This post was first published in The Broad Mind, on September 12, 2013.
Both houses of Parliament recently passed The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“2013 Act”), repealing the century-old Land Acquisition Act, 1894. For years, the new law was touted as the panacea to the evils the old Act perpetuated, not least, the broad discretionary powers to state authorities for acquiring land for a “public purpose”. News reports have pointed to how land is allegedly bought at below market prices (read here and here), and consequently sparks loud protests.
The new Act seeks to resolve this controversy by providing for higher compensation (up to four times the market value in rural areas), requiring prior consent for land acquisition (80 percent of affected families for land acquired on behalf of private companies and 70 percent for public private partnership projects), providing detailed time lines for each stage of the acquisition process (estimated to take approximately 4 years!), rehabilitation and resettlement of affected families in certain cases, etc. This however does not address the main cause of the controversy: state intervention in land acquisition on behalf of private entities.
The old 1894 Act created an expansive definition of “public purpose” based on the assumption that the state would be the chief architect of industrial development, for which it needed to have the power to acquire land for a multitude of purposes. This included some arguably legitimate purposes such as the provision for town planning, development of land from public funds, and “for carrying out any educational, housing, health or slum clearance scheme sponsored by Government or by any authority established by Government. But it also included other purposes such as (a) on behalf of PSUs, and most importantly, (b) “the provision of land for any other scheme of development sponsored by Government or, with the prior approval of the appropriate Government, by a local authority”.
Many protests (including those mentioned in the news reports linked above) arose primarily because of the heavy-handedness of the state in acquiring land, sometimes on behalf of private companies, at below market prices. The new Act intends to correct this heavy-handedness. It does not however question the basic assumption of the role of the state as an interventionist intermediary in land acquisition. Instead, it tries to improve the existing condition by creating more state agencies and broadening consensus-making processes. It requires a social impact assessment through consultation with local municipalities, gram sabhas and panchayats. It creates an expert group consisting of social scientists, representatives of gram sabhas, panchayats or municipalities, technical experts and experts on rehabilitation to evaluate social impact assessment. It also creates a committee for rehabilitation and resettlement, and land acquisition and relief and rehabilitation and resettlement authorities at the state and central levels.
Whether these institutions will work efficiently is hard to predict, but their establishment is an irrevocable step down the path of establishing the state as an intermediary in all land acquisitions for a public purpose. This brings us to the root of the problem: the definition of “public purpose” in the 2013 Act. The definition of public purpose in the 2013 Act has become, if anything, more expansive and explicit. It covers acquisition for strategic purposes, infrastructure purposes (which includes everything from agro-processing units established by government entities to projects for industrial corridors), and retains most of the clauses from the 1894 Act. Worse, this definition is not exhaustive!
The philosophy behind this 2013 Act is therefore seemingly this: the existing role of the state in land acquisitions is non-negotiable. However, multiple controversies have arisen where compensation paid has allegedly been below market prices, or insufficient (This is due to the fault of state agencies since they assess market prices and give compensation.) To correct this wrong, we need to do two things: (1) create more detailed legal process to ensure clear parameters for fixing compensation, and (2) create monitoring and oversight mechanisms.
The question is this: when did the role of the state become non-negotiable? Consider the original Land Acquisition Bill introduced by the UPA in 2007. The Land Acquisition (Amendment) Bill, 2007 (“2007 Bill”), was passed by the Lok Sabha in 2009, but lapsed when the Lok Sabha dissolved prior to the elections. The 2007 Bill contained a narrow, restrictive definition of “public purpose” based on a different premise of the role of the state in land acquisition. The definition is a complete contrast to the page-long definitions in the 1894 Act and the 2013 Act. It includes:
- acquisition for strategic purposes,
- infrastructure projects of the government where benefits accrue to the public, and
- any other purpose where land has already been purchased to the extent of 70%.
The 2007 Bill, which nearly became law, would therefore have been a complete change to this assumption of state intervention that the 2013 Act is predicated on. Between 2009 and 2013, the philosophy of reform which first motivated proposed changes to land acquisition law were completely replaced by a philosophy of incremental change. In this context, our final legislative product, the 2013 Act that replaces a century-old, much-maligned law, is a comparatively small step to prevent market abuses. It does nothing to address the cause of market failure: the role of the state.
Anirudh Burman is a Takshashila Scholar, a law graduate from Harvard, and consults with the National Institute of Public Finance and Policy and the Center for Policy Research.