A few good acres

: With growth, decline in agricultural workforce, literacy and migration, India’s urbanisation will increase and require acquisition and “conversion” of land for urban and commercial use. This acquired land will not always be barren land, forests, swamps or land under water bodies. It will more and more be “agricultural” land, and in states like Punjab it will also be irrigated land. Hence, the Land Acquisition Act of 1894 needs scrutiny, not only because it is ancient and leaves too much to administrative whims, unless the courts are roped in through appeals, but also because since 1984 land can be acquired for companies, which can now be developers. There is a system for compensation and the law does state that compensation will be based on market values on the date of notification of the acquisition.

However, determination of the market value is subject to the collector’s discretion and can only be questioned by the courts — a drawnout process that few of the aggrieved can resort to. Nor, thanks to asymmetry in information, are land-owners privy to what might be an appropriate market price. In determining a fair compensation, the law also prevents courts from considering an increase in the value of the land after acquisition, resulting from subsequent change in land use or improvements.

There are separate issues such as the fear of livelihood loss, the lack of adequate skills, compounded by the lack of a resettlement and rehabilitation policy.

Any contract can seem immoral if land prices increase dramatically after a contract to sell has been executed.

The point is that by providing a more generous package, the Punjab administration not only handled potential resentment better, but it also provided a better information environment for Punjab’s farmers to operate in.

This assumes additional significance because, apart from public acquisition, private land sales in adjoining areas are also possible, which will now reflect more realistic prices.

In addition, incentives...