March 7th, 2008 
krishna Two important Bills pending in Parliament seek to amend the Land Acquisition (LA) Act, and to give statutory authority for the first time to the rehabilitation and resettlement (RR) policy, itself revised on the basis of experience since the first RR policy of 2004. Will these twin Bills succeed in staving off further Nandigrams by securing greater justice for farmers and other displaced persons, while expediting at the same time the land acquisition of land for development projects?
The two Bills contain several far-reaching improvements. They broaden the definition of persons whose rights must be considered when land is being acquired, to include tenants, formal and informal, and to tribals with traditional rights over forest land. They require social impact assessments to be carried out according to procedures laid down in the new RR Act, which provides for consultation with the project affected families themselves, leading to the preparation of a transparent, publicly available RR plan and survey of affected families, within three months of a land acquisition notification. The LA Bill shortens the permissible time over which land acquisition procedures must take place. Disputes are removed from the jurisdiction of the civil courts, and entrusted to an ombudsman and special tribunals to expedite resolution.
The most significant departure, perhaps, is that the LA Bill narrows the definition of ‘public purpose’, to land acquired for strategic and infrastructure development purposes, while removing ‘companies’ as direct beneficiaries. Companies will now be expected to acquire land themselves, through negotiated purchases from willing sellers, although the Bill allows government to step in, if it is in the public interest, to acquire the land of any ‘hold-outs’ once a company has aggregated 70% of the land required. This land will be acquired at the same rate as that of the negotiated purchases, which will ensure that it receives the market rate. In such cases the livelihood and RR entitlements of the landless, including labourers, artisans and others, will have to be met by the company. Where the project authorities or company cannot provide employment to landless affected persons, they will have to protect their previ0us income for two years.
There are two important interconnected deficiencies in the Bills however. While , lip service is paid to the need to appraise projects by quantifying their socio-economic costs and benefits, no mechanism is included through which affected families, community organisations, and concerned citizens can do so, including an examination of any non -displacing or least displacing alternatives. Because acquired land is almost invariably under-priced as discussed below, there is a tendency by projects to acquire excess land and choose inappropriate locations. To prevent this, the Bills need to lay down a specific right to information, including the DPR, financing plan, and assumptions made on benefits and costs, as a check against the tendency to exaggerate the former and downplay the latter.
Second, the Act does not remove one of the main causes of resentment – the quantum of compensation. As discussed in a previous column, compensation is tied to the historical value of land that prevailed at the time of the initial notification of acquisition under Section 4 of the Act. Meanwhile, the price of land all around the project area shoots up.
The longer it takes for acquisition proceedings to be finalised (several years is common) the greater the difference between the acquisition price and the value of the land in the vicinity of the project when the owner of the land actually receives the compensation payment. Ironically, the latter continues to be referred to as an ‘award’ in the Act, although it is by then far below the market value. Thus in the POSCO project the price of land when the project was notified was about Rs 1 to 2 lakh per acre but has now gone up to more than Rs 6 lakh.
Land values in south Nagpur have quadrupled in the past two years because of the MIHAN or multimodal international hub at Nagpur project. Yet the 1500 affected farmers in the project area have the mortification of seeing their land being acquired at Rs 3.8 lakh per acre for irrigated land when a large block of land, albeit nearer the main road running outside the airport, was sold recently for Rs 2.55 crore an acre!
The logic of basing the acquisition price on the before project price is that a person whose land is being acquired should not be a beneficiary of the project investment. But he does not see why not – his land is as much a part of the project as anything else, and he asks why a much larger number of persons, many of them middleclass urban residents who were better off in the first place, should become rich while he stands to lose his livelihood, apart from being uprooted from his village? The compensation amount he receives no longer represents ‘market value’; it is a small fraction of it. To replace the same amount of land he would have to move miles away.
It was for this reason that an early version of the Bill defined market value as the replacement value of the asset. However; the final version of the Bill continues to assess market value on the basis of sale deeds and rates laid down for payment of stamp duty. These rates are out of date (by a factor of at least 10 for land around MIHAN) not only because of the time lag since notification, but more importantly because the market went dead long before the project area was notified. News of an impending project hangs in the air for many years, and no transactions take place in the affected area since no buyer wants to risk losing his land for the paltry compensation on offer.
As Naresh Saxsena of the National Advisory Council points out, land costs are a very small part of total project costs. Most projects can afford to be generous, and unless they are, the sense of injustice experienced by farmers in project after project is unlikely to go away. It would be a pity if the otherwise excellent changes in the two Acts were to be rendered ineffective in achieving one of their primary objectives, which is to expedite development by addressing an increasing cause of tension and violence.
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