Too many sub-plots
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Does the draft bill on land acquisition pass this test? It cannot be emphasised enough that it is a draft and Jairam Ramesh has done well to make it available for proper public discussion. The bill is trying to reconcile different considerations, and its strains are those of the Sisyphean task of trying to do justice to all points of view. On the one hand, it retains an extraordinarily wide definition of public purpose that would allow practically any use. This is a concession to those who fear a narrow definition would thwart development. If part of the problem with the Land Acquisition Act was that it did not specify public purpose sufficiently narrowly, this bill does not do that either. The term "public purpose" will remain hostage to political contestation. Perhaps that is how it should be: there cannot be a legal or definitional resolution of trade-offs a society has to make.
On the other hand, it requires in the case of acquisition for private parties the consent of 80 per cent of all affected families, not just 80 per cent of all landowners. The major, unequivocal achievement of this bill is that any land acquisition must compensate not just land owners but all those affected. It provides a combination of measures, including annuities, to make this real. But making them entitled to fair compensation is one thing; requiring their consent opens up a negotiating challenge that may prove insurmountable.
There are other provisions that are odd. The blanket prohibition on acquiring multiple-crop areas is normatively perverse and practically counterproductive. It does not recognise the reality that in some cases farmers may want their land acquired; it is telling multi-crop farmers that they do not have the possible option of leveraging their assets for an exit out of agriculture. It is also an open question what impact this provision will have on spatial patterns of urbanisation. There is also a typical UPA-style gap between elevated rhetoric and the actual remedy. So the bill provides for six times the market price as compensation in rural areas, and twice the market price as compensation in urban areas. But this is where there is a great difficulty: the means the state uses to ascertain market prices (circle rates, average of sale deeds) may open up the possibility that farmers receive less than the de facto market price.
For this reason, voices from both the left and the right have suggested that the state should not be involved in intermediation at all. It will rely on official instruments for market price which grossly understate value. The emphasis will be on current market prices rather than on future values. The bill partly addresses the latter by providing set-asides in any scheme whose value will accrue to farmers, though giving them shares is probably more problematic than shares in land. But state intermediation is also required for other reasons. The first is the asymmetries in negotiating power between buyers and sellers, which the bill partially addresses by fixing compensation levels. The second is the fact that large developments impose huge externalities in terms of everything from water to infrastructure. State intermediation is required to take these into account.
But the legislation may set the stage for gaming of the system. It only applies to acquisitions of more than hundred acres, and will probably lead to messy, small-parcel acquisition. The objectives and content of the rehabilitation package are laudatory and perhaps the opportunities available to the children of those displaced can be strengthened. But there is a curious impracticality about the way in which the state has imposed obligations on the private sector. Making the process contingent upon the private sector, providing everything from a PDS shop to a post office, is a bureaucratic nightmare. It also gets the private sector to do what the state is unwilling to do in its own actions. Keep the costs you impose on the private sector adequately high; they can survive cost structures even if they are high, so long as they are predictable. Many best practices are reportedly higher than what the bill provides. What they cannot survive is bureaucratic complexity.
What will be the practical consequence of this proposed legislation? It raises the floor of minimum protection for those affected, though ironically it does not do that much for land acquired for the state's purposes. But the honest answer is that we don't fully know. This is for the simple reason that land prices and availability are endogenous to so many other rules, particularly the politics of land-use change. They are also a product of larger infrastructural decisions. There will rather be creative responses to the cost signals resulting in new spatial patterns of development.
The bill deals with complex issues, including those that tread on federalism. They cannot be resolved by rules, but need strong processes. All depends on how these work. The bill provides for social impact assessments, consultation with gram sabhas and monitoring committees to oversee rehabilitation and, most importantly, grievance redressed mechanisms. It is these processes that translate abstract objectives into concrete realities. So, for example, how is the requirement that the land acquired be only the minimal necessary, or that all proposals show that other alternatives are not feasible, going to be interpreted? It will depend on the credibility of the process. That is much harder to correct. India needs not just to reform law but to reform the practices of the state.
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