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Business News/ Politics / Policy/  Land-related conflicts in India threaten investments of Rs12 trillion, says report

Land-related conflicts in India threaten investments of Rs12 trillion, says report

Land conflicts threaten people's lives and livelihoods, impacting development and infrastructure projects, says the report

Land conflicts stalled projects like Vedanta’s Group’s bauxite mining project in Odisha’s Niyamgiri hills. Photo: AFPPremium
Land conflicts stalled projects like Vedanta’s Group’s bauxite mining project in Odisha’s Niyamgiri hills. Photo: AFP

Land-related conflicts in India affect about 3.2 million people and impact investments worth over Rs12 trillion ($179 billion), a report released on Wednesday shows.

The report that analysed 289 ongoing cases—an estimated 25-40% of active and substantive land conflicts in the country—was prepared by Rights and Resources Initiative (RRI), a global coalition of non-profit organizations, and Tata Institute of Social Sciences (TISS).

“Land conflicts are impacting communities across the country, threatening their lives and livelihoods. At the same time they impact development and infrastructure projects," said Geetanjoy Sahu, a professor at TISS and one of the authors of the report.

Instances where land conflicts have led to the stalling of projects include Vedanta’s Group’s bauxite mining project in Odisha’s Niyamgiri Hills and Posco’s $12 billion Odisha steel project.

“A part of the solution to many of these conflicts already exists in the statutes of the Forest Rights Act (FRA) and the Panchayati Raj Extension to Scheduled Areas (PESA). The only way to ensure India’s continued development will be to effectively implement these laws and remove the anomalies in property rights regimes," Sahu said.

Another study, Land Disputes and Stalled Investments in India, also released on Wednesday, found that 5,780, or 14%, of the more than 40,000 projects announced between January 2000 and October 2016 were stalled due to land acquisition conflicts. The study was prepared by RRI and the Indian School of Business (ISB).

“Power projects were more likely to be stalled, followed by the cement, steel and mining sectors," said the report, which used data from the Centre for Monitoring Indian Economy (CMIE)’s CapEx database to analyse the causes and spatial distribution of stalled investment projects in India.

The report also indicated that many of the land disputes related to stalled projects are linked to perceived environmental impacts of these projects and almost 80% of land conflicts arise out of development and industrialization processes with infrastructure being the single-largest cause.

“While less than 15% of the country’s districts are affected by Left Wing Extremism (Maoist insurgency), they comprise 26% of all ongoing land conflicts and 32% of land-conflict-affected population," the report said.

In the case of private land, perceptions of unfair or low compensation were found to drive many disputes.

“If investors are looking at their bottom line, the cost of delays and stalled investments often far outweighs the cost of paying farmers and land owners a fair compensation for their land. Investors, financial institutions and regulators must incorporate land tenure risks, including those arising from common lands, in their project and investment risk analysis portfolios—if they don’t, they risk losing big," said Arvind Khare, board chair of the International Land and Forest Tenure Facility.

The research also found the CapEx database, intended as a planning tool for businesses, financial companies and governments, to be grossly underestimating the risk associated with land-related disputes.

“Looking at a sub-sample of 80 high-value stalled projects, the researchers found more than one quarter of the projects and investments are at risk due to land related disputes, which is 300% higher than the CapEx estimate. The value of the projects at risk due to land related disputes examined in the sub-sample exceeded Rs1.9 trillion ($29 billion)," the report stressed.

One of the main findings of both the reports is that disputes over common lands—on which communities depend for farming, fishing, livestock rearing, salt manufacturing and grazing, and which are often sources of cultural and spiritual well-being—are more frequent than expected.

“These disputes pose as large a risk to investments as do disputes over private lands, with 32% of the land conflicts identified involving only common lands, and another 42% involving both common and private lands," the report said.

“Protests over common lands have historically been left out of the mainstream policy discourse around stalled and delayed investments in India, despite their importance. These oft-contested landscapes have competing claims from communities and government, leading to conflicts when these lands are diverted for industrialization or infrastructure development. The status quo is not sustainable—neither for the affected communities nor for potential investors," said Ashwini Chhatre, a senior research fellow at the Bharti Institute of Public Policy and a professor at ISB.

In India, the FRA and the PESA mandate that the free, prior and informed consent of communities is obtained in case of diversion of forest lands and in case of acquisition of any land (private or common) in the scheduled areas. But in practice, implementation and enforcement of FRA and PESA has been slow and, in many cases, being obstructed.

“To sustain and expand India’s socioeconomic development, the Government must provide India’s tribal and rural communities with the protections they are entitled to under our Constitution by vigorously enforcing the provisions of existing laws like the right to free, prior, and informed consent. But beyond that, they must also adopt new laws providing greater clarity for customary rights on common lands," added Kundan Kumar, Asia programme director at RRI.

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Published: 16 Nov 2016, 12:19 PM IST
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