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Land is Crucial for Power and Other Infrastructure Projects, Shri R V Shahi, Former Secretary, Ministry of Power

When India is now poised to get into a higher orbit of economic growth, in the range of 9 to 10%, on a sustained basis over a long period of time, every aspect of infrastructure is appearing as a major constraint. A growth of this type would obviously require much more expanded and efficient Railway network, National highways and State highways connecting all the parts of the country and particularly the production centers and consumption centers, a chain of ports of small, medium and large capacities to cater to different types of industrial and economic activities, connecting rail and road evacuation systems from these ports to handle the import and export cargos, and modern airports comparable to international standards both in sizes and facilities not only in metros but throughout the countries at other towns, cities and industrial centers. And, above all, it would require the most important of all infrastructures viz. electricity generating, transmitting and distributing facilities to propel a growth of 9 to 10%. At present, all these infrastructures are geared to a growth in the range of 5 to 7% in somewhat comfortable way. Any effort to accelerate and pitch up the growth to higher trajectory exposes all these infrastructures in a highly stressed and strained manner.

This recognition has led to several reform initiatives by the Government - legislative reforms, policy reforms and administrative procedure reforms. It has also been recognized, and rightly so, that Government financial resources alone cannot cope with all these massive and ambitious expansion programmes. At the same time, it is also recognized that the country can no longer afford not to think and plan for such economic growth and, therefore, expansions of these infrastructures. Aspirations of people in general are leading all the policy planners to believe and feel convinced that a lower growth rate in last few decades has been unable to provide to the people of the country the basic necessities to BPL Group and reasonable standards of living to the aspiring groups in the lower middle and upper middle income groups. Examples of China - their GDP growth of 9 to 10% over last 25 years, their expanded infrastructures which have supported such a growth are often quoted with the intended conclusions and assertions that if this could be done in China why not in India. The concerns, disappointments and frustrations are so intense that people often forget that the political systems and administrative approaches in China are vastly different from those in India. The Policy Planners and administrators do try to convey that there are certain democratic values in India which we are so proud of that these may not permit the types of measures which China can take, and have been taking, to force through implementation of different projects. No doubt, people do recognize these weighty arguments, the difference in the levels of progress on infrastructure and, therefore, all related outcomes, are so vast that the people are not able to appreciate the difficulties as have been projected. Rural India, particularly, is losing patience, because urbanization even within India, with all the modern facilities, has further widened the gaps.

Challenges before the political system and administrative apparatus are, therefore, daunting. How to bridge the gaps in all these areas, so that the objective of inclusive growth, the benefits of which percolates down within reasonable time frame? While there are these anxieties to speed up the process and accelerate the growth engine, there are equally opposing forces which tend to hold and decelerate the process. There are many such concerns, but couple of them are more serious - (a) environmental concerns definitely lead to considerable delays in infrastructure projects, and (b) land acquisition which is common to all the areas of infrastructural development, mentioned above, has emerged as a major challenge. In this paper we will deal with issue of land acquisition which is so crucial for all the infrastructural projects.

Though, even in the past in many cases, acquisition of land by project developers did pose problems, but in the last two to three years this issue has assumed much larger proportion. There have been instances, like Singur, when the project developers inspite of having spent considerable fund on development of the factory, had to move to another site because of extreme resistance and protest by the land owners and other local people. These developments have led to the political system thinking in terms of restructuring the land acquisition legislation. There have been concerns raised from various quarters that the present Land Acquisition Act 1894 was formulated in a different context and is no longer relevant now. People have tended to ignore the plethora of amendments which have been made by the various State Governments in the Land Acquisition Act. Only last week the Union Cabinet discussed inconclusively the new Bill relating to land acquisition. As reported in the Press, even within the Cabinet there are differences. While the proposed provision means acquisition by project development agencies to the extent of 70% of land and balance to be facilitated by the Government, another group feels that Government should not be dealing with as much as 30% of land required. There is another Bill, which is under consideration, and it seeks to provide rehabilitation and resettlement for project affected families.

Acquisition of land has been carried out, over last more than 100 years, on the basis of the Land Acquisition Act 1894. Since then a number of changes have happened. These have definite bearings on this process. Some of the things which need to be mentioned are outlined below:

  • The way and the situations under which this issue was handled under the British rule, in the context of the response of society in general on various Government interventions, are entirely different now in independent India. Post independence, the previous momentum continued for a number of years. The attitude and perception of people regarding administrative initiatives and actions have been changing during last two decades. The Institution of Collector of District is not seen and regarded in the same manner as it used to happen in the past.

  • Media, particularly electronic media, have played and continue to play a major role in shaping the hopes and aspirations of people. Any irrational or illogical administrative policies and actions are now questioned and protested more than used to happen in the past. Simultaneously the widening gaps between the quality of life of people who are in the higher income group, particularly those controlling trade and industry, and those who are dependant primarily on agricultural economy are creating a different type of attitude towards industrialization and industrialists.

  • Democratic processes are getting strengthened and gaining maturity. Political configurations of different ideologies, with a large number of national, regional and local political parties, in order to occupy space among the public at large, are widening their own scope of activities and, therefore, are getting into almost every aspect where interests of groups of people are involved. This obviously leads to conflicting influences on the behaviour of affected people due to different approaches of various political entities. This makes the situation complex and resolution of any issue becomes challenging.

  • Pace of industrialization is requiring more and more of agricultural land and, therefore, agriculturists feel threatened about their future. This is particularly true in areas where dependence of people on agriculture is of comparatively higher degree and other sources of income are insignificant. Related issue is also of the skill and capability of such people to shift to alternative economic activities. Since this is lacking, their fear becomes even more profound.

