A Quick Look At The Land Acquisition Act That Arun Jaitley Wants ‘Necessary Changes’ In

Posted on November 19, 2014 in Politics

By Sourabh Harihar:

Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 was the first Act of this nature passed by the Government of India after independence, though amendments had been previously made to the archaic Land Acquisition Act of 1894. Under pressure from public who considered the old Act inadequate in terms of compensation packages and rehabilitation, the UPA-II government passed the bill in its final year in an attempt to prove its ability to push legislation during times of backlash and opposition-animosity.

Picture Credits: Climate Change, Agriculture and Food Security
Picture Credits: Climate Change, Agriculture and Food Security

What are the views for and against the act?

The Act derives most of its appeal from the the general public which is wary of having to undergo displacement or resettlement without getting a fair compensation. Successive corrupt governments and an industrial sector that is hardly socially responsible have triggered apprehensions in people’s mind. The Land Acquisition Act comes as an affirmation of people’s right to their privately-owned properties and reinstates their discretion when it comes to permitting acquisition of their lands for government-led or PPP projects. The Act states in its very introduction that it intends to cause ‘least disturbance to the owners of the land’ and ‘provide just and fair compensation to affected families’.

The points put forth against the act, however, are mostly concerning economics. A stringent land acquisition law, many believe, is often taken to be a barrier for industrial investment. Governments or countries that go hard on land-laws are seen as anti-development or anti-growth. These concerns had been reinforced by the relatively sluggish growth-rate India has had in the past couple of years. Questions have also been asked about how much compensation is good or what is the ‘fair‘ price for land? Inconsistencies are another issue. Maitreesh Ghatak and Parikshit Ghosh in their LSE article ‘India’s new Land Acquisition Act: A lost opportunity’ rightly argue: “…the magnitude of price increase will vary a lot depending on the nature of the project. A factory or Special Economic Zone (SEZ), by attracting all kinds of ancillary industries, could inflate prices several fold. A highway or railway line passing through a lonely farmland will not have that kind of impact. The Act wrongly assumes the same mark-up will serve well in all cases.”

Where does the current government stand?

The existing government came to power riding on its promise of reviving growth. Now under pressure for delivering on its promises, the finance minister Arun Jaitley has recently made a statement “Some changes may be necessary (to the Land Acquisition Act). We will first try to reach a consensus and if that is not possible we will go ahead and take the decision,” addressing India Global Forum meeting in New Delhi. It is clear that the government sees the economic repercussions of the Act and is trying to quell fears of it worsening the economic slump. It is a questionable move though, considering that the existing BJP government, while in opposition, supported the bill in its original form with all its perceived drawbacks.

Interestingly, the minister points out that the Act, if not amended appropriately, may prove to be an obstacle to the concept of smart cities in India. In saying so, the minister has played a masterstroke by linking the deficiencies of the Act to the PM’s pet project. As many legislators may be looking forward to the materialization of the ambitious smart-cities target, such a connection will certainly help Jaitley draw greater support for the amendments.

However, there could be several uncertainties associated with the proposed reform. One may ask what the minister exactly means by ‘some changes’. Many will be interested in knowing the nature and direction of these changes. He has also not clarified the kind of ‘obstacles’ he foresees to growth. These may be apparent to several people in the financial or industrial sector but the common junta will need a clearer explanation on this.

That said, if the right amendments are pushed through, we might just have a Land Acquisition Act that is both fair and development-friendly. It is a fine balance the government will have to strike.