ee land acquisition industrial use

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Economic EnvironmentTowards a pragmatic Land Acquisition policy for

Industrial Use

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Table of Contents

Table of Contents............................................................................................................................ 2

1.0Objective ................................................................................................................................... 3

2.0Land Acquisition Bill 1894..........................................................................................................3

3.0Impediments in land acquisition and its impact on industrial progress......................................3

4.0Critique of current Bill for Industrial use.................................................................................... 3

5.0Why do we need a new law?...................................................................................................... 3

6.0Land Acquisition and Rehabilitation and Resettlement Bill 2011 (LARRB).................................3

7.0Process Flow of LARRB 2011...................................................................................................... 7

8.0Institutional Structure of LARRB 2011........................................................................................7

9.0Pros of LAARB 2011.................................................................................................................... 8

10.0Critique of LARRB 2011............................................................................................................8

11.0Limits of the LARRB 2011......................................................................................................... 8

12.0Land Acquisition across the world............................................................................................ 9

13.0Recommendations................................................................................................................... 9

14.0Innovative Solutions ................................................................................................................ 9

15.0Conclusion.............................................................................................................................. 10

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1.0 ObjectiveInsert here

2.0 Land Acquisition Bill 1894Insert here

3.0 Impediments in land acquisition and its impact on industrial

progressInsert here

4.0 Critique of current Bill for Industrial use

5.0 Why do we need a new law?

6.0 Land Acquisition and Rehabilitation and Resettlement Bill 2011

(LARRB)

Rehabilitation and Resettlement (RR) was always kept out of land acquisition (LA). LARRB 2011

combines resettlement and rehabilitation with land acquisition for the first time in our legal history.

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Outdated

Public

Need for

balance

Heightened public concern on Land Acquisition issues

Absence of a national law to provide for the resettlement,

rehabilitation and compensation for loss of livelihoods

While multiple amendments have been made to the Original

Act, the principal law continues to be the same i.e. the Land

Acquisition Act of 1894

Addressing concerns of farmers and those whose livelihoods

are dependent on the land being acquired

While facilitating land acquisition for industrialisation,

infrastructure and urbanization


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Land Acquisition and Resettlement & Rehabilitation need to be seen necessarily as two

sides of the same coin.

Resettlement & Rehabilitation must always, in each instance, necessarily follow upon

acquisition of land.

Not combining the two R&R and land acquisition within one law, risks neglect of R&R.

This has, indeed, been the experience thus far

This is the first National/ Central Law on the subject of Resettlement and Rehabilitation of

families affected and displaced as a result of land acquisition

Provisions of LARRB 2011:

1. Both LA and RR applies when government acquires land

a. Government acquires land for its own use, hold and control

b. Government acquires land with the ultimate purpose to transfer it for the use of

private companies for stated public purpose (including PPP projects but other than

national highway projects)

c. Government acquires land for immediate and declared use by private companies for

public purpose

Land acquisition under 1.b and 1.c happens only when 80% of the affected families give

consent to it.

2. Government will not acquire

a. Land for private purpose of private companies

b. Multi-crop irrigated land for public purposes

3. Only Rehabilitation and Resettlement provisions apply when

a. Private companies acquire land greater than or equal to 100 acres

b. Private company approaches government for partial acquisition for public

4. The bill clearly defines what the term public purpose means and it includes

a. Strategic purposes (Example: defense, atomic energy)

b. Public infrastructure and industry

c. Land for Rehabilitation & Resettlement

d. Village/urban sites for housing needs of the poor and providing health and education

facilities

e. Land for private companies for public purposes

f. Needs arising from natural calamities

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5. The bill clearly definesaffected families;

Land Owners:

a. Family whose land/other immovable properties have been acquired;

b. Those who are assigned land by the Governments under various schemes;

c. Right holders under the Forest Rights Act,2006

Livelihood Losers:

a. A family whose livelihood is primarily dependent on the land being acquired

b. May or may not own property

6. Minimum compensation for land:

I. Market value of the land:

a. the minimum land value, if any, specified in the Indian Stamp Act, 1899 for

the registration of sale deeds in the area, where the land is situated; or

b. the average of the sale price for similar type of land situated in the village or

vicinity, ascertained from fifty per cent of the sale deeds registered during thepreceding three years, where higher price has been paid; or

whichever is higher

PROVIDED THAT THE MARKET VALUE SO CALCULATED SHALL BE MULTIPLIED BY

THREE IN RURAL AREAS.

