Few people who aren’t paying attention realise it, but until last year, India was using a land acquisition law that had been framed in the 19th century. So when the United Progressive Alliance passed a law last year changing the way land is acquired in this country, it was considered landmark legislation. This was the reason, after all, that Bhatta Parsaul, Nandigram and Singur all became national stories. Yet in less than a year since that alteration, the new government has promulgated an ordinance amending key portions of the law.
And nobody seems to be entirely happy. Industry, while somewhat cheerful because of the removal of a number of cumbersome requirements, is annoyed that the compensation amount has remained the same. Landowners and the civil society groups that claim to represent them feel the changes remove some of the key provisions that prevented governments and others from taking advantage of smaller players. And commentators in the press feel that government has either done too little or too much, particularly in using the ordinance route to address this problem.
But what exactly has changed?
The Land Acquisition Act
To put it simply, the law passed by the UPA requires the consent of at least 70% of landowners and up to 80% if the land is being acquired for private use. The law also mandated a Social Impact Assessment survey that takes a fair amount of time to be completed before the land can be acquired. In addition, it mandates the sale of the land at two times its current value for urban property and four times its value for rural land, among various other provisions.
The Ordinance
While maintaining the compensation clause, which industry has complained about, the ordinance removes a number of the regulatory provisions such as mandating the consent of 70% landowners and the Social Impact Assessment survey, but only if the law is being used to acquire land for five industries. These are defence, rural infrastructure, affordable housing, industrial corridors and social infrastructure projects, including Public Private Partnerships in which ownership rests with the government.
How has this been received?
The response has generally been mixed. Considering land acquisition is one of the biggest issues in India, it is but natural that there are diverse opinions on the subject. And it is even less of surprise that almost no one is happy with what the law has ended up looking like. Industry has mostly been positive that changes have been made to a law that was, according to India Inc, standing in the way of development. Yet the changes are procedural, and more importantly, acknowledge the overall approach of the effect while simply exempting a few sectors from all the procedures.
For those who think the law was flawed from the beginning, this is not enough. And for those who think that the law needed much more support to ensure that landowners don’t get a raw deal, this makes it easier for land to be grabbed.
Most surprising is the belief from many that, while the ordinance reduces the amount of red tape involved and will speed up the process, it doesn’t address fundamental issues with the law.
Take R Jagannathan of First Post. Traditionally a supporter of big business, Jagannathan writes in a column that the ordinance route is the second-best decision that the government could have made, even if it wasn’t keeping industry in mind. Jagannathan argues that neither of the options calculates the value of land after it has been decided what the use will be, meaning the process will always undervalue the amount.
“The real reason why farmers get a rotten deal – even after the Act is implemented – is change in land use after acquisition,” Jagannathan writes, pointing out that these amendments change none of that. “Their land, when used for agricultural purposes, has low value, so four times low value will still be low value. The value of the land soars once it becomes designated for industrial or infrastructure use. Then its value could rise even 10-15 fold. The only way to give farmers a fair deal is by pricing the land after its end-use is determined.”
Or consider the Economic Times, which is also generally seen to support the corporate sector. “The days of forcible acquisition through diktats from the state are long gone: people need a stake, ever-growing, in the land they give up. This Ordinance is misconceived. Incorporate stakeholdership for the land loser instead.” ET in fact argues that governments need to consider a lease model that gives money to the landowner over times depending on increase in the value of the land.
In both cases, the criticism comes on the matter of compensation. The move to reduce some of the procedural requirements, while seen as a betrayal for those on the left who believe it will act as a crucial safeguard, even some of those on the right who speak for big business are at odds with the compensation portion of the law.
Either ways, the battle has barely played out yet. It is unlikely that much activity will take place under this law while it is still to be ratified by the Parliament. The Ordinance primarily acts as a signal. The real fight remains in the Rajya Sabha where the Bharatiya Janata Party still has to find a way past an obstructionist opposition.
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And nobody seems to be entirely happy. Industry, while somewhat cheerful because of the removal of a number of cumbersome requirements, is annoyed that the compensation amount has remained the same. Landowners and the civil society groups that claim to represent them feel the changes remove some of the key provisions that prevented governments and others from taking advantage of smaller players. And commentators in the press feel that government has either done too little or too much, particularly in using the ordinance route to address this problem.
But what exactly has changed?
The Land Acquisition Act
To put it simply, the law passed by the UPA requires the consent of at least 70% of landowners and up to 80% if the land is being acquired for private use. The law also mandated a Social Impact Assessment survey that takes a fair amount of time to be completed before the land can be acquired. In addition, it mandates the sale of the land at two times its current value for urban property and four times its value for rural land, among various other provisions.
The Ordinance
While maintaining the compensation clause, which industry has complained about, the ordinance removes a number of the regulatory provisions such as mandating the consent of 70% landowners and the Social Impact Assessment survey, but only if the law is being used to acquire land for five industries. These are defence, rural infrastructure, affordable housing, industrial corridors and social infrastructure projects, including Public Private Partnerships in which ownership rests with the government.
How has this been received?
The response has generally been mixed. Considering land acquisition is one of the biggest issues in India, it is but natural that there are diverse opinions on the subject. And it is even less of surprise that almost no one is happy with what the law has ended up looking like. Industry has mostly been positive that changes have been made to a law that was, according to India Inc, standing in the way of development. Yet the changes are procedural, and more importantly, acknowledge the overall approach of the effect while simply exempting a few sectors from all the procedures.
For those who think the law was flawed from the beginning, this is not enough. And for those who think that the law needed much more support to ensure that landowners don’t get a raw deal, this makes it easier for land to be grabbed.
Most surprising is the belief from many that, while the ordinance reduces the amount of red tape involved and will speed up the process, it doesn’t address fundamental issues with the law.
Take R Jagannathan of First Post. Traditionally a supporter of big business, Jagannathan writes in a column that the ordinance route is the second-best decision that the government could have made, even if it wasn’t keeping industry in mind. Jagannathan argues that neither of the options calculates the value of land after it has been decided what the use will be, meaning the process will always undervalue the amount.
“The real reason why farmers get a rotten deal – even after the Act is implemented – is change in land use after acquisition,” Jagannathan writes, pointing out that these amendments change none of that. “Their land, when used for agricultural purposes, has low value, so four times low value will still be low value. The value of the land soars once it becomes designated for industrial or infrastructure use. Then its value could rise even 10-15 fold. The only way to give farmers a fair deal is by pricing the land after its end-use is determined.”
Or consider the Economic Times, which is also generally seen to support the corporate sector. “The days of forcible acquisition through diktats from the state are long gone: people need a stake, ever-growing, in the land they give up. This Ordinance is misconceived. Incorporate stakeholdership for the land loser instead.” ET in fact argues that governments need to consider a lease model that gives money to the landowner over times depending on increase in the value of the land.
In both cases, the criticism comes on the matter of compensation. The move to reduce some of the procedural requirements, while seen as a betrayal for those on the left who believe it will act as a crucial safeguard, even some of those on the right who speak for big business are at odds with the compensation portion of the law.
Either ways, the battle has barely played out yet. It is unlikely that much activity will take place under this law while it is still to be ratified by the Parliament. The Ordinance primarily acts as a signal. The real fight remains in the Rajya Sabha where the Bharatiya Janata Party still has to find a way past an obstructionist opposition.