Land Acquisition: Compensation and R&R Policy – II

Written by  //  September 7, 2010  //  Economic & Social Policy  //  6 Comments

After the furore in the Parliament over the killing of farmers in Aligarh last month, the government has promised to introduce a Bill in the Parliament to amend the Land Acquisition Act, 1894 (the “Act”) in the next session. As the government mulls over amendments to the Act, it needs to address three key aspects – mechanism of acquisition and compensation determination, meaningful compensation for all the affected, and effective resettlement and rehabilitation (“R&R”) of those affected. In this second part, I sketch out a broad framework for a just and fair land acquisition policy addressing the above three key concerns.

Complex and sensitive, issues relating to compensation including R&R need to be addressed by considering multiple dimensions. In all cases of land assembly for private entities, it is essential that the individual from whom the land is acquired has a voice in the process, especially in determining compensation and R&R. Once land acquisition for a project is approved by the government, the primary and default mode of compensation and R&R assessment should be consensual, based on free negotiation between the concerned land owners and the private entity requiring land. This will make the acquisition process democratic and also offer individuals the power to determine a realistic value of their land which will make them willing participants of development rather than sacrificial lambs for the developmental agenda of the state or private projects. However, a completely market-based approach is partially skewed due to imbalance in negotiation power and information asymmetry. Not only do the small and fragmented land owners have to face large corporate with superior bargaining power and open to strong-arm tactics, but also suffer from limited skills and expertise in valuation. The government needs to be involved here – to ensure equity by monitoring against potential abuses of the process and provide the displaced owners assistance in valuation of the land. Where negotiation fails due to instances of holding-out with a few owners refusing to sell their land, which can jeopardize the entire project, the State may be permitted resolve the issue by employing the power of eminent domain if the public interest is served. A meaningful threshold for negotiated land acquisition has to be set. This must be met having regard to both the number of owners whose land is required and overall land required for the government to step in. In cases of state-sponsored development, compulsory acquisition should be permitted only when the “public purpose” is clearly demonstrated and after a bona fide attempt at consensual negotiation, both of which should be approved by a court of law.

            Besides, a consensual mechanism, the eventual success of a compensation and R&R package depends to a large extent on the identification of all stakeholders. A sound land acquisition policy should take cognizance of both de facto and de jure rights in land. Acknowledgement of de facto rights will enable indirect stakeholders with no recognizable legal right to the land to be part of the acquisition process. The definition of de facto rights should neither be too broad nor too narrow; it must be comprehensive, yet flexible enough to bring on board all genuine dependents of the land in the given socio-cultural-economic context. Thereby, a consensual mechanism with all concerned stakeholders will provide an objective process to reach a mutually acceptable value, to reflect both the present and future potential of the land. Besides adequate cash compensation, valuation of land can be made more equitable by encouraging alternative forms of compensation – for instance, restitution of a part of the land to the owner after the development or perhaps even offering equity in the commercial venture or providing jobs to the displaced with appropriate arrangements for technical training. Such alternatives will not only compensate for the loss of land but also lay down the foundation for effective R&R.

            Given the intimate relationship with land that many Indians share, R&R cannot be limited to mere physical relocation of the displaced; it should entail social, cultural and economic support suited to the specific geographic and ethnic needs of the displaced. Most importantly, it should be sustainable, and not merely a one-time event. For instance, in the absence of proper awareness and ability to handle cash, monetary compensation is frittered away in conspicuous consumption or loss by fraud, leading to a general social unrest. Hence, a comprehensive R&R package should cover essentials such as housing, education and sustainable livelihood to ensure a long-term solution.

            Development projects and concomitant land acquisition seem to be an inevitable phenomenon of the modern growth paradigm. However, given the importance of land in the economic and socio-cultural lives of Indians, it is inherently linked to rights, poverty, development and equitable growth. Hence, a carefully crafted overall land acquisition policy is extremely critical; compensation and R&R are the first steps towards a meaningful change in the policy to avoid another Nandigram, which our policy makers seem to have forgotten very quickly.   

6 Comments on "Land Acquisition: Compensation and R&R Policy – II"

  1. Suresh Chand September 7, 2010 at 12:42 pm ·

    Sir,
    Till such time an accepted formula for fixing the value of the land is decided the question of adequate compensation will remain inresolved and the proposed Land Acquisition Act remain on paper. The fact that all land deals involve upto 70% payment in black is being ignored. This is because all politicians and bureaucrats have rooms full of cash; that can be used only in shady land deals. Since the amont stated in the sale deeds is only the ‘white’ 30% the legal compensation decided by the LAC is only that 30%! Hence, the farmer/owner never gets the real market price. If the same land was auctioned as is done by DDA, GDA, NOIDA, JDA etc then the true market rates will emerge. The role of the govt. should be to organise such an auction/tender system. All will be happy. The state govt. will also get huge amounts as stamp duty to meet its development costs.
    Yours truly
    S Chand

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