II. Value of the assets attached to land:

a. Building/Trees/Wells/Crop etc as valued by relevant govt. authority;

Total compensation = I+II

III. Solatium: 100% of total compensation

This implies that in case of urban areas, the award amount would be not less than twice that

of the market value determined, whereas in rural areas it would be not less than six times

the original market value.

7. Minimum R&R Entitlements:

For Land Owners:

a. Subsistence allowance at Rs. 3000 per month per family for 12 months;

b. Rs 2000 per month per family as annuity for 20 years, with appropriate index

for inflation;

c. If house is lost, a constructed house of plinth area of 150 sq mts of house sitein rural areas or 50 sq mts plinth area in urban area;

d. One acre of land to each family in the command area, if land is acquired for

an irrigation project;

e. Rs 50,000 for transportation;

f. Where land is acquired for urbanization, 20% of the developed land will be

reserved and offered to land owners, in proportion to their land acquired;

g. Upon every transfer of land within 10 years of the date of acquisition, 20% of

the appreciated value shall be shared with the original owner whose land has

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h. Mandatory employment for one member per affected family or 2 lakh rupees

if employment is not offered;

i. Offer of shares up to 25% of the Compensation amount

For Livelihood losers (including landless):

a. Subsistence allowance at Rs. 3000 per month per family for 12 months;

b. Rs 2000 per month per family as annuity for 20 years, with appropriate index

for inflation;

c. If home-less, a constructed house (plinth area) on 150 sqmts of house site in

rural areas or 50 sqmts in urban area, provided free of cost;d. A one-time Resettlement Allowance of Rs 50,000;

e. Rs 50,000 for transportation;

f. Mandatory employment for one member per affected family or 2 lakh rupees.

Special Provisions for STs

a. One acre of land to each ST family in every project;

b. One time financial assistance of Rs 50,000 for ST families;

c. ST families settled outside the district shall be entitled to an additional 25%

R&R benefits (and a one-time payment of Rs 50,000) to which they are

entitled in monetary terms;

d. Payment of one third of the compensation amount at very outset to ST

families;

e. Preference in relocation and resettlement in area in same compact block;

f. Free land for community and social gatherings;

g. In case of displacement of 100 or more ST families, a Tribal Displacement Plan

is to be prepared:

i. Detailing process to be followed for settling land rights and

restoring titles on alienated land;

ii. Details of programme for development of alternate fuel, fodder

and non-timber forest produce.

8. Infrastructural Amenities to be provided

a. Schools and playgrounds;

b. Health Centres;c. Roads and electric connections;

d. Assured sources of safe drinking water for each family;

e. Panchayat Ghars;

f. Anganwadis providing child and mother supplemental

g. nutritional services;

h. Places of worship and burial and/or cremation ground;

i. Village level Post Offices, as appropriate, with facilities

j. for opening saving accounts;

k. Fair price shops and seed-cum-fertilizer storage

l. facilities

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9.0 Pros of LAARB 2011 The new Land Acquisition, Rehabilitation and Resettlement Bill, 2011, which replaces the old

colonial act from 1894, is promoted as a solution to the twin problems increasingly faced by

many state governments over the last few years: how to attract and facilitate private capital

investments, while at the same time preventing discontent amongst an increasingly

marginalized and angry peasantry from boiling over

The Bill integrates the question of displacement with that of rehabilitation.

It expands the definition of project-affected population considerably.

