So it is perhaps not surprising that India?s Land Acquisition, Rehabilitation and Resettlement Bill, 2011 (LARR) has faced repeated delays. Once again, an all-party meeting to discuss the bill last Thursday failed to reach consensus and another is set for March 20.
The issue hit the headlines in 2008 when angry farmers in West Bengal protested after having to give up land to Tata Motors. Tata was forced to produce its Nano model elsewhere and the dispute catapulted the populist Mamata Banerjee, then opposition leader in the state, to election victory as West Bengal?s chief minister.
In India, compulsory purchase is governed by 19th century colonial legislation and two 2007 laws that address rehabilitation and resettlement. The LARR Bill was tabled by the ruling United Progress Alliance in 2011 to synthesize the law and proposes several changes to protect displaced landowners.
Under the Bill, the process of land acquisition would involve a Social Impact Assessment, a government survey and rehabilitation and resettlement (R&R) of those affected ? all of which must occur within five years for the transfer to be valid. The consent of 80 per cent of affected people is required and the compensation payment is set at four times the market value of land in rural areas and two times the market value in urban areas. The R&R requirements aren?t cheap either, involving delivery of full infrastructure facilities in resettled areas and a Rs50,000 ($920) one-time payment to those affected.
The Bill has been through public consultation, a standing committee has given its report and amendments have been made. But interested parties have taken issue with various elements.
Real estate is the sector most immediately affected. Mayank Saksena, head of land services at Jones Lang LaSalle, told beyondbrics: ?There was some section of the developer industry that was happy with the Bill. These are the small scale developers that work on aggregation of land from farmers and get a change of land usage. For them, the only change is the R&R. Larger developers focus on development rather than land acquisition, and the cost of land acquisition will go up, pushing real estate prices up.?
The Bill is already having an adverse impact for developers: as it will apply retrospectively to any cases in which compensation has yet to be paid, they face the threat of unexpected expenses.
It threatens to be equally disruptive to industry. Shrivallabh Goyal, a senior vice-president at Reliance Industries, identifies three big risks.
?First and foremost the impact will involve time. From the day the Act comes into effect, for the first two to three years, the land available will be zero. The process of making an acquisition will take two to three years and the rules and processes specified will take five to seven years to complete.?
Second, Goyal says, will be higher costs in terms of the process and in compensation payments. The third risk is of an increase in litigation as the Bill?s definitions of ?urban? and ?rural? haven?t been clarified, and there is a powerful financial distinction between the two.
?This issue of land acquisition has become a political hot potato,? says Niranjan Sahoo, a senior fellow at the Observer Research Foundation. ?Parties have their own agendas. There was Banerjee fighting as she wanted to make this a poll issue. Now, election year is approaching so Congress want to progress but the BJP don?t want to give them that credit, as it would be a big political boost for 2014.?
In particular, Sahoo mentions Malayam Singh Yadav, leader of the Samajwadi Party based in Uttar Pradesh. With a large agricultural constituency, Yadav has strong demands for provisions on the conversion of fertile land. Sahoo concludes: ?In the later course when parliament begins debating the issue, the government will have to use a divide and rule policy.?
The final legislation must satisfy several competing interests. The Economic Survey of India 2011 found that over 18m rural families in India were landless. Meanwhile, by some estimates, half of all government infrastructure projects are currently delayed. It?s a moot point which poses the greater threat to industry: the LARR Bill itself, or the delays in bringing it into law.
Related reading:
India wrestles with rival land demands, FT
India: making it easier to buy land, beyondbrics
India land bill gets new name but no consensus, beyondbrics
Source: http://blogs.ft.com/beyond-brics/2013/03/11/indias-land-bill-the-importance-of-getting-it-right/
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