The recent political controversies over land being doled out to companies for a song is not quite unexpected. In India where the property market is largely opaque and pricing irrational, the Centre’s aggressive plan to promote special economic zones (SEZs) coupled with states facilitating even land purchases, such controversies were imminent. Besides, the land market today is really hot and asset prices have zoomed, making valuations unrealistic.

Let’s forget SEZs for a moment. These are fairly new. Land acquisition for projects including roads, ports or even industries has always remained contentious and, unfortunately or fortunately, the state and politicians have a big role to play in this. In a country where property records are not religiously maintained and title deeds are unclear, the government’s decisions on acquisition and compensation are always open to question.

First let us consider the legislative and operational framework relating to land acquisition. We have the Land Acquisition Act, which is enacted by the Central government. Each state has its own laws that draw authority from the Central act. In terms of operation, they have the powers to acquire land and decide on compensation. The only distinction comes in cases of tribal and non-tribal land. Further, the Centre has a resettlement and rehabilitation policy, which looks at taking care of the affected people post-acquisition, because the Land Acquisition Act looks only at compensation for the land being acquired.

Let me illustrate three real instances of land acquisition and categorise the problems broadly. Take DS Construction’s Gurgaon roadway project, which is still underway. The NHAI, which had awarded DS Construction this project, slapped a penalty on the company for the delay. DS Construction countered this by claiming that all the land was not handed over by the NHAI in time. The NHAI insisted that the delay was caused by slow work. Then there is the Tata Steel’s project at Orissa’s Kalinganagar. The state acquired the land required by the company for the project and also paid compensation to the local people who sold it. The company paid the state the market rate for the land thus acquired. But the local people still feel cheated. As for Reliance Industries’s SEZ in Chandigarh, this was a big-ticket investment of Rs 40,000 crore for over 25,000 acres. The state’s SEZ Bill requires the state to acquire 25% of the land for SEZs in the National Capital Region. The examples cited here show that while the government can take tough decisions and help to partly resolve some issues, others are just too big and would require the complete clean up of the property market. This needs political will, which is not so forthcoming from today’s politicians.

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