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Assignment:
An Essay on Land Acquisition Policy & Process in India
Author: Richanand Mishra (Roll no: 24, Student at AIIM, Ahmadabad)
Introduction: Currently, India is on a development track & to continue in
the same way billions of money is being put ever year to upgrade the
capacity of our economy. What I am referring to is ‘The need for
Infrastructure’. Infrastructure comes either by upgrading the existing or by
creating new physical assets. New assets require land and land and land.
Whether it is roads, railways, ports, housing etc.; we need fresh land for
expansion of each. Therefore, it becomes important for a nation to have a
proper policy & process to channelize the land from one use to another. Let
us have a look over the existing policy & processes that we have in our
country for land acquisition.
History: The need for mass land acquisition came at the time of ‘Company
rule in India’. It came in the last 100 years of the British domination where
they wanted to get best out of colonial powers. Like the need today, they
also needed huge ‘Infrastructure’. Construction of various physical assets like
Canals, Dams, Ports, Roads & Railways was of utmost importance. Land
ownership was fragmented then and there were farmers, zamindars,
maharajas etc, who owned land at various places & in varied sizes. The need
for big chunks of land for public purposes led to the evolution of land
acquisition acts.
As Calcutta was the capital of British India, the genesis of land acquisition in
India lies in the Bengal where Bengal Regulation Act (I) was implemented in
1824. This was replaced by Act (I) of 1850, by which the provision for land
acquisition was extended to Calcutta town for obtaining lands for public
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works without any legal problems. By 1857, various laws on the subject of
land acquisition were consolidated as Act IV which was applicable to the
whole of British India. Finally, the Land Acquisition Act of March 1894
replaced all previous laws relating to land acquisition.
India after independence was on a revamp mode. The national government
had, at that time adopted a policy of heavy industrialization largely under
the domain of the public sector. Private companies and multinationals were
functioning under strong governmental control through intimidating licensing
systems. There was an enormous increase in infrastructure development and
industrial activities by the state. Again, there was need for mass land
acquisition & therefore, the Nehru government choose to use the Act of 1894
as base with various amendments as the time passed.
It must be noted that in both events as described above, the state needed
land at a cheaper cost & therefore, they framed rules which only looked
reasonable and facilitated smooth acquisition process. The abolition process
of zamindari system also helped in. But, the question remains that ‘what
looked reasonable in colonial India is still reasonable now?’ To evaluate this
question same, let us go through the system that we have for land
acquisition.
Current Procedure: Land acquisition can be done mainly in 2 ways:
(i) By Market Route: This way leads to direct interaction of the purchaser
to the land owner. Purchaser asks for the land & negotiates the price for it.
Therefore, as the nature of transaction remains voluntary, there is little or no
social discontent. But, this route becomes cumbersome & time-consuming
due to problems like unprecedented price demand from the owner, hold-outs
& unavailability of land records. Therefore, buyers tend to influence
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government & compete with land acquisition requirements to make their
purchase done by the use of eminent domain power of the state.
(ii) By use of Eminent Domain powers: The project proponents in India,
these days, are increasingly relying on this method and states are
cooperating, so much so that it has become the norm. This is not surprising
given that state governments are competing with each other to attract
industrial and infrastructure projects to their respective states. As the title
suggests, the land acquisition is done using the Land Acquisition Act
(LAA) of 1894. Following sequential steps are followed:
Step 1 – Notification: Process starts with the issuance of a preliminary
notification, published in the Official Gazette and two daily local
newspapers. After this, land owners are asked to hold any investment
to their land, preventing them from making full use of their lands and
getting an appropriate return.
Step 2 – Filing of Objection: Once the notification is done, land owners
& other stakeholders are asked to file objections. The objection can be
only on the provisions as described in act. Collector, in charge of
process, hears all objections & then submits a report to the
government for final decision.
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Step 3 – Declaration: Based on report submitted by the collector, the
government issues a declaration which becomes evidence that
government needs land for public purpose (or for a company).
Step 4 – Notice to parties: Then, the collector informs the landowners
about the government’s intention of possession of their land and
invites claims with respect to measurements and value of land.
