We need jobs for our youngsters; so we need industries; for industries we need infrastructure; for infrastructure we need land which is scarce, discovers Binayak Datta
In the middle of the 18th century – the classical economists led by Adam Smith and David Ricardo for the first time acknowledged the prime three factors of production: Land, Labour, and Capital.
In India our land story starts in 1894 by the then British law called The Land Acquisition Act 1894. The land acquisition then meant the acquisition of land for some “public purpose” by a government agency from individual landowners, as authorized by the law, after paying a government-fixed compensation to cover losses incurred by landowners from surrendering their land to the concerned government agency.
The acquisition therefore was limited to public purpose usage meaning building educational institutions or schemes such as housing, health or slum clearance as well as for projects concerned with rural planning or formation of sites.
The compensation payable then to the landowners used to be the market value on the date of the acquisition. This compensation disregarded:
l The degree of urgency which has led to the acquisition.
l Any disinclination of the person interested to part with the land.
l Any increase in the land value likely to accrue from the use to which it will be put when acquired.
However, this law was in vogue for around 120 years although it was universally acknowledged as a singularly unfair law – unfair to the land owner and on the other hand slow but draconian since the gaping holes in defining public purposes led to discontent and unrest – stalling the process of building infrastructure for Industries.
Two years ago the Government brought in a new law known as The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 popularly referred to as the “Land Acquisition Law”
This law clearly laid down the purposes of the acquisition in which case revised compensation would be payable viz:
(a) For its own use and control,
(b) To transfer it for the use of private companies for public purpose, and
(c) On the request of private companies for immediate use for public purpose
But it excluded some 13 odd Laws in which case the compensations would not be determined by this new act. Some of these were The Atomic Energy Act, 1962, The National Highways Act, 1956, SEZ Act, 2005, Land Acquisition (Mines) Act, 1885, The Railways Act, 1989, and others. The logic still remains a mystery of course!
The following law will be considered as acquisition for “Public Purposes”:
(a) Strategic defence purposes and national security,
(b) Roads, railways, highways, and ports, built by government and public sector enterprises
(c) Project affected people,
(d) Planned development or improvement of villages, and
(e) Residential purposes for the poor and landless.
Public purpose also includes other government projects which benefit the public as well as provision of public goods and services by private companies or public private partnerships (PPPs)
Consent: All acquisitions for these purposes would require consent of 80% of the land owners.
Compensation: Higher compensation at the rate of four times market value of rural and twice for urban land was provided. The Other Important Provisions are:
Upto only 5% of irrigated multi-cropped land may be acquired in a district, with certain conditions.
Social Impact Assessment (SIA) has to be done by an independent body Comprehensive rehabilitation and resettlement (R&R) package for development of more than 50 acres (urban) and 100 acres in rural areas
Retrospective implementation- new law to be applicable in all pending cases of land acquisition under old law
Land unused for 5 years to be returned to the landowner
State Government can increase the compensation but not lower it
20% of the developed land would be reserved and offered to the farmers after development.
In two years but, not a single project could start – because Land was just not available under wide scale activism and public resistance. In a few places there were deaths of farmers followed by fall of Governments!!
So now in 2015 the Government has brought in the current Amendment which now is due for conversion into a Law and again the Amendment has run into stiff opposition from a larger section of the society.
The main features of this amendment are:
- The 13 Excluded Laws as mentioned before have now been bought under the ambit of compensations under this law.
- Removal of consent clause AND Social Impact Assessment clause in five areas:
- Industrial corridors, 2.Public private partnership projects, 3. Rural infrastructure,
- Affordable housing and 5.Defence.
- The New Law allows acquisition of irrigated multi-cropped land and other agricultural land, which earlier could not be acquired beyond a certain limit mentioned.
- Return of unutilised land: According to the Act 2013 as stated, the land had to be returned to the farmers if it remains unutilised for five years. The New Amendment provides the land would be returned to the State Government if it remains unutilised for either five years or for any period specified at the time of setting up the project, whichever is later.
- Time frame: The amendment also states that if the possession of acquired land under the old laws were not taken for any reasons, then the new law will be applied.
- The Word ‘private company’ replaced with ‘private entity’: While the Act 2013 stated that the land can be acquired for private companies, the amendment replaces it with private entity. A private entity is an entity other than a government entity, and could include a proprietorship, partnership, company, corporation, non-profit organisation, or other entity under any other law.
