• Any example of this happening?

I have seen similar practices in Latin America. There the subsoil rights were not in place. The land owners who sold the land did not get the benefit of the oil and gas exploration or other mining operations.

• But there might be instances where the majority might be ready to sell but a minority may not, the result of which would be an uneconomic and fragmented holding. How then do you reconcile individual property rights?

What really needs to be in place is a good property rights system where the interests of the majority are taken into account. If 90 per cent of the people are ready to sell their land, the remaining ones will have to give up their land for the benefit of the larger society.

• What about eminent domain? When should government enter and enforce a sale?

The buyer should have a good argument as to why he wants to buy the land and how it will benefit the larger society. It is good if the fragmented pieces of land which were earlier not contributing to the GNP start contributing to it. At that point, if it is fairly clear that the end result is going to generate a higher per capita GNP, employment or other benefits, the government can come in as the last resort. But in a system where the legal rights are in place and are fungible, commercial transactions between economic agents should be the rule.

... contd.