Step 5 – Enquiry and Award: These claims are then addressed by the
collector & final award is made. Landowners not satisfied with award
can still go to district court with their claims.
Step 6 – Possession & Compensation: After award, competent authority
takes the possession on behalf of government by paying the valued
compensation.
Compensation is usually paid at the market value of land, prevailing on
the date of the preliminary notification. For any delay in compensation,
an interest of 12 % per annum is also given. In view of the compulsory
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1. Notificati
on 2. Filing of Objection
3. Declarati
on
4. Notice to parties
5. Enquiry & Award
6. Possessio
n
7. Compens
ation
nature of the acquisition, a solatium equivalent to 30 % of the market
value is also provided.
The act also has provision for acquisition in emergency. In this, usually
number of steps & time limits get reduced.
(ii) Compliance to other laws In addition to Land Acquisition Act of 1894,
there are several other laws which need to be followed, depending upon
specific purpose of land. Some of them are:
The National Highway Act (NHA) of 1956: The LAA covers land
acquisition for every kind of public purpose—dams, industry, hospitals,
educational institutions, housing, official and commercial buildings,
airports or railways. Until 1956, land for all highways was acquired
under the LAA. But since the enactment of the NHA, 1956, land
acquisition for national highways is carried out only under this Act. The
NHA applies only to the national highways, which are under the
jurisdiction of the Central Government and not to state highways,
where land must be acquired under the LAA.
It is to be noted that the land acquisition under NHA is quite different
from land acquisition under LAA. There is difference in the execution
pattern; time limits at various stages; compensation pattern and
resettlement & rehabilitation benefits. Introduction of NHA for road
works adds to the delay in acquisition of land for roads & highway
project. The changed conditions in NHA for administration control,
valuation method etc creates more confusion. Since NHA requires
appointment of independent team (not state official) for supervising
land acquisition, the dependency of this team on local official for
details such as maps etc. creates role conflicts & delays.
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For speedy acquisition of land, it is suggested that (a) competent
authority should mobilize and update records for villages coming
under the project, as they are identified; (b) computerized records of
rights should be in the public domain; (c) effective systems should be
created for better delivery and (d) enhanced land acquisition and
resettlement institutional capacity is made at the design stage only.
The Forest Conservation Act of 1980: This act was setup by
government of India to regulate the diversion of forest land for non-
forest purposes. The act provides regulatory mechanism for
unavoidable use of forest land for development purpose. Mainly, there
are 2 stages of clearances (1) By state / UT giving only ‘inprinciple’
approval by stipulating certain conditions. (2) By regional offices of
Ministry of Environment and Forests (MoEF), State Advisory Group
(SAG), Forest Advisory Committee (FAC) and others after fulfillment of
stipulated conditions.
One of the major issues in development of acquired forest land is the
time taken in obtaining the forest clearance. The conditions stipulated
by the Ministry of Environment and Forests (MoEF) and the state forest
departments, at times, appear unreasonable and difficult to meet.
These conditions vary on project to project & state to state as there is
no uniform guidelines set by states for evaluating the impacts.
Amendments at State Level: It is to be noted that facilitating land
acquisition is one of the three main aims of state-level land legislations
in India, the other two being regulating administration and
development and introducing land reforms. State also plays a
significant role in the rehabilitation and resettlement (R&R) of those
involuntarily displaced by land acquisition. A review of the
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amendments at the state level reveals that the states have adopted
the LAA of 1894 with essentially procedural changes. These changes
are in the process of preliminary notification, criteria for determining
market value, compensation rights, rules for inaction etc.
National Rehabilitation and Resettlement Policy (NRRP) lays down the
objective that R&R benefits to be made available to the Project
Affected People (PAP) and it is the state governments that are required
to operate this provisions of the policy. The Policy of 2007 provides
that the appropriate state government may appoint an administrator
for Rehabilitation and Resettlement, who is an officer not below the
rank of District Collector, to oversee the R&R plan. The administrator is
vested with the power of overall control and superintendence of the
formulation, execution, and monitoring of the rehabilitation and
resettlement plan. Thus, it is evident that the entire R&R mechanism
lies on the discretion of the appropriate state government.
