh 1,50,000 52.90
Maithon & Panchet Bihar 93,874 56.46
Upper Indravati Odisha 18,500 89.20
Pong Himachal Pradesh 80,000 56.25
Ichampalli Andhra Pradesh 38,100 76.28
Tultuti Maharashtra 13,600 51.61
Daman Ganga Gujarat 8,700 48.70
Bhakra Himachal Pradesh 36,000 34.76
Masan Reservoir Bihar 3,700 31
Ukai Reservoir Gujarat 52,000 18.92
Tamnar chhattisgarh 59999

Alternatives

One of the alternative proposals to land acquisition is leasing the land from landowners for a certain lease period. Proponents cite how land acquisition policies by Governments unwittingly encourage rampant land speculation making the projects expensive since huge portion of investment would be need to be allocated for land acquisition costs.[43] According to them, policies of land acquisition gave way to political cronyism where land is acquired cheaply by securing favors from local governments and sold to industries at steep markup prices. Leasing land, may also support sustainable project development since the lands need to be returned to the landowners at the end of the lease period in a condition similar to its original form with out considerable environmental degradation.[44] When the land is leased then anybody who has to otherwise give up land or livelihood will be compensated for its growing valuation over time. In this model, the landowner lends her land to the government for a steadily-increasing rent, or through an annuity-based system as currently practiced in Haryana and Uttar Pradesh.[45]

Some industries already follow the model of leasing lands instead of acquiring it. Energy development projects such as oil & gas extraction usually lease lands. Renewable energy projects such as Wind Power farms[46][47][48] and Bio-fuel[49] projects often lease the land from land owners instead of trying to acquire the land which could make the projects prohibitively expensive.

Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (also Land Acquisition Act, 2013) is an Act of Indian Parliament that regulates land acquisition and provides lays down the procedure and rules for granting compensation, rehabilitation and resettlement to the affected persons in India. The Act has provisions to provide fair compensation to those whose land is taken away, brings transparency to the process of acquisition of land to set up factories or buildings, infrastructural projects and assures rehabilitation of those affected. The Act establishes regulations for land acquisition as a part of India’s massive industrialisation drive driven by public-private partnership. The Act replaced the Land Acquisition Act, 1894, a nearly 120-year-old law enacted during British rule.

The Land Acquisition, Rehabilitation and Resettlement Bill, 2011 was introduced in Lok Sabha on 7 September 2011.[1][2][3] The bill was then passed by it on 29 August 2013 and by Rajya Sabha on 4 September 2013. The bill then received the assent of the President of India, Pranab Mukherjee on 27 September 2013.[4] The Act came into force from 1 January 2014.[5][6][7][8]

An amendment bill was then introduced in Parliament to endorse the Ordinance. Lok Sabha passed the bill but the same is still lying for passage by the Rajya Sabha. On 30 May 2015, President of India promulgated the amendment ordinance for third time.[9]

Contents

Background

The Government of India believed there was a heightened public concern on land acquisition issues in India. Of particular concern was that despite many amendments, over the years, to India’s Land Acquisition Act of 1894, there was an absence of a cohesive national law that addressed fair compensation when private land is acquired for public use, and fair rehabilitation of land owners and those directly affected from loss of livelihoods. The Government of India believed that a combined law was necessary, one that legally requires rehabilitation and resettlement necessarily and simultaneously follow government acquisition of land for public purposes.[10]

Forty-Fourth Amendment Act of 1978 omitted Art 19(1) (f) with the net result being:-

  1. The right not to be deprived of one’s property save by authority of law has since been no longer a fundamental right. “No person shall be deprived of his property saved by authority of law” (Constitution 44th Amendment, w.e.f. 10.6.1979). The amendment ensured that the right to property‟ is no more a fundamental right but rather a constitutional/legal right/as a statutory right and in the event of breach, the remedy available to an aggrieved person is through the High Court under Article 226 of the Indian Constitution and not the Supreme Court under Article 32 of the Constitution. .
  2. Moreover, no one can challenge the reasonableness of the restriction imposed by any law the legislature made to deprive the person of his property.

