The gathering storm over the NDA’s bill to amend the Land Acquisition Act is largely posturing. The truth is no state government, including Mamata Banerjee's, wants the law to remain what it is now. But opposition is still building up, including from some NDA allies, because this is how regional parties and the Congress believe they can cut Narendra Modi down to size. They will try their damnedest to do so what is not in their own states’ interest. A perfect example of cutting the nose to spite the face.
Ideally, in a federal set-up, the centre ought not to be legislating any law where states should be the lead players. But the UPA, believing it was on to vote winner, legislated a growth-retarding land acquisition law which will result in an artificial land shortage for infrastructure and manufacturing, not to speak of urban expansion and housing.
Even the current opposition to the NDA move to ease the land law on five fronts – defence, affordable housing, rural infrastructure, industrial corridors, and public-private projects - is a denial of federalism. Leaving the act as it was in 2013 will make it tougher for states to acquire land for infrastructure projects which are vital for growth.
It is important to understand why the original Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act – which is the official name of the Act which the NDA wants to amend – is not what the doctor ordered for India.
India's problem is that too many people are dependent on low-income jobs in agriculture, while land is scarce for the creation of higher-paying jobs outside agriculture. The only solution is to reduce the number of people dependent on land and agriculture by making more of it available for industry and infrastructure. There is no other way.
Consider the pros of making land acquisitions easier – and who actually benefits from the UPA law. It is certainly not the poor.
First, all politicians love the UPA version of the law for the simple reason that if land acquisition becomes tougher, middlemen and landlords will benefit from the resultant scarcity. Most rural politicians are big landlords, and they will gain the most if businessmen have to kowtow to them to buy land. Land aggregators, village officials and other middlemen will benefit from graft if the process of acquisition is made difficult through the need for 70/80 percent consent and Social Impact Assessment (SIA) studies. It has been estimated that acquiring a large parcel of land under the UPA Act would take four to five years – enough time to make any project unviable as all cost assumptions go for a toss.
Second, the basic purpose of the Act – as its very name suggests - is to ensure fair compensation, rehabilitation and resettlement; none of this is impaired by the NDA’s version of the Act. In fact, by making acquisitions easier, it will be able to make payments quicker to land sellers. The poor will get rehabilitated faster if the deal goes through faster, not by dragging it over five years. The only real issue it that the displaced must be compensated and rehabilitated properly - and this is what needs tough implementation and oversight.
Third, making land available for infrastructure and housing will make jobs grow in rural areas – making land sellers benefit both from higher payments and new job opportunities. The landless poor depend on seasonal agricultural employment for livelihoods; once land acquisition becomes easier, they will have options beyond agriculture. Wages will rise as infrastructure projects start blooming in rural areas.
Fourth, India’s structural problem is that too many people are bottled up in unproductive rural and agricultural work. Any scheme to get people off the land – even if it happens through compulsory land acquisitions – is thus good for them even though the disruption is real. The gut issue is people’s emotional attachment to land – but this is no different from hanging on to a family heirloom which is of no use to anyone. It needs careful communication from the government that it is mindful of sensitivities. Nothing else.
Fifth, quicker land acquisition will, in fact, make it easier for farmers to derive more value from land. It is a fallacy to think that land prices can be mandated to rise only through government fiat. (The Land Act mandates paying two times market prices for land acquired in urban areas, and four times in rural areas.) Land values rise when more land shifts out of agriculture (as is visible in large areas of urban Haryana bordering Delhi), and this cannot happen if the idea is to make acquisitions tougher. The UPA Act would have had the opposite effect of keeping market prices of land lower than they should be due to the stiff conditions attached to its acquisition. To develop a proper market for land, you need to make transactions faster and easier, not slower and more complicated. To make a market for land vibrant, you need to increase land supply, not constrict it - as the UPA Land Act does.
Sixth, the UPA Act’s provision for the return of land in case it is not developed five years after acquisition makes no sense. This is like asking you to sell your house if you have not lived in it for some time. What I do with what I have bought is my business, not the seller’s. Moreover, the prices of land don’t stay still. No landowner can hope to get the land back at the same price he sold it for. The idea of returning land is not only daft, but unimplementable in practice. The NDA version thankfully ends this nonsense.
Seventh, the assumption that giving up fertile land will impact food production is erroneous. It is Luddite thinking. Food production depends on improving agricultural productivity by investing more in it. This calls for land consolidation, mechanised farming, more contract (or even corporate) farming, use of improved techniques, and introduction of new technology, including genetically-modified seeds, among other things. None of this is possible if Indian agriculture is going to have to support so many people with tiny parcels of land. Not just industry and infrastructure, even agricultural growth needs land consolidation — which means getting people to sell small patches of land and move to urban areas or to non-agricultural jobs.
It is nobody’s case that the poor farmer must be robbed to feed rapacious corporate greed with cheap land. But it cannot be anyone’s case that the poor must be bound hand-and-foot to underproductive land. Land gets undervalued when too many people are dependent on it. So it is important to get people off land.
The paradox of land is that the people who own it will not benefit unless they are able to sell it. They are sitting on a valuable asset, but encashing it needs them to let go of it. The purpose of the UPA law is to ensure that they find it as difficult as possible to realise value from their land.
It is this hidden paradox that the Land Acquisition Ordinance solves by making acquisitions easier. The Act pushes land owners to sell in their own long-term interest. But no one wants to put it this way.
The only reason why politicians are working up a lather over the NDA bill is simple: they are mostly land owners and land hoarders with their own vested interests. It is no secret, that politicians are benami owners of urban land too. They are using the poor to argue their own case.
The real joke is this: a right-wing government is citing "eminent domain" and public purpose in speeding up land acquisitions; the opposition is from the left, which is arguing for private property, especially landed interests.
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Updated Date: Mar 11, 2015 10:02:39 IST