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The new law in land acquisition: A drastic reversal or continuation of status-quo?


The land acquisition bill has followed a tumultuous political trajectory, and the deadlock is no closer to being resolved now than it was a year back. When, in 2013, the UPA-II finally succeeded in passing its landmark land acquisition law titled ‘The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act’, the law was widely seen as a result of the precipitation of efforts to address the injustices inherent in the colonial era land law – the Land Acquisition Act of 1894 (LAA 1894) – according to which land acquisition could be conducted arbitrarily by the state in the name of ‘public purpose’. The colonial era law incorporated no clear understanding of the idea of ‘public purpose’ in the name of which the land acquisition by the state was sought to be justified and had no real mechanism for addressing the grievances and demands of landowners with regard to compensation, resettlement and livelihood. The 1894 law was a product of reforms and amendments to a series of British India land laws from 1857 to 1870, and was based on a promotion of the vested British interest of development of India’s infrastructural economy – most prominently the railways – for fulfilling the extractive accumulation motives of Britain.

The 1894 colonial legislation was based on the legal doctrine of ‘eminent domain’. It is this doctrine that lies at the heart of the general idea of land acquisition in any country. According to the concept of ‘eminent domain’ which first found expression in the works of Grotius in 17th century, the property of citizens or subjects constitutes such a domain which the state can use out of extreme necessity or for fulfilling a public purpose, and, in return, can compensate the affected citizens for their losses. It has not been laid out in the Indian Constitution, and, as a result, historical disputes over land acquisition by the state have played out variously over the years. The doctrine of eminent domain has been justified to curb the economic fallouts from the collective action problems that ensue in trying to voluntarily acquire consent from the landowners prior to taking their land. The classic economic problem is that each landowner will have an incentive to maximize his own interest, so he may threaten not to sell the land in the hope that others will sell their lands, so that he will, thus, be able to retain his land and also be able to get the benefits of the overall project that is developed. Since each landowner will behave in such a way, no one will give their consent and the project will not come up at all. This necessitates the power of the state under eminent domain.
How sound this classic economic logic is can only be tested against real world circumstances – it may very well be applicable to the rich farmers of the West, but not in the Indian context. The logic of such reasoning is belied in the way the land acquisition process has played out in India, and how strong the collective mobilizations against land acquisition in India have been. Such mobilizations thwart the assumptions about rational individual farmers acting in isolation to maximize their own gains. They have been shaped by the political circumstances surrounding the process of land acquisition after Independence.

Unsurprisingly, the independent Indian republic inherited the colonial law of 1894 as a part of the rest of its constitutional inheritance of the colonial era systems and institutions. The major question is why this colonial era constitutional baggage continues to remain with us despite the dynamic nature of the Indian society? As it now stands, the draconian law is fully geared towards making the process of land acquisition easier for the state, with deliberate ambiguity over the definition of public purpose, urgency clause and issues of compensation creating practical complications that precipitate in conflict and forcible land acquisition for the fulfilment of corporate interests. However, this was not always the case. Since the doctrine of eminent domain was not enunciated in the Constitution, legal disputes over land acquisition after Independence were decided according to the changing political reality. The central conflict in the early years of Independence was mainly between the fundamental right to property under Article 19 of the Constitution and the legitimacy of the state in acquiring land from big landlords to ensure the welfare of the landless and the tenants. With a few exceptions like the 1952 Supreme Court judgement, the dispute was almost always settled by the judiciary in the favour of big landlords’ right to property, despite the fact that the government wanted to introduce pro-poor land reforms to break the monopoly of the zamindars over the land. It was only during the 1970s when the judiciary was brought under the authoritarian control of Mrs. Gandhi’s government and with the scrapping of the fundamental right to property in 1978 that there was acknowledged the need to promote land reforms to ensure redistributive justice. Thus, the eminent domain or the state’s absolute power to acquire land was viewed as a socialist ideal conforming to the interests of the landowners and the dependent landless and wage farmers. Moreover, the power of the state to acquire land also underwent a series of other Parliamentary amendments in the immediate post-Independence period to prevent the judiciary from upholding the right to property of the landowners, mainly through the First Amendment and the 25th Amendment. However, this early acquisition by the state in the name of welfare could not be sustained for long, and over the years land acquisition underwent drastic changes. Three major factors were responsible for this:
First, acquisition was fraught with challenges as the resistance to land reforms also came from the big landowners who were opposed to acquisition of land for redistributive purposes and formed a sizeable electoral lobby.

Second, the strong state under Mrs. Gandhi began to promote its own interests in a political environment fraught with mounting corruption and degradation. The rights of the poor and the landless who were supposed to have been the beneficiaries of land reform increasingly took a backseat. Through a series of amendments, it now became possible to avoid paying compensation for the deprivation of property under Article 300A except to tillers of cultivated land and minority educational institutions. The right to compensation excluded from its purview the vast majority of landowners and landless peasants and wage workers who were displaced.