State must pay compensation at the market value for such land, building or structure acquired (Inserted by Constitution, Seventeenth Amendment Act, 1964), the same can be found in the earlier rulings when property right was a fundamental right (such as 1954 AIR 170, 1954 SCR 558, which propounded that the word “Compensation” deployed in Article 31(2) implied full compensation, that is the market value of the property at the time of the acquisition. The Legislature must “ensure that what is determined as payable must be compensation, that is, a just equivalent of what the owner has been deprived of”). Elsewhere, Justice, Reddy, O Chinnappa ruled (State Of Maharashtra v. Chandrabhan Tale on 7 July, 1983) that the fundamental right to property has been abolished because of its incompatibility with the goals of “justice” social, economic and political and “equality of status and of opportunity” and with the establishment of “a socialist democratic republic, as contemplated by the Constitution. There is no reason why a new concept of property should be introduced in the place of the old so as to bring in its wake the vestiges of the doctrine of Laissez Faire and create, in the name of efficiency, a new oligarchy. Efficiency has many facets and one is yet to discover an infallible test of efficiency to suit the widely differing needs of a developing society such as ours” (1983 AIR 803, 1983 SCR (3) 327) (Dey Biswas 2014, 14-15 footnote).

The Land Acquisition, Rehabilitation and Resettlement Bill, 2011 was introduced in Lok Sabha. Two Bills on similar lines were introduced in Lok Sabha in 2007. These Bills lapsed with the dissolution of the 14th Lok Sabha.[11]

The First Amendment to the above bill was introduced and passed in the lower house of the Indian legislature on 11 March 2015 among strong protest from allies as well as opposition. It is expected to face opposition in the Rajya Sabha as well after being dubbed as an “anti-farmer” bill.

Aims and objectives

The aims and objectives of the Act include:

  • To ensure, in consultation with institutions of local self-government and Gram Sabhas established under the Constitution of India, a humane, participative, informed and transparent process for land acquisition for industrialisation, development of essential infrastructural facilities and urbanisation with the least disturbance to the owners of the land and other affected families
  • Provide just and fair compensation to the affected families whose land has been acquired or proposed to be acquired or are affected by such acquisition
  • Make adequate provisions for such affected persons for their rehabilitation and resettlement
  • Ensure that the cumulative outcome of compulsory acquisition should be that affected persons become partners in development leading to an improvement in their post acquisition social and economic status and for matters connected therewith or incidental thereto.[12]

Purpose and scope

The Act aims to establish the law on land acquisition, as well as the rehabilitation and resettlement of those directly affected by the land acquisition in India. The scope of the Act includes all land acquisition whether it is done by the Central Government of India, or any State Government of India, except the state of Jammu & Kashmir.

The Act is applicable when:

  • Government acquires land for its own use, hold and control, including land for Public sector undertakings.
  • Government acquires land with the ultimate purpose to transfer it for the use of private companies for stated public purpose. The purpose of LARR 2011 includes public-private-partnership projects, but excludes land acquired for state or national highway projects.
  • Government acquires land for immediate and declared use by private companies for public purpose.

The provisions of the Act does not apply to acquisitions under 16 existing legislations including the Special Economic Zones Act, 2005, the Atomic Energy Act, 1962, the Railways Act, 1989, etc.[11]

Provisions

Definition of public purpose

Section 2(1) of the Act defines the following as public purpose for land acquisition within India:[13]

  • For strategic purposes relating to naval, military, air force, and armed forces of the Union, including central paramilitary forces or any work vital to national security or defence of India or State police, safety of the people; or
  • For infrastructure projects, which includes the following, namely:
    • All activities or items listed in the notification of the Government of India in the Department of Economic Affairs (Infrastructure Section) number 13/6/2009-INF, dated 27 March 2012, excluding private hospitals, private educational institutions and private hotels;
    • Projects involving agro-processing, supply of inputs to agriculture, warehousing, cold storage facilities, marketing infrastructure for agriculture and allied activities such as dairy, fisheries, and meat processing, set up or owned by the appropriate Government or by a farmers’ cooperative or by an institution set up under a statute;
    • Project for industrial corridors or mining activities, national investment and manufacturing zones, as designated in the National Manufacturing Policy;
    • Project for water harvesting and water conservation structures, sanitation;
    • Project for Government administered, Government aided educational and research schemes or institutions;
    • Project for sports, health care, tourism, transportation of space programme;
    • Any infrastructure facility as may be notified in this regard by the Central Government and after tabling of such notification in Parliament;
  • Project for project affected families;
  • Project for housing, or such income groups, as may be specified from time to time by the appropriate Government;
  • Project for planned development or the improvement of village sites or any site in the urban areas or provision of land for residential purposes for the weaker sections in rural and urban areas;
  • Project for residential purposes to the poor or landless or to persons residing in areas affected by natural calamities, or to persons displaced or affected by reason of the implementation of any scheme undertaken by the Government, any local authority or a corporation owned or controlled by the State.

