In a move that could be a setback to land acquisition for commercial use, a parliamentary committee unanimously recommended that the government should not acquire land for industrial, commercial or for-profit enterprises or private companies.
Instead, the panel, which has proposed legislation favouring landowners, recommends that private companies and public-private partnerships would have to buy land in the open market.
The report that was tabled in Parliament on Thursday suggested that agricultural land should not be acquired and that a multi-member land-pricing authority should decide the cost of the land and the compensation instead of paying out a fixed amount.
The parliamentary panel headed by Bharatiya Janata Party member Sumitra Mahajan has denied exemption even for the acquisition of land for infrastructure, mining and power projects, defence and special economic zones (SEZs). In the original Bill—the Land Acquisition, Rehabilitation and Resettlement (LARR) Bill, 2011—which was introduced in September, the government had exempted land acquisitions processed under various Acts, including the SEZ Act, the Atomic Energy Act, the Land Acquisition (Mines) Act and the National Highways Act, among others.
Indian industry was predictably unhappy.
“It would have a strong impact on the industry. We are concerned about the manufacturing sector,” said Chandrajit Banerjee, director general of the Confederation of Indian Industry. “The LARR Bill had included industry in the definition of public purpose as industry creates wealth for the country. These recommendations do not seem to have taken into account the need for industry. It will make the whole process complicated. It will have a major impact on infrastructure development in the agriculture sector.”
The standing committee on rural development, comprising members belonging to various parties in both houses of Parliament, said that in developed countries such as the US, Japan, Germany or Canada, land is purchased by enterprises.
Mani Shankar Aiyar, a senior Congress leader and a member of the panel, said, “The three principal factors of production are land, labour and capital. Since there is no question of the state acquisition of labour or capital, there is no logic at all for (the) government to acquire land.”
The committee further said that the entity for which the land is acquired should not be “any public-private partnership or private company”.
According to a senior Congress leader familiar with the development, the rural development ministry is under “pressure” from the Congress leadership to incorporate the proposals made by the parliamentary panel.
The politically sensitive and critical LARR Bill permits land acquisition under three broad categories—when the government acquires land for its own use, when it acquires land to ultimately transfer it to private companies for a given public purpose, and immediate and declared use by private firms for public purpose. The legislation is expected to address rehabilitation and resettlement by providing safeguards for both landowners and livelihood losers while clearly defining the “public purpose” for which land can be acquired by the government.
The panel, which perused the draft Bill for nearly eight months, pointed out that keeping these Acts outside the ambit of the legislation would mean that “almost 95% of the land acquisition would be outside the purview of the Bill”. Not convinced by the arguments of officials in various ministries, it rejected the demand for exemption under any of the 16 central Acts that were listed by the government.
Keeping the country’s food security in focus, the members of Parliament (MPs) argued that exempting “irrigated multi-crop land” from acquisition would not adequately address the challenge. Pointing out that the persistent deficit in the production of coarse cereals, which provide the highest proportion of nutrition to the poorest and the most deprived consumers in India, the report said, “Food security cannot be only limited to rice and wheat.” The committee recommended that restrictions on acquisition of irrigated multi-crop land should be extended to “any land under agriculture cultivation”.
Land acquisition has become a controversial issue, after protests by farmers against unfair compensation and forcible acquisition in various parts of the country turned violent and became politicized. And it turned out to be the key issue that led to the end of the three-decade-old Left rule in West Bengal and played a crucial role in the ousting of the Mayawati-led Bahujan Samaj Party government in Uttar Pradesh in recent assembly elections. Both Congress president Sonia Gandhi, through the National Advisory Council, and her son and party general secretary Rahul Gandhi, through political campaigns, had pressured the government to make the Bill more farmer friendly.
Critical of the original Bill, Aiyar said that despite a “fancy preamble”, the substantive portions of the Bill do not live up to it. “The provisions for rehabilitation and resettlement are decided bureaucratically with no participation of the people,” he said.
The panel also suggested that whenever the government intends to acquire land for public purposes, there should be a social impact assessment (SIA) study in consultation with gram sabhas (village councils) or the equivalent urban bodies to determine whether any change in livelihood, social practices and environmental conditions may arise through the setting up of industry, mines or roads. “The SIA teams should include the presidents or the nominees of panchayats at all levels involved in the acquisition,” it said.
The committee said the provisions in the Bill to fix the cost of the land or compensation did not have any scientific basis. The Bill has proposed that the compensation will be four times the market value in rural areas and twice the market value in urban areas. The report said, “The market value or registered value or circle rates are much below (the) real price of land across the country and there is tendency to register the sale deeds at minimum value to avoid stamp duty.” Rejecting the argument by industry representatives and some state governments that very high costs for land acquisition would make projects unviable, the MPs proposed that the government should “constitute multi-member land pricing commissions or authorities to finalize the cost of land acquisition/compensation state-wise/area-wise”.
Aiyar added that rehabilitation and resettlement should be mandatory and made under the provisions of state legislation.
The panel also ruled out suggestions from some state governments to extend the emergency clause related to defence, national security or national calamities to certain infrastructure projects. However, it accepted the state governments’ suggestion to reduce the time period to return the land, if unused, to the owners, from 10 to five years.
The committee insisted that the government would not make amendments to the legislation through just a notification, but will seek Parliament’s consent for the changes.
Amrit Raj and Moulishree Srivastava contributed to this story.