  • In the last 100 years, agricultural holdings have been divided several times among the new generations of various families. Unfortunately, revenue records, in many States, have not kept pace with the changes in the ownership of different pieces of land. Negotiations for purchase of land in such situations become virtually impossible. For the same reason of several divisions of a piece of land the expectations of four or five generations of families for rehabilitation and resettlement becomes a challenging task to resolve.

  • Ownership of land has also been a sentimental issue. Wherever villages or towns have to be dislocated, emotions become even stronger and resistance to acquisition more intense. The issues of genuineness of compensation, rehabilitation, resettlement, employment etc. get further compounded because of such emotions which are attached to the houses and properties.

  • The position and protest against land acquisition in recent years has also been caused partly because of the credibility gap, or atleast the perceived credibility gap, about the Government, trade and industry. There are instances where land owners were asked to sell and handover their land invoking the urgency Section of the Land Acquisition Act in "Public Interest", they starting hoping for industrial development in the area, but even after 10 to 15 years the project did not happen. This obviously erodes the very credibility of not only the industry but also the Government.

  • Under the Land Acquisition Act, the value of land is determined by the District Revenue officials on the basis of its present usage pattern. In most cases, therefore, the rates of agricultural land are fixed on the basis of the present revenue that is generated and also on the basis of recent sale-purchase transactions. Once the land has been transferred, the industry arranges to have the land use pattern changed and accordingly the rate of land shoots up. This continued for decades. Ignorance and innocence of land owners did not permit them to understand this arithmetic and equation. As awareness has grown, on account of factors like political dynamics, media interface, higher education of new generation, the game plan of industry has not gone well with the land owners. Most of them have perceived this as a mischievous approach of industry towards agriculturists.

  • While there have been a large number of good examples of rehabilitation and resettlement measures including training for skill upgradation with a view to improving the employability of the affected people, there have been also a number of examples of a very indifferent approach on this important requirement. This has obviously led to doubts and suspicions among the land owners about the promises and assurances of industrial organizations.

  • There are a large number of other factors, in addition to the above important aspects, which have put the business and industry on one side and land owning agricultural group on the other. The adversarial role, thus created, is becoming responsible for inordinate delays in acquisition of land thereby delaying project developments. The challenge is how these dramatically opposite positions, of industry on the one side and agriculture on the other, are reconciled and harmonized, so as to achieve the objective of speedy execution of infrastructure and other projects. Though land acquisition is relevant to all the areas of industry, among infrastructure, power and coal, which require very large areas of land, are going to be affected the most if this issue is not tackled properly.

The issue is whether the proposed Land Acquisition Bill, which stipulates that 70% of the land should be acquired by developers and acquisition of balance 30% to be facilitated by the Government, would solve the problem. Though within the Union Cabinet there is a view even on the 30% of land acquisition, which is to be facilitated by the Government, and this group feels that the Government should not get into this. Leading newspapers, even in their editorials, have supported the proposed provision of 70% and 30%. My take on the subject is somewhat different for the following reasons:

  1. In view of totally unreliable revenue records on ownership of land, it will be virtually impossible for the public sector or private sector companies to approach individual land owners for acquisition on the basis of mutual negotiation. Though I am fully aware that there are a few examples of such acquisitions which have happened, to think and generalize that it could happen on a large scale and, therefore, this should form the basis of an Act, may not be practical.

  2. Vested interests groups will invariably jump into these controversies, influencing different land owning groups to queer the pitch, thus making resolution of rates, compensation structure etc. virtually impossible.

  3. A few examples of wrong interpretation of the phrase "Public Interest", and using this provision to acquire land which really may not have been in the public interest in the strict meaning of the term, should not be treated in a negative way for all land acquisitions. We need to recognize that a factory, a highway, a power project, a coal mine development, whether done by a Government Department, a Government controlled public sector company or a private sector company, are all to facilitate economic growth of the country and, therefore, they are in public interest. If the Law needs amplification or a schedule attached to the Act to exhaustibly list public interest projects, the same could be done rather than questioning the very approach that Government could intervene in the process to acquire land in public interest.

  4. Compensation structure consisting of rate of land and other properties, rehabilitation and resettlement measures should all be restructured for which a consultative approach may be necessary. Industry must be made to recognize that change of land use pattern after the transfer of land thereby having higher valuation subsequently, should not deprive the land owners of the benefit of higher valuation. Similarly, a more positive approach on rehabilitation and resettlement could make all the difference.

  5. In most of the cases, acquisition of land is not only a matter between the owning industrial organization and the land owners. Development of project also affects the people in general in the area, who may or may not be the land owners. For example, the project location may be adversely affecting the existing infrastructure on connectivity and access to market, school, hospital, etc. It will be important that, apart from compensation etc. for the land owners, project affected area is also taken care of through suitable infrastructure and community development.

  6. We need to create a positive feeling about the industrial and other projects among the land owners. One of the ways through which this could be done would be to make them equity holders in the company. Part of the monetary compensation could be paid to them and a part of it could be retained as their equity in the project. This would enable them to appreciate that, as and when the valuation of the project asset increases, they are going to be also the direct beneficiaries of such enhanced value additions. This will, however, require considerable amount of education and awareness about the mechanics of this process, the likely benefits to them and how, in a credible and transparent manner, this will be accounted for in the future.

We need to bring about required changes in the Land Acquisition Act based on our experience of last over 100 years, but particularly of last 10 to 15 years rather than formulating a legislation which distances the Government from land acquisition. In today's conditions of so called Land Market, for which not even reliable revenue records exist, leaving land acquisition totally in the jurisdiction of project developers, is fraught with the risk of unending process of negotiation thereby jeopardizing the very project development activity.