When government declares public purpose and shall control the land directly, consent of the land owner shall not be required. However, when the government acquires the land for private companies, the consent of at least 80% of the project affected families shall be obtained through a prior informed process before government uses its power under the Act to acquire the remaining land for public good, and in case of a public-private project at least 70% of the affected families should consent to the acquisition process.[14]

The Act includes an urgency clause for expedited land acquisition. The urgency clause may only be invoked for national defense, security and in the event of rehabilitation of affected people from natural disasters or emergencies.

Definition of ‘land owner’

The Act defines the following as land owner:[13]

  1. person whose name is recorded as the owner of the land or building or part thereof, in the records of the authority concerned; or
  2. person who is granted forest rights under The Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 or under any other law for the time being in force; or
  3. Person who is entitled to be granted Patta rights on the land under any law of the State including assigned lands; or
  4. any person who has been declared as such by an order of the court or Authority;[12]

Limits on acquisition

The Act forbids land acquisition when such acquisition would include multi-crop irrigated area. However such acquisition may be permitted on demonstrable last resort, which will be subjected to an aggregated upper limit for all the projects in a District or State as notified by the State Government. In addition to the above condition, wherever multi-crop irrigated land is acquired an equivalent area of cultivable wasteland shall be developed by the state for agricultural purposes. In other type of agricultural land, the total acquisition shall not exceed the limit for all the projects in a District or State as notified by the Appropriate Authority. These limits shall not apply to linear projects which includes projects for railways, highways, major district roads, power lines, and irrigation canals.[15]

Compensation

Section 27 of the Act defines the method by which market value of the land shall be computed under the proposed law. Schedule I outlines the proposed minimum compensation based on a multiple of market value. Schedule II through VI outline the resettlement and rehabilitation entitlements to land owners and livelihood losers, which shall be in addition to the minimum compensation per Schedule I.

Market value

The market value of the proposed land to be acquired, shall be set as the higher of:[13]

  • the minimum land value, if any, specified in the Indian Stamp Act, 1899[16] for the registration of sale deeds in the area, where the land is situated; or
  • the average of the sale price for similar type of land being acquired, ascertained from the highest fifty per cent of the sale deeds registered during the preceding three years in the nearest village or nearest vicinity of the land being acquired.; or
  • the consented amount in case the land is acquired for private companies or public-private partnership projects.

The market value would be multiplied by a factor of, at least one to two times the market value for land acquired in rural areas and at least one times the market value for land acquired in urban areas. The Act stipulates that the minimum compensation to be a multiple of the total of above ascertained market value, value to assets attached to the property, plus a solatium equal to 100 percent of the market value of the property including value of assets.

In addition to above compensation, the Act proposes a wide range of rehabilitation and resettlement entitlements to land owners and livelihood losers from the land acquirer.

Rehabilitation and resettlement

For land owners, the Act provides:[10]

  • an additional subsistence allowance of Rs.36,000 (US$ 800) for the first year – may be
  • an additional entitlement of a job to the family member, or a payment of Rs.5,00,000 (US$ 11,000) up front, or a monthly annuity totaling Rs.24,000 (US$ 550) per year for 20 years with adjustment for inflation – the option from these three choices shall be the legal right of the affected land owner family, not the land acquirer
  • an additional upfront compensation of Rs.50,000 (US$ 1,100) for transportation
  • an additional upfront resettlement allowance of Rs.50,000(US$ 1,100)
  • if the land owner loses a home in a rural area, then an additional entitlement of a house with no less than 50 square meters in plinth area
  • if the land is acquired for urbanization, 20% of the developed land will be reserved and offered to land owning families, in proportion to their land acquired and at a price equal to cost of acquisition plus cost of subsequent development
  • if acquired land is resold without development, 20% of the appreciated land value shall be mandatorily shared with the original owner whose land was acquired

In addition to the above compensation and entitlements under the proposed LARR 2011, scheduled caste and schedule tribe (SC/ST) families will be entitled to several other additional benefits per Schedule II of the proposed bill. India has over 250 million people protected and classified as SC/ST, about 22% of its total population. The proposed additional benefits to these families include:[13]

  • an additional land grant of 2.5 acres per affected family
  • an additional assistance of Rs.50,000 (US$ 1,100)
  • free land for community and social gatherings, and special Schedule V and VI benefits

Schedule III of LARR 2011 proposes additional amenities over and beyond those outlined above. Schedule III proposes that the land acquirer shall provide 25 additional services to families affected by the land acquisition.[13] Some examples of the 25 additional services include schools, health centres, roads, safe drinking water, child support services, places of worship, burial and cremation grounds, post offices, fair price shops, and storage facilities.