- Offence by government officials: If an offence is committed by a government official or the head of the department, then he cannot be prosecuted without the prior sanction of the government.
There is one more resistance to the Amendment; it is on the shelf of a Parliamentary Committee having failed the Rajya Sabha test. Let’s now take a look at the overall situation which has arisen:
From the Economy’s points:
In India 73% of the People live in villages and derive their incomes from Agri or Agri based activities. It is therefore a pity that this activity does not constitute even 18% of our GDP! And the growth per year is just about 1% where there is a population rise of around 1% each year! 10 years back we produced around 250 tons of food grains today we produce less than 260!
We have just 3% of the worlds cropped lands but we are proudly home to 17% of the World Population! Our total area under crops was around 180 million hectares – today also we are under 200.
Our Crop able area is similar to China whereas we are less than half of China’s yields.
Yes, we need jobs for our youngsters – for this we need industries – for industries we need infrastructure and for infrastructure we need land.
But do we need crop able land? Our Arable Lands account for around only 60% of the total land – for the last 10 years – in fact there is a dip by 0.7% in the World Bank numbers!
I think our priorities in the context of land should be
Reforms of Land Resources – Ownerships, Land Maps
Incentivisation of Land Cooperatives in the Gujarat Style
Modernisation and Automation of Agriculture to increase productivity!
Stress on Food and Food Processing Activities
Rural Infrastructure and Rural Roads
Of our total land resources: Our Net Sown Area comprises 42% of the total land. If we leave out the forested land of around 20% and the Urban and sub-Urbans around 5% we still have more than 30% waiting to be utilised productively!! Use of this portion I think is the key for Infrastructure for growth oriented employment generating industries.
This will entail economic inclusion for the 73%. Rather than prioritise on the unseen fairy known as “PPP Projects” and Industrial Corridors for non infrastructure industries!
It would be a great service if transparent data is published on the important sovereign resources such as railways, PSUa and ports.
From the Industry Points:
Ideally by a thumb rule in a Large Capital Intensive Green Field Project the Land Cost accounts for around 5% of the Project Cost. Here the 4-times multiples for rural land (since we cannot make a project in any case inside a city) – so there is a straight rise of 23% in the project costs after ensuring the reservation of 20% of the developed land for the farmer.
After this there is the difficulty of tracing back all of the 80% who have to give their consents. But the remedy lies not in doing away with the consent clause but ensuring a transparent documentation of the non arable land. I am sure the panchayats, districts and the block offices must be having these records – if they don’t – there should be a prioritisation of this activity!
And after all this if you take more than 5 years to clear all of this – your land goes back to the State Government – not the original farmer. I know of at least 10 Big Private Projects which had to be called off because the land owners could not be traced and those which could be – would not sell their portions because their co owners could not be located!
From the Farmers’ Points:
In a democracy – the final decision should weigh the impacts on the common man. Mahatma Gandhi used to say…” when i am faced with a tough choice i would try and visualize in what way my decision would impact the poorest person of our Country – and then my choice becomes so simple!!”
In our country Land strikes a specific chord in the farmers’ mind. He somehow equates his holdings with his lineage – his heritage! There have been governments as I said which ruled for decades but which fell on one single issue – land!!
I think The Government has a tough job in building up public opinion for utilisation of the underutilised land, and more than 80% of these lands are already with possibility of disposals under the Governments’ powers directly or indirectly.
It is also the point that these lands will certainly not have the ready built infrastructure that would be there in the cropped land – but ultimately – that’s precisely the job! – to convert the non arable 33% to Industrial Use by building state of the art infrastructure!
Contrarily, I think Net Sown area (42%) should be increased to may be 55% since there is still a vast scope considering the total cultivable land.
Goa’s 18% may give hope
Goa has around 3.6 lakh hectares usable land. Of this the crop able area is around 47%, the urban centres and forest cover are around 35%. The remaining 18% holds the key.
Whilst some have other uses like mining and a portion has already been functioning as Industrial Estates with varying degrees of success, there could be a distinct possibility on the development of the vast 18% tracts for environment friendly industries.
The focus should be on prosperity of Agriculture itself for example we have around 50 thousand hectares under paddy cultivation where we cultivate around 1.7 lakh tons with a yield of 3.5 Tons a ha, China’s corresponding figure is 6.3.
Conclusion: Back to of Adam Smith. Land must be used for productive purposes with boundariless opportunities for business, agriculture and industry is the key lies in optimalisation, which is achievable. What is more important is Inclusive Development.