Only benificiaries of land acquisition are big companies: Here's why

The only beneficiaries of land acquisition are big companies. Everyone else — displaced communities, banks, the government, those needing infrastructure — will pay the price.

hidden March 13, 2015 20:12:58 IST
Only benificiaries of land acquisition are big companies: Here's why

The key question in the land acquisition debate isn't about "industry" or "farmers."  It is: who decides which is land is to be acquired? Because, when land acquisition is done badly, it doesn't just harm displaced communities. It prevents necessary infrastructure, imperils the financial system, and endangers the economy.

Official data in Rajasthan shows that majority of land acquired is lying unused, and the CAG found the same in Orissa. In Orissa, over Rs 75,000 crore was raised by mortgaging such land illegally; in ten years only two percent of projects were ready to start. On SEZs, the CAG found that "land appeared to be the most crucial and attractive component of the scheme."  Eleven companies were checked; those eleven alone had raised Rs 6300 crore by mortgaging SEZ lands, of which over Rs 2000 crores went to companies in non-operational SEZs. Similarly, most companies that sought captive coal mines — and associated land — never used them, except to boost their own value. In every sector, this story repeats itself.

Only benificiaries of land acquisition are big companies Heres why

Representational image. Reuters

The government tells us it wants employment and "development", but those can't be generated by projects that never come up. Besides, loans to such projects can't be repaid. Thus India's public sector banks are drowning in bad loans, with the infrastructure sector being the biggest recipient. Finally, assuming that some proposed activities were actually useful, how will they ever come up when non-performers got the land first?

Such non-starters are not the end of the story. In project after project, independent analysis has found proponents' claims to be grossly exaggerated. The CAG found that all the SEZs it sampled had failed to meet their employment, investment and export targets, in some cases by over 90 percent. It said "the achievements of SEZs in the country are mostly contributed by a few SEZs in developed states that were set up before the SEZ Act." An analysis by US-based economists found that the famed POSCO project would destroy three times more livelihoods than it claims it would create, while generating negligible tax revenues. All the figures for benefits from the project were from a "cost benefit analysis" paid for by POSCO, which essentially ignored all the existing jobs in the area. Meanwhile, in 2009, 89 percent of India's hydroelectricity projects were producing below capacity, and 50percent of these were not even generating half their targets.

The reason all of this happens is that India's resource allocation process is completely irrational. Decisions are made by bureaucrats on the basis of information given either by project promoters or other bureaucrats. There is no objective review and no one is ever held accountable.

The 2013 Land Acquisition Act made two changes — a social impact assessment by an independent panel, and requiring landowners' consent in some cases. These would have forced corporates and bureaucrats to at least back their claims with data, and to justify their promises to some of those who would lose everything. None of this would have stopped the abuse, but it was a start.

That start was too much for the NDA government. Under the current ordinance, for practically all projects, the District Collector's word is gospel. If the Collector says that land must be acquired, it must be acquired.

But still Ministers tell us they want "development." How do they know that any project will lead to development when they have no way of checking promoters' claims? How do they know projects will generate net employment when there is no assessment to count the jobs they will destroy? Decisions made in this manner, whether corrupt or not, can never be rational. The only beneficiaries are big companies. Everyone else — displaced communities, banks, the government, those needing infrastructure — will pay the price.

Shankar Gopalakrishnan is a researcher and unionist based in Dehradun. He is currently working on a book on the land question in India.

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