LARR Bill 2011 proposes that Schedule II through VI shall apply even when private companies willingly buy land from willing sellers, without any involvement of the government.

The Bill as drafted mandates compensation and entitlements without limit to number of claimants. Thus, for clarity and as an example, if 1000 acres of rural land is to be acquired for a project, with market price of Rs.2,25,000 per acre (US$ 5000 per acre), 100 families claim to be land owners, and 5 families per acre claim their rights as livelihood losers under the proposed LARR 2011 Bill, the total cost to acquire the 1000 acre would be

  • Land compensation = Rs.90,00,00,000 (US$ 20,000,000)
  • Land owner entitlements = Rs.6,30,00,000 (US$ 1,400,000) + 100 replacement homes
  • Livelihood loser entitlements = Rs.365,00,00,000 (US$ 70,000,000) + 5000 replacement homes

The average effective cost of land, in the above example will be at least Rs.41,00,000 (US$ 91,400) per acre plus replacement homes and additional services per Schedule III to VI of the proposed bill. Even if the pre-acquisition average market price for land were just Rs.22,500 per acre (US$ 500 per acre) in the above example, the proposed R&R, other entitlements and Schedule III to VI would raise the effective cost of land to at least Rs.33,03,000 (US$ 73,400) per acre.

The LARR Bill of 2011 proposes the above benchmarks as minimum. The state governments of India, or private companies, may choose to set and implement a policy that pays more than the minimum proposed by LARR 2011.

For context purposes, the proposed land prices because of compensation and R&R LARR 2011 may be compared with land prices elsewhere in the world:

  • According to The Financial Times, in 2008, the farmland prices in France were Euro 6,000 per hectare ($2,430 per acre; Rs.1,09,350 per acre).[17]
  • According to the United States Department of Agriculture, as of January 2010, the average farmland value in the United States was $2,140 per acre (Rs.96,300 per acre). The farmland prices in the United States varied between different parts of the country, ranging between $480 per acre to $4,690 per acre.[18]

A 2010 report by the Government of India, on labour whose livelihood depends on agricultural land, claims[19] that, per 2009 data collected across all states in India, the all-India annual average daily wage rates in agricultural occupations ranged between Rs.53 to 117 per day for men working in farms (US$ 354 to 780 per year), and between Rs.41 to 72 per day for women working in farms (US$ 274 to 480 per year). This wage rate in rural India study included the following agricultural operations common in India: ploughing, sowing, weeding, transplanting, harvesting, winnowing, threshing, picking, herdsmen, tractor driver, unskilled help, mason, etc.

Benefits and effects

The 2013 Act is expected to affect rural families in India whose primary livelihood is derived from farms. The Act will also affect urban households in India whose land or property is acquired.

Per an April 2010 report,[20] over 50% of Indian population (about 60 crore people) derived its livelihood from farm lands. With an average rural household size of 5.5,[21] LARR Bill 2011 R&R entitlement benefits may apply to about 10.9 crore rural households in India.

According to Government of India, the contribution of agriculture to Indian economy’s gross domestic product has been steadily dropping with every decade since its independence. As of 2009, about 15.7% of India’s GDP is derived from agriculture. Act will mandate higher payments for land as well as guaranteed entitlements from India’s non-agriculture-derived GDP to the people supported by agriculture-derived GDP. It is expected that the Act will directly affect 13.2 crore hectares (32.6 crore acres) of rural land in India, over 10 crore land owners, with an average land holding of about 3 acres per land owner.[20] Families whose livelihood depends on farming land, the number of livelihood-dependent families per acre varies widely from season to season, demands of the land, and the nature of crop.