Also, NRRP of 2007 has introduced the concept of Social Impact
Assessment (SIA) of projects. The Policy states that whenever an area
is declared as an affected area, ‘the appropriate government shall
ensure that a Social Impact Assessment (SIA) study is carried out in
the affected areas in such manner as may be prescribed by law.
Criticism: The Land Acquisition Act of 1984 is a draconian law which was
enacted by the colonial rulers for their own use. The essence of the same
was not understood by the new leaders of independent India & was carried
further in our democracy. The act has led state’s Eminent Domain to be used
forcibly for acquiring private lands in the name of ‘public purpose’, whose
meaning is still undefined.
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Excessive discretionary powers is with the collector and government which
are subject to their interpretations. The compensation offered to the
displaced persons remains below the market price as the price is determined
by the local collector / officials on the basis of the sale and purchase prices
obtained from land transactions that have taken place in the vicinity. The
latter always represented gross undervaluation by the parties in the
transaction to avoid paying the registration charges. In other words, the
compensation amounts paid under the Act failed to capture the real value of
the land. Also, a landowner cannot approach the court directly to object
against the award (that is, on matters related to the measurement of his
land or the amount of compensation); he has to seek a reference from the
collector only for doing so.
In most cases, the authorities routinely invoked the urgency clause to
dispose voiceless citizens but the process of payment of compensation
remained tortuous and time consumingm making it unreasonable in the view
of landowners.
The act has various flaws as there is no time frame set for the declaration,
possession & compensation. This puts the landowners nowhere as they are
not allowed to make full use of land after the notification. A mere interest of
12% will not ensure the future livelihood given that the landowners with low
income remains well aware that his/her mean for survival will go away. In
practice, collector & other owners disallows the use of land completely &
uses the same for some other use till the time governments takes final
decision.
The act does not provide a level playing field as a public sector party faces
less problems in acquiring land than a private sector one. Given the current
situation where the government is encouraging private participation in the
infrastructure sector, this provision goes other way around.
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New Amendments – 2007 Bill: There are significant changes that has
been proposed in the 2007 Bill with regard to (a) the purpose for which land
may be acquired, (b) the amount of compensation to be paid, (c) the process
of acquisition, (d) use of the land acquired, (e) dispute settlement
mechanisms (f) Public Information and (g) Acquisition by private industry.
These are briefly explained below:
Purpose: As state before, land may be acquired for a range of uses such as
village sites, town or rural planning, residential purposes for poor or
displaced persons, planned development (education, housing, health, slum
clearance) and for state corporations. Land may also be acquired for use by
private companies for the above purposes or if the work "is likely to prove
useful to the public" i.e. with use of Eminent Domain under LAA.
The new bill has a narrowed list which defines ‘Public Purpose’: (a) for
strategic naval, military or air force purposes; (b) for public infrastructure
projects; and (c) for any purpose useful to the general public given that 70%
of the land has been purchased from willing sellers through the free market.
This definition of ‘Public Purpose’ is not comprehensive; but is better than
what is being used vide LAA of 1894.
Compensation: The LAA of 1894 requires market value to be paid for the
land and any other property on it (buildings, trees, irrigation work etc) as
well as expenses for compelling the person change place of residence or
business. It explicitly prohibits taking into account the intended use of land
while computing market value. The new bill requires payment of the highest
of three items: the minimum value specified for stamp duty, the average of
the top 50 percent by price of land sale in the vicinity, and the average of
the top 50 percent of the land purchased for the project from willing sellers.
For computing recent land sale, the intended land use is to be used. Which
means if a agricultural land being acquired for an industrial project, the
compensation for the same shall be paid at the price of industrial land.
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This process of land valuation is very much close to the market value
process wherein both the parties mostly agrees for values based on (a) price
for which land will be used & (b) the prices prevailing in the vicinity.
Process of acquisition: Several changes are proposed, including the
requirement of a Social Impact Assessment (SIA). Any project that displaces
more than 400 families (200 in hilly, tribal and desert areas) will require an
SIA before the acquisition is approved.
