Land acquisition: Learn from the States

The National Democratic Alliance (NDA) government is putting all its political capital to amend “the growth-retarding” land acquisition law enacted by the United Progressive Alliance government in its dying days. For the proponents of amendments, the key impediments to smooth land acquisition are the expansive consent clause and the cumbersome social impact assessment (SIA) provision. Yet the law makers from the government ought to know that the removal of two contentious provisions from the 2013 Land Act (LARR) would not end all the trouble facing land acquisition. Given land is a State subject (while acquisition is in the Concurrent List), much would depend on how different states create “enabling conditions” for smooth acquisitions. It makes sense to look at how certain states in India have made impressive strides in acquiring large tracts of land (at a time when several other regions have witnessed delay and violent protests). What made some states to succeed? We take a quick tour of successful land acquisition in select states.

One of the most industrialised states in the country, Tamil Nadu has not witnessed any major violent agitation around land acquisition. The recent Kudankulam protest was more about having the nuclear plant and less about land acquisition. The extent of land acquisition is self explanatory when you see that the state houses more than 3500 foreign farms including forty ‘Fortune 500?? companies. Apart from more than 26,000 factories, the state has 28 multi-product special economic zones (SEZs) producing everything – from apparels to electronic goods. Tamil Nadu’s Tirupur can give competition to any mid-sized Chinese apparel SEZ.

What made things click in Tamil Nadu? The state did not have a great land acquisition policy either. It is rather the process of land acquisition and the quantum of compensation which facilitated easy acquisition. This apart, state government has taken care of locating most SEZs in distant places and over fallow lands. This has reduced the possibility of resistance or chances of opposition. Thus, a thinking government and sensitive officialdom can make crucial difference in smother transactions.

Maharashtra

Despite its share of controversies and several stalled mega projects, Maharashtra’s land acquisition record is very impressive and less bloody. This is evident from the fact that not only does the state possess 282 industrial estates, it is also one of the seat anchors for the Delhi Mumbai Industrial Corridor (DMIC) project. In fact, if one goes by the information release of the Maharashtra Industrial Development Corporation (MIDC), the state government has already acquired land required for DMIC project. MIDC has a land bank of over 80,000 hectares. With its flexible framework of compensation and R&R provisions, the Maharashtra Industrial Development Act (MID Act) has facilitated much successful land acquisition.

Of course, the nodal agency like MIDC has placed critical role in building up transparent process of negotiation and determining compensation. The state is a pioneer (even before many provisions were included in 2013 LARR Act) in providing attractive compensation based on market price, offering employment to one person of the family member, buy back option of up to 15% of the developed land and remuneration/wages to landless labourers. The smooth land acquisition in the case of Bharat Forge MIDC SEZ in Pune is a case in point.

Haryana

If one keeps asides some big ticket land acquisition controversies (including the Robert Vadra incident), Haryana is a leader in facilitating a large number of land acquisitions sans any violent agitations. Not only has the state boosted a large number of SEZs (34 in Gurgaon alone), it is probably one state (next to Gujarat) that has created maximum number of millionaires among farmers. Haryana has made successful land acquisition into development industrial clusters in Gurgaon, Kundli, Manesar, Bawal, Rohtak, Faridabad and Panchkula among others. How did Haryana make such impressive progress when most regions of the country faced resistance against land acquisition?

A combination of incentives and exemplary roles played by key institutions made the difference. Haryana was an early mover in bringing out progressive elements in land acquisition process and these were the clinchers in many land deals. There are at least three interesting points to be noted in Haryana’s land law.

First, it went beyond rural and urban definition of land by dividing the region into five categories, each with its own minimum floor rate i.e. Gurgaon, where land price is extremely high, will have a higher floor rate when compared to say Rohtak or Bawal.

Second, the Haryana government ensured the minimum floor rate is up to date with current land market trends by revising them periodically. The concept was first introduced in 2005 and has since seen the floor rates been revised thrice, first in 2007 and then in 2010 and 2014.

Third, and probably the most innovative step taken by the Haryana government is the ‘No Litigation’ incentive. To dissuade land owners from petitioning courts, the Haryana government offers an addition amount equal to 20% of the basic rate of land determined by the Collector as an incentive for ‘No Litigation’ to such land owners who opt (i) not to challenge the acquisition of their land, (ii) to accept the compensation amount as awarded and undertake not to seek a reference as per Section 18 of the Land Acquisition Act, 1894. Apart from progressive policies, state agencies especially HUDA and HSIIDC have played a critical role in facilitating deals and iron out differences between competing parties.

Gujarat

Gujarat is probably the most critical case to learn about smooth acquisition. The state which has been rapidly industrialising in the last two decades incidentally has not witnessed single violent agitation over land acquisitions. While the state has a tradition of industrial houses offering attractive prices for land, the state has institutionalised acquisition process as being more “voluntary” or consent based, thereby reducing chances of violent protests. This apart, the 2010 land acquisition policy brought in an independent body to determine the quantum of compensation. The Centre for Environmental Planning and Technology University, a reputable institution handles the issues of compensation.