Third, the government, from 1980s, began to operate in active collusion with corporate interests. In 1984, the government passed a landmark amendment to the Land Acquisition Act (1894), whereby it expanded the scope of ‘public purpose’ for which the land could be acquired. It now no longer simply included public utilities in which the government was the main stakeholder, but private projects also. This amendment marks a watershed moment in land acquisition reforms, as besides the state, the zamindars and the landless poor, it now brought in the corporates as a new player. It was also a decisive step backwards and made the new policy of land acquisition even more retrogressive than the colonial law.

It was after this period that major displacements arising out of land acquisition began in a newly liberalizing economy from the 1990s onwards. It precipitated in major protests against land acquisition for Special Economic Zones (SEZs) during the 2000s, reaching its peak with the infamous Nandigram and Singur cases in West Bengal in 2007. The mounting voices against land acquisition had begun to affect the electoral prospects of the major party in power viz. the Congress, as states like Orissa, Andhra Pradesh, Tamil Nadu, Maharashtra and Assam were gripped by protests against forcible acquisitions and states like Haryana and Uttar Pradesh increasingly agitated against inadequate compensation provided. It was in response to the snowballing controversy over land acquisition that the UPA-I government sought to repeal the 19th century law and promulgated a new land bill in 2007. The Land Acquisition (Amendment) Bill of 2007 was an attempt to address the coercive nature of the colonial legislation while ensuring that the process of development, industrialization and urbanization did not face any hurdles in the process of acquisition, thereby according greater priority to the economic goals of the government. Under this bill, ‘public purpose’ included strategic and other works of the state such as naval, military, air-force and infrastructure projects. However, the 2007 bill had to be eventually dropped due to large-scale acquisition for the SEZs in the name of Public Private Partnership (PPP) and rampant government corruption, which led to protests from landowners, citizens’ groups and NGOs.

Finally, the Land Acquisition Rehabilitation and Resettlement Bill (LARR) was promulgated in 2011 and was ultimately cleared by the Parliament in 2013 in the form of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill (RTFCTLARR). It was the bill that sought to do away with the LAA 1894 radically by bringing into consideration, rehabilitation and resettlement for the first time. The 2013 law sought to address the injustices involved in the process of land acquisition by introducing a number of radical changes, such as:

  • Mandating Social Impact Assessment (SIA) in case of large-scale displacement of people.
  • Obtaining the consent of 70% of landowners for acquiring land for Public-Private Partnership Projects and of 80% of landowners in case of private projects.
  • The compensation proposed was four times the market rate in rural areas and twice the market rate in urban areas, as well as providing a one-time compensation for other affected parties.
  • It also mandated that the government had to pay for any damage caused to the land or the crops in the process of acquisition.
  • The government could not acquire multi-crop irrigated area, except minimally and as a last resort and never above 5% of the state total cultivable area. It also had to develop an equivalent area of cultivable wasteland or deposit an equivalent amount with the state government to be invested in promoting food security.
  • Very importantly, the land acquired under the law which remained unused for a period of five years would be returned to the appropriate state government.

The cardinal features of the 2013 law appear dramatically opposed to the current government’s land acquisition bill viz. RTFTC 2015. Widely viewed as echoing the draconian colonial law and vociferously opposed by even NDA’s own allies, the current bill, promulgated through an ordinance, seemingly reverses the ‘pro-poor’ conditions set forth in the 2013 law, by removing the SIA, the consent clause or the requirement to obtain prior consent of the landowner before acquisition in case of major projects, expanding the range of projects under ‘public purpose’ to presumably favour the capital more, and reversing the retrospective application of the law such that unused land would not be returned to the state government. Despite the nine amendments introduced recently to make the bill’s passage possible in the Rajya Sabha the bill continues to reflect a compromise and dilution rather than a genuine change. Some of the main features, including the latest amendments, of the bill that have acted as a bone of contention are:

