Land Acquisition ordinance: Will land sharks be biggest beneficiaries of it?

The land acquisition ordinance seeks to exempt industrial corridors along with four other areas of activities from the purview of social impact assessment and mandatory consent – which is set at 80 percent generally and 70 percent in case of PPP projects – from the total number of affected people.

One does not know for sure whether the term industrial corridor would be defined comprehensively and exhaustively in the ordinance but from the initial reports, it seems the term would not be tightly defined. Industrial corridor finds reference in the Make in India website of the government but it being just a publicity platform for the government initiative, exhorting both Indian and foreign companies to manufacture in India, there is obviously no definition in it either.  The need for tight definition of the term is very much required as otherwise there is a chance of misuse and confusion.

Would it be kosher under the scheme of the ordinance for five or six wannabe manufacturers to band themselves together and lay claim to a vast tract of land, in the name of setting up factories in the proposed industrial corridor?

Or is it that the very idea of industrial corridor has to be blessed by a government agency like SIPCOT in Tamil Nadu that is on an acquisition spree to set up free trade zone in Sriperumbudur?

One hopes it is the latter because otherwise vultures can gather and start acquiring land without let or hindrance now that for industrial corridors there is no need for social impact assessment or mandatory 80 percent approval from the affected lot.  That compensation would be paid at twice to four times the guideline/market value depending on whether the land is non-agricultural or agricultural cannot be an extenuating reason for dislodging people from their properties.

It is also possible that private initiative may be countenanced for forming industrial corridors subject to case by case approval by government or its instrumentality. Should that be on cards it would be a sure recipe for encore of 2G and coal scams. Both the insurance ordinance as well as the land acquisition ordinances would not culminate in a money bill. In the event, both will have to be passed by the Rajya Sabha as well as the Lok Sabha because it is only with money bills that the Rajya Sabha’s writ does not run.

What would happen if the Rajya Sabha defiantly refuses to go along with the government given the animus between the ruling dispensation and the opposition?

Nippon which has a 26 percent stake in Reliance Life is reportedly thinking of infusing more capital to take advantage of the heightened 49 percent limit permitted by the recently promulgated ordinance. There would be red faces galore should Rajya Sabha stubbornly refuse to pass the bill incorporating the provisions of the ordinance. The government would be embarrassed as would be Reliance Life.

Would Nippon have to pull back the additional investments made on the back of the ordinance? Would it require court approval on the grounds that it would amount to a reduction of capital? Won’t there be a long delay in getting the permission for capital reduction? In the meanwhile, would the money have to be parked in a separate designated account? Many questions, all uncomfortable, might rear their heads.

The land acquisition ordinance may also engender similar all round embarrassments. Nippon is a single investor. But should an industrial corridor set out to acquire lands from hundreds of people in the hope that the ordinance would be signed into law and the hope is belied thanks to intransigence of the opposition parties in the Rajya Sabha, all hell would break loose.Industrialists might start pestering, even threatening people with demands for return of the compensation now that the compulsory acquisition is null and void.

Of course, this apocalyptic view would find greater resonance in the Nippon’s case rather than in the land acquisition case because the compulsory acquisition process is long drawn whereas additional FDI can be consummated in a jiffy.