Andhra Pradesh passes amendments to Centre's land acquisition law; a boost for private property rights
Until the Centre passed this law, India followed the Land Acquisition Act of 1894, which was written expressly to allow the colonial regime to acquire land.
Andhra Pradesh has passed an amendment to the Centre's Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act of 2013 (LARR 2013), after over two years of legal and constitutional challenges. With this move, the Andhra Pradesh government has finally succeeded in reducing the acquisition of private agricultural land to a simple agreement initiated by the district collector. This statutory change bypasses the procedures the LARR 2013 had put in place, expediting land acquisition for the state's new capital Amaravati under Andhra Pradesh's controversial land pooling scheme that eliminates monetary compensation for land acquisition.
The LARR 2013 was a hard-won victory for the democratic evolution of property rights in India. Property rights theorists have long held that enforceable private property rights are essential to facilitate markets. From this perspective, the right to private property needs to be sufficiently guaranteed in law so the domain powers of the state do not interfere with the proper functioning of a market economy.
India's colonial era land laws failed to provide for this because they were written to maintain India's status as a colony. Until the LARR 2013 was passed, India followed the Land Acquisition Act of 1894, which was written expressly to allow the colonial regime to acquire land. For the first time in independent India, the LARR 2013 made compensation as per market rates and rehabilitation measures binding for land acquisition.
After coming to power in May 2014, attempting to undo the Land Acquisition Act of 1894 was one of the NDA government's first moves. The amendments the Centre had proposed then had provisions identical to Andhra Pradhesh's current amendment. However, the Centre's proposed changes were met with fierce public opposition. Farmers across the country, including members of the Bharatiya Janta Party's farmers' wing, staged protests against the amendment. At the time, the NDA government did not enjoy a majority in the Rajya Sabha, as a result of which it failed to pass the amendment to the legislation. However, this did not deter it from attempting to amend the LARR 2013.
The NITI Aayog, which replaced the erstwhile Planning Commission — ostensibly in the interest of "cooperative federalism" — is clear in its India Action Plan that nothing short of amending India's land laws will suffice to achieve its aims. The plan offers an explicit directive that states should bring in changes where the Centre cannot.
The Narendra Modi government's Make in India scheme was introduced partly as the rationale for such amendments. Although the Centre has been unable to steamroll through national legislation to implement these programmes, it is doing everything in its power to pressure state legislatures into passing its amendments.
To bring states in line with the Make in India policy, the Centre's Department of Industrial Policy and Promotion has been publishing state-wise ease-of-doing-business rankings, which the World Bank has been actively overseeing since 2015. This drives an internal race to the bottom among states as these rankings are key in budget allocations from the Centre. For example, Andhra Pradesh and Telangana were ranked first in the 2016 rankings, with a score of 98.78 percent. But in 2018, 18 other states are competing for a perfect score.
Land acquisition has been identified as one of the key hurdles in implementing programmes like the Sagarmala and Bharatmala, which seek to industrialise the Indian coastline. In addition to amending state-level land laws, the Centre is also changing national policies on forests and coasts to allow the private sector more purchase over the country's natural resources.
Although these policy changes are purportedly being undertaken in the interest of India's economic development, they fly in the face of the widely-held economic wisdom posited by mainstream property rights theorists. Rather than protecting private property to ensure that a competitive market economy functions well, these policy changes sacrifice laissez-faire values at the altar of private profit.
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