  • The 13 acts (such as the National Highways Act, Railways Act) which were excluded from the RTFCTLARR 2013 have been brought under its purview. Thus, their rehabilitation, resettlement and compensation policies have been merged into one policy.
  • Exemptions of five categories of projects from certain provisions viz. industrial corridors, PPP projects, rural infrastructure, affordable housing and defence. Of all these areas, the major protests are against removing the consent clause for industrial corridors and PPP projects. In response to the protests, as a part of the nine amendments that were floated by the government, it was stipulated that industrial corridors would be built by government or government undertakings and the land acquired can be up to 1 km of the designated railway line or industrial corridor. It also removed social infrastructure projects from the exempted categories, as a part of the nine amendments.
  • While the RTFCTLARR 2013 mandates that 70% and 80% consent requirements be obtained in case of PPP and private projects respectively, the 2015 bill removes these consent requirements in case of the categories mentioned above.
  • While the RTFTC 2013 mandated the identification of families and an assessment of the social impact of the projects, the above categories have also been exempted from Social Impact Assessments in the current 2015 bill.
  • Unlike in the previous Act, it would also be possible to acquire irrigated multi-crop land without worrying about being limited by a ceiling under the categories of projects mentioned above. However, due to protests, as a part of nine amendments the government stipulated that it must be ensured that the land acquired must be in keeping with the minimum land required for the project. It should also conduct a survey of wasteland first.
  • While the RTFTC 2013 applied to ‘private companies’ only, the current 2015 bill makes a significant departure by applying it to ‘private entities’. Since private entities may include a host of other private organizations including non-profit bodies and partnerships, there have been widespread protests by the opposition parties against this change also.
  • Though the current 2015 bill had amended the RTFTC 2013 to include private hospitals and educational institutions also under its purview, due to widespread protests about the “public” function of these enterprises, they have been excluded again as a part of the nine amendments introduced by the Modi government.
  • Another point of criticism of the 2015 bill is that it amended the RTFTC 2013 to ensure that now prior government sanction would be required to prosecute a government official for an offence in the process of acquisition.
  • To ensure compliance with rehabilitation and resettlement norms, the government, as a part of nine amendments, provides for compulsory employment to one person of the family displaced, instead of just a general promise of employment as was done before.
    It is, thus, clear that after passing some of the key amendments, the bill looks much better than how it was originally promulgated. Critically, the compensation remains untouched and the government promises to hold a survey of wastelands and acquisition of multi-crop land only to a provable minimum. However, apart from the social infrastructure projects, the need of consent for the other four categories of projects remains elusive. This will considerably curb the bargaining power of the landowners and force them to accept the amount of compensation fixed under the bill. Whether the amount of compensation fixed even under RTFTC 2013 viz. four times the market rate in rural areas and twice in urban areas is just a formality or really in accordance with the needs and wishes of the landowners, remains questionable.

Thus, despite the gaping difference between the 2013 and 2015 versions of the bill, it does not mean that the previous law of 2013 laid the foundations of justice in land acquisition any more than the current proposed bill. The 2013 land law was not a genuine instrument for expressing the changing aspirations and social reality on the ground, but was merely a compromise and an accommodation. It was a product of the amended land acquisition law of 1984, which had expanded the idea of public purpose to include state intervention to acquire land on behalf of companies also – something that was not present in the original law of 1894 based on limited compulsory acquisition. The amendment of 1984, in fact, reflected the intended changes in the patterns of land acquisition to make it more in tune with the coming era of capitalist dominance during and after the late 1980s. The subsequent bill in 2013 did not depart from this reality of privileging the interests of the capital, but only proposed measures to counter-balance the side-effects of land acquisition on the farmers and other implicated groups. As laid down in the 1984 amendment, the concept of public purpose continued to be conflated with public-private interests.

Much like the current proposed law by the Modi government, therefore, even the previous land law was based on a sweeping, overarching idea of ‘development’, assuming that farmers would want to be a part of the development process and contribute to economic growth by foregoing the claim to their lands. We cannot, in fact, proceed with any such assumption. Therefore, instead of deriving solutions based on broad assumptions about the rural communities and landowners, there is a need to bring the fundamental problems on the ground to bear in policy. In this regard, the most critical questions are those of compensation and food security, with the latter being a particularly important issue in the light of the food scarcity and the reality of the deterioration in food quality being faced by the country. Despite this, the current proposed law only mentions a voluntary survey of wastelands for land acquisition purposes rather than a compulsory mechanism to curb the appropriation of agricultural land.

The issue of compensation too cannot be dealt with mechanically. It is often determined with regard to determinants such as fertility of the land, location of the land viz. proximity to urban centres, the intended use of the land and the potential profits to be generated. Thus, the amount of compensation to be paid will vary according to these contextual factors and cannot be determined arbitrarily, and should also allow space for bargaining by the farmers. It is not that farmers do not want to part with their land, as a recent survey shows that 62% farmers want to move to better-paying employment. Then what is the problem? The central point is two-fold:

First, the valuation of land (or the corresponding compensation) may never really capture the actual meaning or relation of land with the people. This does not merely refer to the cultural attachments which are articulated during resistance movements, but to a more fundamental expression of insecurity arising from a flaw in the current development model. The current model of development in India has completely marginalized the agricultural economy and fails to provide conditions of mobility to ensure employment in the dominant service economy. Thus, even when majority of farmers do not want to remain engaged in the occupation of farming or have their offspring follow this path, this kind of subsistence farming, in several major states of the country, acts as a source of survival, livelihood and insurance which cannot easily be given up in exchange for a certain amount of compensation no matter how high, in the absence of a viable livelihood alternative. Such an alternative has not been provided in our imported development model and the prevalent idea of land acquisition is precisely a part of this unquestioned development model spanning the entire political spectrum, from the Congress to the BJP.