Further, the government has also actively engaged farmers in the acquisition process thereby reducing litigation and ensuring smooth transition from agriculture to industry- something the Supreme Court also took notice of in 2011 when it stated,

The quick pace at which land was acquired in Dholera Special Investment Region (using land pooling and town-planning strategy) further reaffirms state’s ability to overcome bottlenecks in acquiring large tracts of lands. To make land acquisition an even smoother affair, the Gujarat Industrial Development Corporation (GIDC) has ensured that most information be available online. The GIDC and the Investor Facilitation Portal have created an internet data base which provides information such as availability of land, power, gas, distance from a port/airport, and SEZ, etc. and enables entrepreneurs to proceed in an efficient and less-time consuming manner. The success of such a mechanism was highlighted in a Department of Industrial Policy and Promotion report which ranked Gujarat’s land acquisition model as the best in the country.

Uttar Pradesh

Uttar Pradesh may have become the battleground for protests against land acquisition. It was in Bhatta-Parsual in 2011 that the Congress vice president Rahul Gandhi launched his protest march against then Mayawati government’s land acquisition policy. Yet, the state can rightfully claim to have anchored many successful acquisitions for large infrastructure and industrial projects (especially in areas surrounding National Capital Region). The latest being the successful land acquisition for the six-lane green-field expressway project covering 302 km between Agra to Lucknow. In a record six-month time, more than 3000 hectares of land has been acquired from farmers involving ten districts. Such a feet has been accomplished when everyone is busy blaming the 2013 Act for bringing standstill to fresh land acquisition.

UP can easily boast, as it has the most progressive land acquisition laws in the country. In fact, the consent clause of the LARR 2013 was borrowed from the 2011 land acquisition policy. Apart from consent requirement, the 2011 law vested the power to determine compensation quantum with the Governing Board of the Public Undertaking, not the Collector. Importantly, UP introduced attractive incentives into acquisition by having an annuity of Rs. 23,000 per year per acre for the next 33 years or farmers were given an option to settle for a one-time compensation of Rs. 2.76 lakh per acre. The clincher provision however is the offer of 16% developed land for the land owners. The land owner is given the option of retaining part of the 16% developed land given to him/her and to obtain cash compensation for the remaining land on the basis of mutual agreement. Notwithstanding many petitions in the courts, this has worked wonder in many land acquisition cases in Greater Noida and the Yamuna Expressway project.

Key Lessons

So what are the key lessons emerging from the state level experiences? Here is a summary of them.

Follow a negotiated route

Successful land acquisition examples in states under review unequivocally point towards the triumph of negotiated and consent-based approach over an involuntary and coercive approach which often fuels mistrust and resistance even in cases where compensation packages are very attractive. Instances where land negotiations have been handled in an atmosphere of openness and trust, have mostly yielded positive outcome. A case in point is six-way expressway land acquisition in UP’s Unnao district. By opting to have direct negotiation with affected farmers in an atmosphere of openness and with an attractive compensation package, the UP government was able to acquire a large tract of land in record time. One saw similar outcome in the case of Bharat Forge in Pune, Maharashtra. Thus, while it is necessary to moderate provisions like mandatory consent and SIA to cut down needless bureaucracy and delay in acquisition, the new land bill must provide an institutionalised platform for dialogue and a legal mechanism for identifying affected people eligible for compensation. This way, a lot of initial resistance to land acquisition can be reduced.

Vesting powers to independent institutions

The credibility of government agencies facilitating acquisition plays a crucial role in reducing the level of mistrust and possible opposition to land acquisition. States that have better records relating to land acquisition, incidentally, have more credible institutions dealing with land. For instance, state agencies like MIDC (Maharashtra) and HIISDC (Haryana) with fair degree of credibility have facilitated numerous successful land acquisitions. However, an even better option can be assigning such roles to independent bodies. For instance, the state of Gujarat has assigned the Centre for Environmental Planning and Technology University the responsibility to fix the quantum of compensation for land. So far, this has reflected positively on land deals. The new land bill by the Union government might take some cue from the state experiences to strengthen the governance (fairness) aspect of land acquisition.

Compensation, decisive

While most landowners would like to be consulted and listened to, it is the quantum of compensation which plays a decisive role in clinching the deals. A cursory glance at most of the successful land acquisitions unanimously points to the fact that while direct negotiation with farmers in a free and frank atmosphere helps the process, the clincher is the quantum of compensation.

For instance, in the Unnao land acquisition, although free-flowing negotiation helped to reduce initial resistance, what won the deal was an attractive compensation package. According to available information, the UP Expressway Industrial Development Authority paid Rs. 45.60 lakh for less than half acre land (4 times of circle rate). While the new land bill has one of the best compensation frameworks, the government can still make it more attractive. Maybe a 16% developed land deal and an assured job might win the day. In short, the new law should be an outright temptation for the land owners.

To sum up the state level experiences, the Union government needs to avoid a maximalist position, and rather, embrace a middle-of-the-road approach. It must not be forgotten that despite the widespread and prolonged misuse of the 1894 Act, principles like consent and public purpose have acquired a huge degree of legitimacy and relevance and cannot simply be thrown out as “irritants”. State level experiences clearly indicate that land acquisition is a function of so many elements including the nature and character bureaucracy, incentive structure and sound polices.

Importantly, since most of the land business will be in the domain of states, the sensible thing for the Centre would be to provide broad policy outlines (such as definition of public purpose, acquisition process, compensation, grievance redress) and leave rest to the states concerned. After all, land acquisition is listed in Concurrent subject under Article 254 (2) and Centre can allow progressive states to come out with improved versions of the Central law. All it requires is to advise the President of India to allow such a law to exist.

Courtesy : ORF – Land acquisition: Learn from the States

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