Land Bill: Why the UPA is so keen to help land sharks

Apr 23, 2013 16:21 IST

#Land Acquisition Bill   #LandBill   #MNREGA   #Scams   #TheLongView  

When government and opposition disagree, we should worry about democracy and governance. But when both agree, we have to worry even more - about which vested interests they are fighting for. This is the case with the Land Acquisition Bill for which the UPA government has been lobbying in the hope or garnering the rural vote.

The Bill is one more effort to redistribute wealth from the urban rich to the rural landed rich - but the biggest beneficiaries will be politicians and middlemen. The biggest losers will be India's citizens - as industrialists compensate for costlier land with fewer jobs and more automation - and the rest of us urban suckers who need to buy an urban home. We can now forget all about it.

Last week, Parliamentary Affairs Minister Kamal Nath announced that government and opposition have achieved a "broad consensus" to have the bill passed in the current session of parliament. But the net result of this "consensus" is not going to make things better. Barring some additional features - like allowing the government to compensate land-owners even more in case it acquires land already sold to private parties, and a new provision to allow land to be leased instead of bought - the revised Bill will not do anything to lessen the damage of the original one cleared by the cabinet. It will, in fact, make things even better for the land mafia.

The original Bill, introduced in 2011 as the Land Acquisition, Rehabilitation and Resettlement Bill 2011, will retain all its costly features: acquiring land at four times the market price in rural areas and twice the market rate in urban areas, apart from forcing buyers to rehabilitate and resettle both landowners and people working on the land in any capacity, among other things.

Who will decide what the market price of land is and who will decide whether or not the provisions of the law on rehab have been complied with or not? An entirely new bureaucracy will be created for the purpose in all states. Ergo, the land mafia - which means essentially politicians and builders and criminal elements - will control the availability of land to anyone who needs them. Opportunities for rent-seeking will zoom. What other result can one expect from such a powerful law that will have to be mediated by another big, bureaucratic machine?

In fact, the one suggestion of the Parliamentary Standing Committee that would have done something to prevent collusion between private parties and the executive - to disallow private-public partnerships from being allowed to acquire land forcibly from land-owners - has been abandoned. In short, in the name of public-private partnership, private infrastructure projects will now be allowed to acquire land as if it were for a public purpose.

The standing committee wanted to avoid this and had critiqued the "wide ambit for discretionary action by the executive amounting to arbitrariness" that would flow from this bill, writes Shruti Rajagopalan, visiting fellow at New York University, in The Indian Express today. The committee "recommended that the bill exclude state acquisition of land for private firms or public-private partnerships, a recommendation that all parties have ignored. Given the extent of power in the hands of the executive, the land acquisition policy is an easy target for interest-group capture," she points out. It will enable "backroom deals between political and business interests in the guise of public purpose."

Even without this omission, the Bill is like an open invitation to the land mafia which is currently facing financial pressure due to the sheer unaffordability of land in urban or rural areas. Demand has fallen like a stone and deals have crashed. The high prices of property reflect a rigged reality, not real demand. But by making all available land even costlier, the Land Bill will enable this very mafia to benefit despite falling demand by making the remaining land even pricier.

How bad will it be?

Many development projects will become unaffordable. Industrialisation and urbanisation will slow down. The politician-criminal nexus will make hay

Many development projects will become unaffordable. Industrialisation and urbanisation will slow down. The politician-criminal nexus will make hay

According to Sanjoy Chakravorty, Professor of Geography and Urban Studies at Temple University in Philadelphia, land costs near urban areas will soar to Rs 8-40 crore per acre depending on location. He writes in BusinessLine today: "Once we take account of the real price of acquisition (not just purchase, but payments to non-owners, and rehabilitation/resettlement) the sobering prices become frightening ones. I calculate that, depending on the region, acquired land at the urban edge will cost between Rs 8 crore and Rs 40 crore per acre. Acquired farmland will cost between Rs 25 lakh (at its cheapest) and Rs 1.5 crore per acre."

No prizes for guessing who will benefit from this.

Chakravorty breaks the current land market into four areas: (1) places where land markets are already operating at market price (Punjab, Haryana, Kerala, Tamil Nadu), (2) places which are "peri-urban," where the gap between nominal and market prices is small, (3) rural areas where land markets have not developed, and (4) those parts where land markets cannot be allowed to operate (as in Odisha'a Niyamgiri district, where the land is revered by tribals, etc).

The Land Bill, he says, has been designed only with the third market (rural, undeveloped) in mind. So when it is extended to places where the market already operates (as in Punjab, where land prices have "quintupled", a further doubling or quadrupling of the price can only result in windfall gains to a bunch of vested landed interests.

He comes to the same conclusion as Shruti Rajagopalan: "Many development projects will become unaffordable. Industrialisation and urbanisation will slow down. The politician-criminal nexus will make hay."

It's crystal clear why the UPA wants the Land Bill before the elections. It may help some farmers from being exploited by land sharks, but in the process it will be creating super land sharks who will benefit both from the bureaucracy that will administer the law, and from the resultant land scarcity and soaring prices.

The UPA has learnt nothing from its past scams. Even as the Comptroller and Auditor General has released a new report on another flagship scheme - the Mahatma Gandhi National Rural Employment Guarantee Act - disclosing a Rs 13,000 crore hole in it, the Land Bill will provide opportunities to create the scam of scams.