New Delhi: One reason why protests originate against the acquisition of land is because the compensation and rehabilitation packages aren’t properly framed.

Infrastructure Development Finance Co. Ltd’s (IDFC) India Infrastructure Report 2009, titled Land—A Critical Resource for Infrastructure, focused on this issue among others related to land and land acquisition.

Changing the law: The scene near a Tata Motors Ltd plant in Singur in 2008. Experts say compulsory land acquisition in India isn’t sufficiently sensitive to the idea that India is a democracy. Prashanth Vishwanathan / Bloomberg

Mint’s deputy managing editor Tamal Bandyopadhyay, IDFC chief executive officer and managing director. Rajiv Lall and six of the several experts who contributed to IDFC’s latest report, India Infrastructure 2009, discuss the issue. The experts are Sebastian Morris, Ajay Pandey, Ashok Singha, Rumjhum Chatterjee, Runa Sarkar and Bimal Patel. In the first part, which appeared on Wednesday, Mint presented excerpts from the discussion on the findings of the report and why there is opposition to some industrial projects and not others. In the second part it looked at the legislative aspect of land acquisition. In this, the third and final part, it presents excerpts on the issue of compensation:

Bandyopadhyay: Sebastian, this is a question for you. If the private sector needs to acquire land, on behalf of the government in certain cases and for their own purpose in others, what kind of compensation package should they devise?

Morris: First let’s understand the role of the government and the private sector. The private parties can always acquire the land, there’s no problem. Let them acquire land for whatever purpose they want. The problem is not that. The problem is when you need public infrastructure—roads, ports, bridges, railways, urban spaces to expand, a bus stop to come up, a market to come up —then the state cannot say well, if it doesn’t happen through the market process, I’ll stay away. It needs to get in and acquire land. So here even in the very greatest of democracies, we have the notion of eminent domain—that is, compulsory acquisition of land by the state—and this is enshrined in our laws and so that must be there. But the point is that this compulsory acquisition in India is not sufficiently sensitive to the idea that India is a democracy. The law is that of the British when India was not a democracy. And now that we are a democracy, we must constrain eminent domain through due process and through valid compensation process.

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Patel: The emphasis on whether it’s a public purpose or not comes about simply because you have ineffective mechanisms of acquisition that are perceived to be unfair. What in effect we say when we try to distinguish between public and private purpose is that unfair things are okay if it’s for the public purpose. This is the problem.

Morris: My sense is similarly that the rehabilitation Act— even the proposed one—says the government “may" do this and all the things about the government is always about “may" ; so it’s the sweet will of the government. Whereas everything on the private side is about how they “will" or “must"; now here is a large-scale problem and Ajay can talk more about this.

The state must understand that in its actions, in its operations it is bound by law. So the law must not be written in such a way that state functionaries are not essentially accountable under law. That was okay when foreigners were ruling us. So the first principle that gets violated in the detailed drafting of much of the legislation in India is that the state functionaries want to have loopholes so that they are not answerable under the spirit of the law.

Bandyopadhyay: Ajay, you spoke about valuation and removing uncertainties. But in the entire administrative process of land acquisition…there is no record, no adequate record at least, and there’s a problem of aggregation. Why don’t you take us through how difficult it is to acquire land, even after the landowner gives the consent?

Pandey: One of the reasons why private companies prefer to take the land acquisition route is that they don’t have to face uncertainties related to titles. In India the system that we are following is firstly, between the land record and physical, actual piece of land there’s no correspondence and so therefore the risk associated with the ownership for the land, which you’re getting into, and buying, is always there. Whereas if the government comes in and invokes land acquisition Act and hands you over the land, after that all the titles are clear.

Bandyopadhyay: So what is the solution, a central registry?

Pandey: Well, actually I think there’s already a move towards…well registry is only for registration of deeds but you require, actually, a consolidation at three levels: One is the land records, then the deeds, as well as the physical mapping—all three have to be aligned. Currently, the government offices work with two distinct entitles: one keeping track of deeds, which is registry, and another one, which has the land records, and they don’t talk to each other. Unless these are unified, unless there is something called a title guarantee system, wherein the moment you buy a land, you’re assured of the title...

Bandyopadhyay: Is there any survey on how much land is owned by the government, how it is being used, how much can be released, monetised and how much money it can generate?

Sarkar: No.

Morris: Let me make some upfront statements. Vizag Steel, using eminent domain, acquired 25,000 hectares or acres of land and it needs a fraction of that for the steel plant. If Vizag Steel tomorrow goes and says here is land that I want to monetise. What are you saying? That I ripped off the people of India and here is my stock of wealth and now I’m going to use that for a private purpose essentially? Because Vizag Steel, all said and done, is a commercial entity. Lets understand where the big things are; first and foremost all the cantonment (army) land must be put to productive use. Today cantonments have a density lower than that of, forget villages, lower than that of pastoral lands.

Bandyopadhyay: We have discussed the problems so far, but what are the solutions as far as land is concerned?

Patel: Develop a new mechanism that is totally fair, that’s the only way you depoliticize issues around land.

Singha: There should be an independent valuation, which should be fair, and there should be a process where these valuations are transparent.

Chatterjee: Government, private sector and the communities (should) work in partnership, in a fair, transparent manner.

Morris: Well I would say that all the current distortions which make the market worse than what it would have been if left to itself should first go.

Pandey: I think government has no case for compulsory land acquisition for wherever private interests are involved except where you have specific land required for public purpose. It should be evident that the purpose is truly public, otherwise you cannot depoliticize this. Of course, wherever government interventions are they should be on the side of those who are going to suffer. They should be on the side of relief and rehabilitation and not on the side of the one who’s going to acquire the land.

Sarkar: A complete overhaul of the land administration system is needed. One of the reasons why Gujarat has been successful, the scheme has been successful, is because of the mapping,. There is a clear mapping of the land; you know the different pieces and to whom it belongs.

There is a complete overhaul needed of the land administrative system which would then serve as the necessary condition based on which one could start removing market distortions, have better valuations and have a more fair and equitable distribution of benefits as well as costs.

Lall: We should allow independent valuation of land in the event of government acquisition of land. So compensation should be fixed on the basis of independent valuation rather than leaving it to some administrative mechanism. Second, the conditions under which the government steps in when the private sector has already acquired land needs clearer definition than is currently there in the proposed legislation.

Quite apart from that, the biggest bang for the buck comes from improving the whole land administrative framework. I would suggest that Nandan Nilekani (the former Infosys chief executive recently appointed as the head of the government’s unique ID project) should as of today be given another term of three years so that he can start using the technology for land mapping, for land titles into the geographical map of the country—that work done on a national basis. We would then be much better off.