Govt clears new land acquisition policy, puts oil price hike on hold

Govt clears new land acquisition policy, puts oil price hike on hold

New Delhi: The Union government on Thursday approved a new rehabilitation policy that promises alternative land and future employment to those displaced in various land-related projects, in a move that will alter regulations that have been in place for 103 years.

In an unrelated move, the Union cabinet, led by Prime Minister Manmohan Singh, also decided not to pass on the burden of rising international oil prices to consumers, at least through March.

Both moves have significant political implications. One attempts to settle a fierce debate that has raged much of this year over displacement of people, especially farmers, from large industrial and export-oriented projects, including so-called special economic zones, or SEZs. The other simply avoids taking a fiscally prudent yet politically unpopular decision at a time when there is a possibility that India could be in for early elections.

The new rehabilitation policy also allows displaced people to hold a fifth of their compensation as equity in the new industrial unit that would come up on the acquired land, and maintains that acquisition of agricultural land for such projects should be kept to the minimum.

Among other decisions, the Union cabinet also announced a productivity-linked bonus to railway employees and cleared the outstanding dues of employees of 12 loss-making public sector undertakings.

The new rehabilitation policy will entail the introduction of a National Policy on Rehabilitation and Resettlement Bill, 2007, and Land Acquisition (amendment) Bill, 2007, which will replace the existing 103-year-old Land Acquisition Act. Cabinet spokesperson and minister Priyaranjan Dasmunsi said the new policy will apply to those uprooted by development project as well as natural calamities. “The details of benefit will be worked (out) when the law is framed."

The benefits under the new policy include land-for-land, which implies that a landowner whose land is acquired by the government will be given another piece of land. Other benefits include suitable employment opportunities, financial support, training facilities for those seeking self employment, pension for those who cannot work, and help in building temporary workplaces and houses in the resettlement areas for all those who will be uprooted. The policy also lays down that in case a company is able to acquire 70% of the land it requires, the government will step up to help the company acquire another 30%. However, all these provisions are subject to conditions. For instance, land-for-land is subject to the extent of availability of land in resettlement areas and employment opportunities are subject to vacancies.

Analysts were quick to dub this as an election gimmick. “More than anything, the announcement of this policy is a clarion call for early elections," said Bidyut Chakrabarty, head of the University of Delhi’s department of political science. “Land acquisition has been the Left’s Achilles heel more than any other party and the Congress has only highlighted this once again through this announcement."

Some of the biggest protests against SEZs have been in West Bengal, the bastion of India’s Left parties, which also help the current Congress party-led government claim a majority in the Lok Sabha.

D. Raja, national secretary of the Communist Party of India, one of the four Left parties that lend critical outside support to the ruling United Progressive Alliance, said the government has taken too long in announcing this policy. “It’s good they have finally announced it," he said. “We’ll of course study it in detail but what’s important now is how the government plans to implement it."

Jivabhai Ambalal Patel, a Lok Sabha member of the Congress and a member of the parliamentary standing committee on commerce, which submitted a critique of the SEZ policy, maintained “this (policy) will not have an impact on elections because the voters have other considerations. Awareness levels are appallingly low in a majority of the country." Patel, a Gujarat-based industrialist, however, added only barren lands should be acquired for industrial projects.

The policy elaborates that at least one person in every uprooted nuclear family will be given an employment opportunity subject to the vacancies available with the government. Besides, there is a special provision for a monthly pension to the vulnerable section such as those above 50, disabled, destitutes and widows.

The government is also expected to provide training facilities for those seeking self employment and provide scholarships for students. Financial support will be provided to affected families to rebuild temporary housing, cattle sheds, working sheds, etc.

The government will also set up an ombudsman for redressal of grievances, a national rehabilitation commission and a national monitoring committees, supported by a national monitoring cell. All Union ministries with major projects will have to set up new internal oversight panels. It has also introduced a mandatory social impact assessment for projects which displace more than 400 families in plain areas and 200 in tribal and hilly areas.

In yet another people-frien-dly measure, the government put on hold a long-pending hike in the heavily subsidized petroleum prices that would have brought them more closer to international rates, where a barrel of oil is hovering around $77. The crude oil price in the Indian basket is $75.53 per barrel as against the all time high price of $78.46 per barrel on 28 September.

It also announced a three-year extension of the subsidy schemes for kerosene distributed through public distribution scheme and domestic liquefied petroleum gas through March 2010. Both are used by most Indian households.

The government did pitch in to reduce the financial burden on state-owned oil-marketing companies by announcing oil bonds of Rs23,457 crore. Similarly, it had issued oil bonds worth Rs24,121 crore in 2006-07 and Rs11,500 crore in 2005-06. “The finance ministry will work out the duration of the oil bonds along with their date of issue. Though the Reserve Bank of India issues these bonds on the government guarantee, they will only show up on the government books at the time when they become redeemable," said one government official who did not wish to be identified.

Companies such as Indian Oil Corp., Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd have been absorbing the subsidy arising out of the difference between the higher international price and domestic prices charged to the consumer. Taking into account the new set of oil bonds that are being issued, this burden would reduce to Rs18,312 crore.

“This (the bonds were) the next best option after a price hike," said Sarthak Behuria, chairman and managing director, IOC, India’s largest oil marketing company. “We are happy, as the bonds will help us improve our bottom line."

The oil marketers lose around Rs4.35 and Rs6.90 on the sale of a litre of petrol and diesel respectively. The losses are Rs16 per litre of kerosene and Rs174 on every consumer gas cylinder sold.

Ashish Sharma contributed to this story.