This additional condition forces the project proponents to think about the
social impact in their initial plan itself. This leads to proper budgeting of the
projects & eventually, prevents these proponents to not go for any shortcut,
less expensive methods. It discourages the project stakeholders to look for
Eminent Domain way.
Use of land acquired: The new bill requires that the land acquired to be used
for that purpose within five years. If this condition is not met, the land
reverts to the government (it is not returned to the original land owners).
This constraints land receiving agency to act for the objective for which the
land acquisition took place. Also, if any acquired land is transferred to
another entity; 80 percent of the capital gains need to be shared with the
original land-owners and their legal heirs. This provision makes sure that the
use of land will directly determine the compensation even after the actual
sale.
Dispute Settlement: In accordance with LAA of 1894, all disputes are
currently being resolved by civil courts, which results in delays. This new bill
sets up Land Acquisition Compensation Dispute Resolution Authority at the
state and national levels. These authorities will have the power of civil
courts, and will adjudicate disputes related to compensation claims.
The formation of new dispute resolution authority should speed-up the
process as 70% of backlog cases with courts are in respect of land
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acquisition only. This will also isolate the judgment process as the collector –
who executes the acquisition process at the root level – will not have any
influence in judgments.
Power to Collector: LAA of 1894 gave collector a fair power w.r.t how the
valuation is to be done. At times, government just listened to the collector’s
report without even cross-checking the real facts. This led to use misuse of
powers by the local collector. This new bill has defined a procedure for
collectors in matters of market value assessment which is the payment of
the highest of three items: the minimum value specified for stamp duty, the
average of the top 50 percent by price of land sale in the vicinity, and the
average of the top 50 percent of the land purchased for the project from
willing sellers. Also, the new law will make it mandatory for the collector to
provide access to summary of transactions to public.
Acquisition by private party: There would be significant change in the way
the private sector would be acquiring & using lands. They will have to
purchase at least 70 percent of the required land from willing land owners
(presumably, at fair market price). Also, the compensation amount for the
remaining (up to 30 percent of land) could be significantly higher than the
old method. This would be at a premium to the average paid to the willing
sellers, and it would be based on intended industrial or commercial use
(which usually commands a higher price than agricultural land).
Conclusion: Land acquisition is a process which is meant for the
development of the society. The whole idea of land acquisition, by giving
Eminent Domain power to the government, was supported because everyone
felt that development of society is more important than development of an
individual. We must not forget that, land acquisition is possible because
people decide to sacrifice his or her comfort for the development of society.
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Since, these sacrifices are not being used for what it was meant to,
landowners are feeling cheated where they would have been proud.
The intangible & tangible benefits associated with the land use can never be
replaced with equity to all through any acquisition acts. It is the ‘perceived
fairness’ of the process that matters. LAA of 1984 has lost the same; people
feel that this is a biased procedure mainly due to unwanted practices done
by executors of the act in all these years.
The future aim should be bring back the fairness touch in acquisition process
by changing the rules & its execution pattern. I sincerely hope that the
upcoming bill will eradicate some of the major problem of old act & hence,
will create an effective, reasonable & fair system.
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(No. of words: 3180, Font used: Footlight MT, Size – 12pts, Line Spacing – 1.5)
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References:
Evolution of Political Economy of Land Acquisition - by Sanjukta Ray and
Shreemoyee Patra
Eminent Domain Powers: Rationale, Abuse, and Way Forward - by Nirmal
Mohanty; Boxes by Mandar Kagade and Nitin Desai
Regulatory and Policy Regime of Land Acquisition: A State-level Perspective-
by Videh Upadhyay and Chandrima Sinha; Box by K. Balagopal
Land Acquisition Process for National Highways: Issues and
Recommendations - by V.K. Sharma and Tarun Choudhary
Obtaining Forest Clearances under the Forest (Conservation) Act, 1980 - by
C.D. Singh
Use of Eminent Domain: Process and Its Critique - by Tarun Choudhary; Box
by Ramakrishna Nallathiga.
Various websites such as Wikipedia.com, Business.gov.in, Indianexpress.com
etc.
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