Second, the problem before us is not simply to change the existing laws, but to establish the right and dynamic institutions which can permanently provide groundwork for solving the miseries of the farming community. In order to ensure this, three issues must be taken note of:

  • Providing the right amount of monetary compensation: Admittedly, in the existing law, the compensation provided was changed to four times the market value of the land in case of rural land and twice the market value in case of urban land. Yet, given the deplorable condition of our agricultural sector, a case for more compensation can be supported. However, at the same time, we need to recognize that monetary compensation can only go so far, unless the broad problems of the land acquisition policy are tackled. Increasingly, displaced landowners are no longer satisfied with compensation but also demand a right to some part of the developed property.
  • The process by which such an amount is determined: A proper institutional framework should be put in place such that the bargaining process between the farmers and the buyers or investors is not in itself an arbitrary one.
  • Ensuring that the compensation packages do not result in permanent displacement of the farmer: This is the most critical point in the current land acquisition debate, having much wider implications, and one that is often missed. The manner in which the compensation package is determined should take into account the specific socio-cultural and economic context in any country and its states. Very often, the category of ‘compensation’ is taken for granted in land acquisition debates. It is often assumed that there is a sharp divide between pro-poor compensation and pro-corporate acquisition, and once the right mode of compensation is decided the debate ends. However, the moral issue of doing justice is much more fundamental and goes beyond these sweeping economic categories. If compensation is to be just, then it should guarantee an end outcome which is assuredly as good as or better than the original situation of the landowning farmer. However, the current idea of merely providing monetary compensation, no matter how high the amount, does not guarantee such an outcome. Given the prevailing socio-cultural conditions in rural India, most of the farmers do not invest the compensation amount in income-generating assets. Instead, they are more likely to spend it on short-term plans or waste it altogether. In fact, the experience of operation of various Self Help Groups in rural areas shows precisely this kind of a spending pattern and inability to generate long-term income. Such conditions would morally result in a permanent displacement of the farmer despite the monetary compensation being awarded.

The problem is, clearly, a behavioural one and reflects the wide gap between the so-called slogan of ‘development’ and the reality on the ground which is full of fundamental exclusions. It is because of this that bringing in even a reformed land acquisition law – as was done by the UPA-II government in 2013 – will, in itself, not be sufficient, unless the institutions operating on the ground are also changed. How can these institutions on the ground, which shape behavioral interactions between landowners and the authorities and the investors as well as among the farming community itself, be changed? The most dominant practical proposition that has emerged is to strengthen the role of the NGOs and activists who can represent the interests of the uninformed farmers and can not only bargain on their behalf but also create institutional establishments to ensure that they invest their monetary awards in income-generating assets. However, the assumption here is that NGOs and other such organizations are fool-proof and are truly representative of the farmers’ interests. That is clearly not the case. Numerous such experiments continue to take place in different states and have ended in disastrous failures, as these developmental NGOs are themselves not above corruption and lack of transparency. A more long term solution to tackle the deteriorating rural reality would be to promote skill-development and capacity-building programmes on a large-scale and in an effective manner. The government is already investing resources in such programmes and is even entering into partnerships with private foundations to promote it more effectively.

For the present, this may be a viable alternative. Such behavioral changes at the ground level may certainly result in more conscious and effective modes of generating long-term income and livelihood, so that compensation out of land acquisition for development does not remain merely an ineffective formality on paper. However, this should not delude us into thinking that such solutions can provide a model for long-term change.

A real alternative can emerge only by, first and foremost, recognizing the transitional nature of our ideas of development, democracy, institutions and social change, within which we have been circumscribed for far too long. The problem is not simply that we have been shaped by imported Western understandings of social change/behavior and development and the problems that accompany them, but we have also shaped our self-understandings and collective action in accordance with such an understanding. The major policy assumptions of the land acquisition question, including assumptions by NGOs and the state alike, of how farmers will behave and what they would ‘rationally’ expect, has been framed by a very limited understanding of collective action, which has ended up producing major social conflicts that cannot be cured by merely providing a one-time compensation. Instead of blindly borrowing the idea of eminent domain (necessity of state intervention) and imposing its top-down logic on the Indian society without the requisite transformation in other socio-economic conditions and a blind reliance of law as an instrument of bringing about change, new institutional alternatives need to be explored in the light of India’s own experiences and conditions.

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