Opinion Acres of change

Currently,land may be acquired for “public purpose”,which has a broad definition. It includes land needed for village sites,town or rural planning,land for residential purposes for the poor,for development (including education,health or slum clearance) or if it is needed by a public sector entity. The act also permits acquisition for use by a private company for any work that is “likely to prove useful to the public”. This clause has been interpreted broadly to include employment creation.

The amendment bill specifies that land may be acquired only for three purposes: strategic defence requirements; infrastructure projects (roads,rail,bridges,power,ports,etc); and for a company if 70 per cent of the land is already purchased through market mechanisms. This last condition is contentious. One argument is that land is just one more resource for an industrial concern. Just as they acquire other resources (raw material,capital,etc),they should purchase the required land. After all,no industrialist wants to go back to the days when IPOs were priced by the government; if that is abhorrent,why should land identification and pricing be done by the government? On the other side,the argument is that the government should facilitate land for industrialisation. The land market in India is very inefficient,and titles are not clear in most cases. It is not practical to expect private companies to identify a large number of small land holders,check titles and purchase land.

Second,compensation for the land acquired is computed based on recent sale of similar land in the vicinity. This computation results in low payment on three grounds. One,the recorded sale price is often well below the actual market value of land as transactions under-report the sale price to lower stamp duty and registration costs. Two,the compensation paid does not include any price rise due to change in land use; as agricultural land is priced significantly lower than commercial or industrial land,the farmer whose land is acquired gets paid the price of agricultural land and does not share in the gain. Three,the price of land usually rises in the neighbourhood of a new industrial or commercial project; however,the person whose land has been acquired does not get any benefit from this price rise.

The amendment bill changes the manner of computation of prices. The land price will be the higher of (a) value specified in the stamp act; (b) the average of the top 50 per cent of sale price in the vicinity; and (c) the average of the top 50 per cent of the price paid for purchasing land for the project (the 70 per cent part). The last part addresses the issue of the under-reporting of sale price. The amendment also requires the price to be computed based on the intended use of land. That is,in the case of acquisition for a commercial project,the compensation will be based on the prevailing price of commercial land. The manner of compensation has also been changed: 20-50 per cent of the compensation has to be as shares or debentures of the project. The seller may choose to take the entire compensation as cash. This mechanism is to provide a share in future growth of the project (though there is confusion between shares and debentures).

Third,the Rehabilitation and Resettlement Bill identifies all persons affected by the acquisition,including land owners,tenants,landless labourers and traders and craftsmen in that area. It sets minimum norms for resettling and rehabilitating them. Though that bill has several lacunae,it is the first law to address the issue of displacement.

These two bills address several of the major problems related to land acquisition. It is important to resolve the contentious issues and have a fair and comprehensive law in place.

The writer is at Parliamentary Research Service,New Delhi

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