How states can get around 2013 land acquisition law

land
In an address to the nation on the mann ki baat programme on All India Radio on August 30, 2015, the prime minister Narendra Modi, announced that the government would not re-promulgate the land acquisition ordinance. As he said during the course of his address: “Tomorrow [August 31, 2015] the Land Bill will lapse and I have agreed to it. The government will not re-promulgate [an] ordinance, but will include 13 points to reform the land acquisition law to benefit farmers.”

Up until 2013, the Land Acquisition Act 1894, a remnant of the British era, was in force. It gave more or less absolute powers to the government to acquire land wherever and whenever it wanted to, by paying a pittance for it. As Jairam Ramesh and Muhammed Ali Khan write in Legislating for Justice—The Making of the 2013 Land Acquisition Law: “The 1894 Act was a comparatively short legislation that left much to the discretion of the acquiring authorities.”

Many wrongs were committed by the government and the politicians under the 1894 Act. This Act was replaced by the Land Acquisition, Rehabilitation and Resettlement Act (LARR) 2013. The 2013 law calls for consent from 70% of families whose land is being acquired, in case of public private partnership projects and 80%, if the land is being acquired for a private company.

A social impact assessment also needs to be carried out. This assessment needs to answer questions like whether the “proposed acquisition serves public purpose” and “whether land acquisition at an alternate place has been considered and found not feasible”. Over and above this, the 2013 law also has clauses dealing with rehabilitation and resettlement of those affected by the purchase of land and the compensation they need to be paid.

In fact, Bhartiya Janata Party (BJP), which was in the opposition at that point of time played a key role in the passage of the 2013 Act. The standing committee formed to look into the Land Acquisition, Rehabilitation and Resettlement Bill 2011, which finally led to the 2013 Land Acquisition Act, was headed by the current Lok Sabha speaker Sumitra Mahajan. The committee made 28 recommendations out of which 26 were accepted. Recommendations made by Sushma Swaraj, the then leader of opposition in the Lok Sahba, were also accepted.  The point being that the BJP played a key role in the passage of the bill, which it has wanted to dilute after coming to power.

The problem was that all land acquisition came to a standstill after the Act was passed. What did not help was the fact that the Indian corporates over the years have become used to the government providing them with all the land they require on a platter.

In December 2014, the Modi government, after being in power for six months, brought in an ordinance that proposed changes to the 2013 Act. As mentioned earlier, to acquire land under the 2013 Act consent of 70% of land owners in case of public private partnerships and 80%, in case land is being acquired for private projects, is required.

The ordinance did away with this consent clause for affordable housing, defence, rural infrastructure, industrial corridors and infrastructure projects. The social impact assessment clause was also done away with in these cases.

The trouble was that the exempt categories were very broadly defined and almost anything could come under them. As Ritika Mankar Mukherjee and Sumit Shekhar of Ambit Capital wrote in a recent research report titled Failure to amend land law to exacerbate sense of ‘policy drift’: “The opposition as well as supporters of the NDA alike were aghast by the proposed legislation as potentially these five exempted categories could cover a majority of projects for which land can be acquired…For instance, how is rural infrastructure defined? Can a shopping mall be defined as rural infrastructure? Can land be acquired for a mandi and the top floors turned into a multiplex?”

The Lok Sabha, where the Congress has only 44 members, eventually cleared the changes that the ordinance would make to the 2013 Act, in May 2015. But the changes did not go through the Rajya Sabha, where the Modi led National Democratic Alliance does not have enough members.

Meanwhile, the government re-promulgated the ordinance thrice and after August 31, 2015, the ordinance was allowed to lapse. The government understood that it would not be able to push the changes through the Rajya Sabha.

This means that we are now back to the 2013 Act, under which almost no land acquisition has happened. The question is what happens from here? The states needs to take the lead and come up with their own laws in order to ensure that the land acquisition process continues.

As finance minister Arun Jaitley wrote on his Facebook page yesterday: “Acquisition of property is a List-III, Entry 42 subject provided for in the concurrent list. The provisions of article 254(2) clearly provide that a State Government can bring a legislation on a Concurrent List Subject which conflicts with the Central legislation provided the Presidential assent is given to such legislation. The States are thus fully empowered to amend the 2013 Land Law and seek Presidential assent before the amendment can be effected.”

What this means that states can bring in their own land acquisition laws from now on. As per the 2013 Act, for rural areas the minimum compensation promised is anywhere between two to four times the market value of land along with the value of the assets on that land. For urban areas the minimum compensation promised is two times the market value of land along with the value of the assets on that land. Hence, the compensation offered by the 2013 Act should become a floor price for the compensation that states will offer under their own Acts.

What further helps is the fact that the BJP is currently in power in 11 states, which are likely to come up with their own land acquisition laws, in line with the Modi government’s ordinance than the 2013 Act. In fact, Tamil Nadu, where the AIADMK is in power, a party closer to the BJP than the Congress at this point of time, has already done that.

As Mukherjee and Shekhar write in their research report: “Tamil Nadu was the first and only state to seek and receive Presidential assent to exempt three major categories from the purview of the Land Acquisition, Rehabilitation and Resettlement Act. In particular, land acquisition done under the Tamil Nadu Highways Act, 2001; the Tamil Nadu Acquisition of Land for Industrial Purposes Act, 1997 and the Tamil Nadu Acquisition of Land for Harijan Welfare Schemes Act, 1978 is outside the purview of the consent clause and Social Impact Assessment clause.”

Around four-fifths of the land acquired in Tamil Nadu is acquired under the three acts mentioned above. Hence, given that the Tamil Nadu government has totally managed to work around the binding provisions of the 2013 Act.

The social impact assessment clause and the consent clause are at the heart of the 2013 Act. While the clauses are necessary in order to protect the interest of the people who own land, at the same time one needs to keep in mind the fact that 13 million Indians are entering the workforce every year. And jobs need to be created for these individuals. For jobs to be created more industry needs to set up. And that requires land. This is a point those opposing the dilution of the 2013 Act need to keep in mind.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

The column originally appeared on Firstpost on Sep 3, 2015

Advertisements

About vivekkaul
Vivek Kaul is a writer who has worked at senior positions with the Daily News and Analysis(DNA) and The Economic Times, in the past. He is the author of the Easy Money trilogy. Easy Money: The Greatest Ponzi Scheme Ever and How It Is Set to Destroy the Global Financial System , the latest book in the trilogy has just been published. The first two books in the trilogy were published in November 2013 and July 2014 respectively. Both the books were bestsellers on Amazon.com and Amazon.in. Currently he works as an economic commentator and writes regular columns for www.firstpost.com. He is also the India editor of The Daily Reckoning newsletter published by www.equitymaster.com. His writing has appeared across various other publications in India. These include The Times of India, Business Standard,Business Today, Business World, The Hindu, The Hindu Business Line, Indian Management, The Asian Age, Deccan Chronicle, Forbes India, Mutual Fund Insight, The Free Press Journal, Quartz.com, DailyO.in, Business World, Huffington Post and Wealth Insight. In the past he has also been a regular columnist for www.rediff.com. He has lectured at IIM Bangalore, IIM Indore, TA PAI Institute of Management and the Alliance University (Bangalore). He has also taught a course titled Indian Economy to the PGPMX batch of IIM Indore. His areas of interest are the intersection between politics and economics, the international financial crisis, personal finance, marketing and branding, and anything to do with cinema and music. He can be reached at vivek.kaul@gmail.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: