Land Acquisition Act and the Ordinance: Some Issues

Author(s): DHANMANJIRI SATHE

Source: Economic and Political Weekly, Vol. 50, No. 26/27 (JUNE 27–JULY 4, 2015), pp. 90-
95
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 NOTES
Land Acquisition Act
and the Ordinance
Some Issues
DHANMANJIRI SATHE
This note tries to capture what
has been attempted in the Land
Acquisition Act, 2013 and the
ordinance to amend it that has
been hitherto promulgated
thrice. It discusses in detail the
provisions on public purpose,
social impact assessment,
compensation, and rehabilitation
and resettlement.
Research assistance by Atul Kotagal and
funding from CHHS, Savitribai Phule Pune
University is gratefully acknowledged.
Dhanmanjiri Sathe (dhan.sathe@gmail.com)
teaches at the Department of Economics,
Savitribai Phule Pune University, Pune.
90
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the Land Acquisition, Rehabilita
On 12 May
tionthe
andLok Sabha referred
Resettlement (Second
Amendment) Bill 2015 to a joint commit
tee of Parliament (Indian Express, 13
May 2015). This is to amend the Right to
Fair Compensation and Transparency in
the Land Acquisition, Rehabilitation and
Resettlement Act, 2013 (Ministry of Law
and Justice 2013) which was passed by
the Lok Sabha in August 2013 during the
tenure of the United Progressive Alliance
(upa) government and became effective
on 1 January 2014. The National Demo
cratic Alliance (nda) government made
certain amendments to the act and an
ordinance was promulgated in Decem
ber 2014. Later, a bill giving effect to
these changes was approved by the Lok
Sabha in March 2015 with some changes
but was not put to vote in the Rajya
Sabha. This was then promulgated for
the second time as an ordinance in April
2015 (Ministry of Law and Justice 2015).
Since the ordinance was to lapse in early
July, on 30 May the land acquisition
ordinance was promulgated for the
third time.
Much of the 2013 act remains as it is
and in this note, we will call it the
act (wherever it is unchanged) and the
amendments (that is, the changes)
passed on 20 April by the Lok Sabha as
the ordinance.
In this note, we hope to put forth, in
simple words, what has happened up till
now and also discuss what needs to be
done to make the law more acceptable to
all the affected parties.
1 Public Purpose
The first feature that we can observe is
that the act and the ordinance have
defined the meaning of "public domain"
june 27, 2015 vol L nos 26 & 27 Q3B3 Economic & Political weekly
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in a broad manner and hence, the
purposes for which land can be acquired
by the government using eminent
domain in an expansive manner.
The doctrine of eminent domain says
that the government can acquire land/
property forcibly but it should be for a
public use/purpose and a fair compensa
tion should be paid to the loser. It has
generally been believed that the public use/
purpose consists of infrastructure projects
like say a dam, railways, roadways, etc.
In definitional terms and according to
the dictionary, public use includes schools,
streets, highways, hospitals, government
buildings, water reservoirs, flood control,
slum clearance and redevelopment, pub
lic housing, public theatres and stadiums,
harbours, bridges, railways, airports, ter
minals, prisons, jails, public utilities,
canals and numerous other purposes
designated as beneficial to the public.
However, what one can discern is that
over the years there has been a percepti
ble broadening in the meaning of public
use/purpose.
Here we can refer to the United States
(us) for no other reason but that infor
mation is easily available for that country
and it is an advanced, capitalist economy
and India is now on the same path. Fur
ther, it is also claimed by some that while
India was earlier influenced by the Brit
ish legal system, it takes its cue now from
the us model. The us has some of the
strongest property rights in the world and
the government has the power of emi
nent domain. Further, the land loser has
a right to approach the court and ask for
a fair compensation if she is not satisfied
with the one given by the government.
The United States Supreme Court in
1908 (Kelly 2007: 1) ruled, "When we
come to inquire what are public uses for
which the right of compulsory taking may
be employed, and what are private uses
for which the right is forbidden, we find
no agreement, either in reasoning or cone
lusion." Almost hundred years later, Nicho
las (2003 cited in Kelly 2007: 1) opined
that "Further efforts at providing a precise
definition of 'public use' are doomed to
fail..." Thus things seem to be where they
were for hundred years or so, in the us.
 NOTES

Having said that, the us Supreme numbers could be anywhere between housing and housing for poor people."
Court has been defining public purpose thousands and lakhs. Affordable housing can be interpreted in
and over the years it has been defining it a very wide manner and can be a front
in an increasingly broad manner. We can Indian Law for expensive real estate development,
look at one such recent important judg- So what does India's 2013 Land Acquisi- However, it needs to be made clear
ment. The Supreme Court decision in tion Act allow as public purpose? Under that if the government is acquiring land
2005 in Kelo vs New London (www.case- Chapter 1, Section 2, the government can for itself then, in any case, no consent is
briefs.com and www.ij.org/kelo) broad- acquire land for its own use and for pub- required.
ened the constitutional authority under lie purpose. The public purpose has been The act has given an extensive list of
the Fifth Amendment (which allows the defined extensively in the act, with activities for which land could be
government to take private property for the expected purposes like defence, acquired by the government. Thus,
"public use" as long as "just compensa- for infrastructure including social and infrastructure projects mentioned in the
tion" is paid, that is, the doctrine of emi- commercial infrastructure, industrial act includes (to name a few) roads,
nent domain) for the government to take estates and special economic zones— bridges, airports, electricity generation
property from one private owner and sezs. It also includes industrial corri- and distribution, water and sanitation,
grant it to another private entity. dors, national investment and manu- and communication. Social and com
In this case, there was a property that facturing zones, government adminis- mercial infrastructure includes hotels
was owned by Susette Kelo which the tered and aided educational and and convention centres with a project
local government wanted to "take" and research institutions. It allows land to be cost of more than Rs 200 crore and
transfer it to the New London Develop- acquired for project-affected families, Rs 300 crore, respectively, as they come
ment Corporation. The purpose stated for residential purposes of the poor and under public purpose. The act also says
was "economic development." the landless. that projects for sports, tourism and
The us Supreme Court held that the In the next section, the act spells out transportation would be taken as public
use of eminent domain for economic the rules in case the private sector is purpose.
development did not violate the public involved, that is, government acquiring We can discern that what the Supreme
use clause of the state and federal consti- land for the private sector. The govern- Court has done in the us, the act and the
tutions. The Court held that if a legisla- ment will be able to acquire land in case ordinance have done in India, that is, they
tive body finds that an economic project of a public-private partnership (ppp) have given a very broad definition of
will create new jobs, increase tax and project where the ownership of land is activities for which the government can
other city revenues, and revitalise a going to be vested with the government, acquire land for public purpose. Addition
depressed urban area, then the project Additionally also in cases where the ally, the exemptions under the ordinance
serves a public purpose. This ruling was private companies are going to build are much more than those under the act.
given in spite of the fact that the develop- infrastructure, the government can acq- To give an example, as per the ordina
ment corporation was a private entity, uire land. But there are some conditions nee, if the government along with a pri
Further, there was no "blight" in the said that would have to be fulfilled. In case vate foreign partner who is willing to
area, a reason that had been used in ear- of private companies, 80% consent of bring in foreign direct investment (fdi)
lier judgments. The public reaction to this the affected families would be required wants to start a defence production
decision was very critical and many and in case of ppp projects 70% consent industry, it would not be necessary to
believed it to be a gross violation of would be required, as per the act. It get consent of the affected families (nor
property rights. Be it as it may, this judg- is this last provision which the would a sia be necessary). As per the
ment shows the manner in which the private sector has reportedly not been 2013 act, both are mandatory,
issue of public purpose is being dealt with comfortable with.
and the trends in a country which inargu- But a very important change that the 2 Social Impact Assessment
ably puts the highest value on private ordinance has brought about is that it sia is exempted for the five categories of
property. has identified five categories. For these land acquisition as per the ordinance.
In India, it is accepted now that for five categories, even if the projects are But for all other acquisitions (that is,
economic development huge invest- ppp or private projects, no consent and government acquisition for itself, ppp
ments are required, especially in the no social impact assessment (sia) would and private not belonging to the five cat
infrastructure sector and by the govern- be required. The categories are projects egories) sia is mandatory (unless an
ment too. In this kind of a situation the related to national security, rural infra- urgency clause is invoked and when the
legal framework would have to buttress structure including electrification, affor- environmental impact assessment is
these developmental activities. Second, dable housing and housing for poor peo- required for irrigation projects) and here
it follows that the requirement of land is pie, industrial corridors, infrastructure the act stands.
going to be very large in absolute terms, projects under ppp, where the ownership The act in Section 4 says that when
Third, by and large, those affected are of land continues to vest with the govern- the appropriate government intends to
usually the rural populations and the ment. The ordinance exempts "affordable acquire land for public purpose, it shall

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NOTES= =
consult the concerned panchayat, muni- compensation is such which puts the tenants. Rehabilitation and resettlement
cipality, that is, the local government; injured party in good condition as s/he is to be provided to all those whose land
and carry out an sia study in consulta- would have been, if the injury had not is acquired, the tenants on the land and
tion with them. So this in effect means been inflicted. So just compensation is also all those who were dependent on
that the acquiring government itself full indemnity for the loss or damage the land in some other way, that is, those
would be the authority (along with the sustained by the owner—all damages— who were artisans, shopkeepers and
local government) that will do the sia. past, present and prospective. The prop- small traders.
The act goes on to say that the sia erty's highest and the best use is to be
study shall examine whether the pro- considered for compensation. The fac- Valuation of Land
posed acquisition serves public purpose tors to be considered to determine the Focusing on compensation (which
or not. However, since the public pur- highest and best use are: (1) market comes in Chapter iv), the district collec
pose has been defined quite broadly, it is demand, (2) proximity to areas already tor decides the compensation to be paid
unlikely that any sia will find a purpose developed in a compatible manner with after assessing and determining the
"not public." Additionally, since the the intended use, (3) economic develop- market value of the land (Section 26:15).
acquiring government itself would be ment in the area, (4) specific plans of In short, the market value would be
conducting the sia, the possibility of businesses and individuals, (5) actions based on the stamp duty that has been
the purpose being declared non-public already taken to develop land for that paid, average sale price for similar type
is remote. use, (6) scarcity of land available for that of land in a nearby village, and con
Further, it is said that the sia shall use, (7) negotiations with buyers inter- sented amount agreed upon in case the
include, besides other things, an esti- ested in property taken for particular acquisition has been done for private
mate of the number of families that are use, (8) absence of offers to buy property purposes or under ppp. After specifying
likely to be affected and displaced. It will made by buyers who have put it to the in detail how to arrive at the market
also engage in a study of the "social use urged, (9) the use to which the prop- price, Section 26(c), Explanation 4
impact of the project and the nature of erty is being put at the time of taking, states that if the collector opines that
cost of addressing them and the impact Further, uniqueness adds to the value of the price to be paid is not indicative of
of those costs on the overall costs of the land. And if the land to be taken is actual prevailing market value, then he
project vis-à-vis the benefits of the adaptable for special purpose or use, can discount it for the purposes of cal
project" (Section 4.4 (f): 7). Then the sia that fact may be considered as an culating the market value. Thus, the
report shall go to a duly formulated element of value (www.eminentdomain. collector has the power to discount
expert group, which will give its opinion uslegal.com/compensation). whatever is emerging as the market
on whether the project serves any public So, on the whole we see that though price.
purpose and whether the social costs and the us Supreme Court has defined public It has been often mentioned that the
adverse social impacts outweigh the use in a broad way, the principles of com- price of the land may be underestimated
potential benefits. However, even if the pensation seem to be quite well worked as people, to avoid the stamp duty, do
group rejects the project on these gro- out and most importantly the compensa- not show the real value of land and take
unds, the act says that tion is justiciable. But the ground-level a large share in cash. So the price of land
Provided further that where the appropriate reality is SOmewhat bleaL ChanS (2010) 011 PaPer is mUch leSS that what * aCtU"
Government, in spite of such recommenda- studied 80,000 sales for the period from ally is in reality.
tions, proceeds with the acquisition, then it 1990 to 2002 for New York City and found To arrive at the compensation, the col
shall ensure that its reasons for doing so are that 50% of the condemnees were com- lector has to take into consideration the
recorded in writing (Section 7 (4): 9). pensated with less than fair market value market price (as defined above), then he
Thus the recommendation of the expert (fmv); about 40% received more than fmv also has to take into consideration the
group can be completely rejected by the and around 10% got equal to fmv. He also value of the standing crops, damage
government; the only thing it has to do is found that the condemner's political inter- caused by severing land, etc. Interest
to give the reason in writing. It could be ests and condemnee's ignorance of estima- ingly, the seventh point to be taken into
argued that the whole edifice of sia in the ted fmv are the most likely explanations consideration is "any other ground
act is a façade which would be quite time- for half the people getting less than fmv. which may be in the interest of equity, jus
consuming. The ordinance by exempting Coming back to India, the act had tice and beneficial to all affected parties"
five areas has taken away this pretense exempted 13 laws from its ambit (for (Section 28). This is a fairly broad con
and is at least honest that it will save time. example, Railways Act, 1989, National sideration and using this collector could
Highways Act, 1956, etc), while suggest- reach a price more acceptable to the land
3 Compensation, Rehabilitation ing that they should be included by Jan- losers.
and Resettlement uary 2015. The ordinance does that. But, in any case the land markets in
In the us, as in the case of public use, the There are no other changes. India being so underdeveloped, the pos
concept of "just compensation" has been The compensation has to be paid to sibility of arriving at a "genuine" market
well debated and worked out. Thus just those whose land is acquired and to the price is rather slim. Further, there is a