Act provides to compensate rural households – both land owners and livelihood losers. The Act goes beyond compensation, it mandates guaranteed series of entitlements to rural households affected. According to a July 2011 report from the Government of India, the average rural household per capita expenditure/income in 2010, was Rs.928 per month (US$ 252 per year).[22]

For a typical rural household that owns the average of 3 acres of land, the Act will replace the loss of annual average per capita income of Rs.11,136 for the rural household, with:[10]

  • four times the market value of the land, and
  • an upfront payment of Rs.1,36,000 (US$ 3,000) for subsistence, transportation and resettlement allowances, and
  • an additional entitlement of a job to the family member, or a payment of Rs.5,00,000 (US$ 11,000) up front, or a monthly annuity totaling Rs.24,000 (US$ 550) per year for 20 years with adjustment for inflation – the option from these three choices shall be the legal right of the affected land owner family, not the land acquirer, and
  • a house with no less than 50 square meters in plinth area, and
  • additional benefits may apply if the land is resold without development, used for urbanization, or if the land owner belongs to SC/ST or other protected groups per rules of the Government of India

If the affected families on the above rural land demand 100% upfront compensation from the land acquirer, and the market value of land is Rs.1,00,000 per acre, the Act mandates the land acquirer to offset the loss of an average per capita 2010 income of Rs.11,136 per year created by this 3 acre of rural land, with the following:[10]

  • Rs.18,36,000 (US$ 41,727) to the rural land owner; which is the total of R&R allowances of Rs.6,36,000 plus Rs.12,00,000 – which is four times the market value of the land, plus
  • a house with no less than 50 square metres in plinth area and benefits from Schedule III-VI as applicable to the rural land owner, plus
  • additional payments of Rs.6,36,000 each to any additional families claiming to have lost its livelihood because of the acquisition, even if they do not own the land

The effects of LARR Bill 2011, in certain cases, will apply retroactively to pending and incomplete projects. land acquisition for all linear projects such as highways, irrigation canals, railways, ports and others.[13]

Criticisms

The proposed Bill, LARR 2011, is being criticized on a number of fronts:

  • Some criticize the Act citing that it is heavily loaded in favour of land owners and ignores the needs of poor Indians who need affordable housing, impoverished families who need affordable hospitals, schools, employment opportunities and infrastructure and industries.[23][24]
  • Some economists suggest that it attaches an arbitrary mark-up to the historical market price to determine compensation amounts, along with its numerous entitlements to potentially unlimited number of claimants. This according to them shall guarantee neither social justice nor the efficient use of resources.[25]
  • LARR 2011 as proposed mandates that compensation and rehabilitation payments to land owners and livelihood losers be upfront. This misaligns the interests of land acquirer and those affected. Once the payment is made, one or more of the affected families may seek to delay the progress of the project to extract additional compensation, thereby adversely affecting those who chose long term employment in the affected families. The Bill, these economists suggest, should link compensation and entitlements to the progress and success of the project, such as through partial compensation in form of land bonds. These success-linked infrastructure bonds may also help poor states reduce the upfront cost of land acquisition for essential public projects such as hospitals, schools, universities, affordable housing, clean drinking water treatment plants, electricity power generation plants, sewage treatment plants, flood control reservoirs, and highways necessary to bring relief to affected public during fires, epidemics, earthquakes, floods and other natural disasters. The state of Kerala has decided to pursue the use of infrastructure bonds as a form of payment to land owners.[26]
  • LARR 2011 places no limit on total compensation or number of claimants; nor does it place any statute of limitations on claims or claimants.[27] The beneficiaries of the Bill, with guaranteed jobs for 26 years, will have no incentive to be productive. The Bill should place a limit on total value of entitlement benefits that can be annually claimed per acre, this entitlement pool should then be divided between the affected families, and the government should run this program if it is considered to be fair.
  • LARR 2011 as proposed severely curtails free market transactions between willing sellers and willing buyers. For example, DLF Limited – India’s largest real estate developer – claims that the current bill may limit private companies such as DLF from developing affordable housing for millions of Indians. DLF suggests that direct land transactions with owners on a willing voluntary basis, at market-determined rate, should be kept out of the purview of the bill.[28] There should be no conditions imposed on free market transactions between willing sellers and willing buyers.
  • Amartya Sen, the India-born Nobel Laureate in economics, claims prohibiting the use of fertile agricultural land for industries is ultimately self-defeating.[29] Sen claims industry is based near cities, rivers, coast lines, expressways and other places for logistical necessities, quality of life for workers, cost of operations, and various reasons. Sen, further suggests that even though the land may be very fertile, industrial production generates many times more than the value of the product produced by agriculture. History of industrialisation and global distribution of industry hubs, Sen claims, show that the locations of great industry, be it Manchester, London, Munich, Paris, Pittsburgh, Shanghai or Lancashire, these were all on heavily fertile land. Industry always competes with agriculture, Sen claims, because the shared land was convenient for industry for trade and transportation. Amartya Sen further argues that in countries like Australia, the US or Canada, where agriculture has prospered, only a very tiny population is involved in agriculture. Agriculture prospers by increasing productivity and efficiency. Most people move out to industry. Industry has to be convenient, has to be absorbing. When people move out of agriculture, total production does not go down; rather, per capita income increases. For the prosperity of industry, agriculture and the economy, India needs industrialisation. Those in India, who in effect prevent industrialisation, either by politically making it impossible for entrepreneurs to feel comfortable in starting a business, or by making it difficult to buy land for industry, do not serve the interest of the poor well, claims Sen. The proposed LARR 2011 bill prohibits the acquisition of fertile agriculture land beyond 5% per district.
  • An article in The Wall Street Journal claims that the proposed LARR 2011 rules will apply even when any private company acquires 100 acres of land or more.[30] For context, POSCO India seeks about 4000 acres for its US$12 billion proposed steel manufacturing plant in the Indian state of Orissa. In most cases, even small companies planning US$10-US$300 million investment, seeking 100 or more acres will be affected by the compensation plus rehabilitation effort and expenses of LARR 2011. The WSJ article further claims that the proposed LARR 2011 bill doesn’t actually define the word “acquisition,” and leaves open a loophole that could allow government agencies to continue banking land indefinitely.
  • The Observer Research Foundation’s Sahoo argues that the bill fails to adequately define “public purpose”.[31] The current definition, he claims, can be interpreted vaguely. In leaving public purpose too vague and porous, it would ensure that land acquisition will remain hostage to politics and all kinds of disputes. More clarity is needed, perhaps with the option that each state have the right to hold a referendum, whereby the voters in the state can vote to approve or disapprove proposed public purpose land acquisitions through the referendum, as is done through local elections in the United States for certain public acquisition of private or agricultural land.
  • The Confederation of Real Estate Developers’ Association of India claims that the proposed LARR 2011 bill is kind of one-sided, its ill-thought-out entitlements may sound very altruistic and pro-poor, but these are unsustainable and will kill the goose that lays the golden egg.[32] This group further claims that the bill, if passed, will increase the cost of acquisition of land to unrealistic level. It will be almost impossible to acquire 50-acre or 100-acre land at one place for planned development. They suggest that if India does not facilitate urbanization in an organized manner, all the incremental population will be housed in disorganized housing developments such as slums with dire consequences for Indian economy. In the long run, even farmers will suffer as fringe development of urban centres will largely be in the form of unauthorized developments and they will not realize the true economic potential of their lands.
  • The bill inflates the cost of land to help a small minority of Indians at the cost of the vast majority of Indian citizens, as less than 10% of Indian population owns rural or urban land.,[20][33] The LARR Bill 2011 favours a privileged minority of land owners as the Bill mandates above market prices for their land plus an expensive rehabilitation package. The Bill does not mandate a process by which the time involved in land acquisition is reduced from current levels of years. Nor does the Bill consider the effect of excessive costs upfront, and expensive rehabilitation mandate over time, on the financial feasibility of large-scale, socially necessary infrastructure projects needed by 90%+ of Indians who are not landowners. In an editorial, Vidya Bala writes that the most important weakness in the Bill is bringing non-government transactions too under its purview. Private players buying 50+ acres of urban land tracts or 100+ acres of rural areas would be required to comply with the R&R package stated in the Bill.[34]
  • LARR 2011 Bill’s sections 97, 98 and 99 are incongruous with other laws of India in details and intent. Section 98, for example, says that the provisions of the Bill shall not apply to the enactments relating to land acquisition specified in the Fourth Schedule of the Bill. According to Indian Legal Code, the Fourth Schedule referred to by LARR 2011 Bill, consists of 16 bills, including the ancient monuments and archaeological sites and remains Act, 1958, the atomic energy Act, 1962, the special economic zones Act, 2005, the cantonments Act, 2006, the railways Act, 1989 amongst others. Laws can not be in conflict with each other. LARR Bill carve outs through Sections 97, 98 and 99 add confusion, offering a means for numerous citizen petitions, lawsuits and judicial activism. The LARR 2011 Bill thus fails to deliver on the goals motivating it.[35]

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