It specifies in greater detail the controversial notions of public purpose and public interest.

It restricts acquisition of irrigated multi-cropped land and increases the rate of

compensation

It makes it mandatory for private companies to obtain the consent ofat least 80% of the

project-affected families.

10.0Critique of LARRB 2011 Issues related to land pricing such as absence of properly functioning land markets,

fragmented holdings, and mode of bargaining and determination of reservation price,

intermediation and brokers, political arm-twisting, compensation to landless agriculturalworkers.

Another critique is one ofguaranteeing to the seller of land a fair share in the

augmented value of the land in the future as the value can really shoot up once the

land is put to use. At the same time the future value of any asset or land is not realised now

and the seller and the buyer will have natural disagreements on the future value.

The claim paper that is obtained by the seller after the sale of land in the current period is a

legal instrument which entitles him to receive a part of the capital gain tax and that

instrument can be traded in the market. A poor farmer who sells his land at a low price

today, but is confident that the price will increase substantially in the future cannot get the

part of the future price now even if he has that claim paper

No claim for the seller in the future capital gain on the land

11.0Limits of the LARRB 2011 The logic of market and its normative propositions are imported in the Bill, and thereby it

tries to argue for providing just compensation to, and obtaining consent of, the affected

families whose land is acquired. It expects that the solution to the conflict over land

acquisition can be found within the logic of market.

The logic of market holds well as long as people are willing to sell their land at a desired

price (or for an attractive compensation and rehabilitation package). But the specific context

which has given rise to resistance to land acquisition is not imperfect land market as the

minister of rural development opines in his foreword to the draft Bill, but the non-existence

of land market i.e., an absent market where there are no willing sellers for a

particular land, though there are buyers. In other words, there is neither any

existing relationship between the seller (landowners or possessors) and the buyer

(the State or a private company), nor the former is willing to enter into such a

relationship. The seller does not exist. This absent market is not analogous to the

neoclassical understanding of imperfect or missing market which can be supplemented,

created or ameliorated through positive interventions. This absent market is not a given,

rather a political achievement, something that emerges out of the resistance movements

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against land acquisition. This resistance to acquisition cannot be simply reduced to a

problem of unattractive price/compensation or exploitation of farmers by offering lower

price.

12.0Land Acquisition across the worldInsert here

13.0Recommendations Eliminate ambiguity on Public Purpose

Compulsory Acquisition no alternate cases: Only in cases where the particular land

under consideration is the only possible solution should the land be acquired. Otherwise all

the alternatives should be properly evaluated and the decision should take into account the

social impact of the transaction also.

Acquisition challengeable in court: According to the previous act, only compensation

charges could be challenged in court. The affected should be allowed to challenge the entire

acquisition in the court.

Timeline for Rehabilitation

14.0Innovative Solutions Focus on the market value of land in the future and treat the augmented part of the value as

a capital gain which can be taxed following the standard practice. A novel part of the

mechanism is that it binds the government to distribute the taxes, or a part of it, to

the original sellers.

The claim paper that is obtained by the seller after the sale of land in the current period is a

legal instrument which entitles him to receive a part of the capital gain tax and that

instrument can be traded in the market. A poor farmer who sells his land at a low pricetoday, but is confident that the price will increase substantially in the future cannot get the

part of the future price now even if he has that claim paper. But he can sell that

paper to someone who can wait to receive the extra value in future

For example, if the farmer expects to receive Rs 10,000 from the government next year, he

can sell the piece of paper at Rs 8,000 today. If I am buying that paper, I shall get Rs 10,000

tomorrow and make a profit of Rs 2,000. The farmer gets the money much earlier and does

not have to wait and I make some profit

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Seller Buyer

Capital gain on

Future Value of

land

Present value

Government

Tax


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Appropriate planning: When the government plans for growth, a clear demarcation of

land that can be used development for public use should be made. Only those lands can

be used for development. This can substantially reduce the agency costs.

15.0ConclusionInsert here

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