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 NOTES

problem even if one were to arrive at a land is going to be given back to the It is here that a house needs to be pro
correct market price: the future appreci- original owners, then the owners may vided to the landowners, tenants and
ation of the land is not included in this be satisfied with a lower amount as other dependents on the land (categories
market price. It can be observed that a compensation. we have elaborated above) as part of
lot of anti-acquisition agitations in peri- R&R. The act says that land should be
urban areas have been with respect to Resettlement provided if a dam is built and families
not getting a share in the future appre- The act says that the two times the mar- have lost land. The act states that "at
ciation of the land. To mention a well- ket value in urban areas and four times least one member per affected family"
known case, in Bhatta-Parsaul in Uttar the market value in rural areas be paid should get a job; while the ordinance
Pradesh, the farmers were happy with as compensation. The raison d'être of states that "one member of such affected
the price of land that they got in the first these multiples have been, quite cor- family of farm labour" is mandatory,
phase. However, as the acquisition rectly, questioned by many experts. Justifying that the acquisition of land
moved on to the second phase, they While these can be interpreted as the is for public purpose is always a neces
could see that the value of their land had minimum that the farmer should get, sity for the government. Jawaharlal
increased exponentially and what they the experience at state level shows that Nehru in 1948 said to the people affected
are getting was not commensurate with since the market price can itself be erro- by Hirakud dam, "If you are to suffer,
that amount. Also while doing fieldwork neous it is better if the governmental you should suffer in the interest of the
in Maan, a village close to Pune the vil- acquiring agency has the power to nego- country" (Vora 2009: 10). Whether the
lagers said to this author, "they (mean- tiate the price with those who lose with- people suffered willingly is a moot point,
ing the development agency) just make out any numerical limits. Chapter v of However, the entire discourse of devel
some roads, give electricity, etc, and sell the act deals with the issue of r&r which opment has changed and there do not
the same land at very high prices. We the collector has to give as per the sec- seem to be any moral reasons for asking
sold in acres and they sell in square feet" ond schedule. This schedule gives in people to sacrifice, even for public pur
(Sathe 2014). Thus, it is almost impera- detail various kinds of r&rs that would poses. This is a positive trend. Thus the
tive that wherever possible the compen- have to be undertaken for the displaced, compensation and r&r has to be satis
sation package itself should give back a This includes fishing rights, a one-time factory to the land loser. And there can
certain percentage (say 10% to 20%) of resettlement allowance, a one-time be many ways in which this can be done,
the developed land to the original own- grant to artisans, small traders, trans- if there is willingness on the part of all
ers. If a certain percentage of developed portation costs to be paid, etc. involved parties to reach a settlement.

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NOTES = ~ =
The importance of Section 107 of the The act says that no irrigated, multi- coarse grains. What India may lose by
act becomes clear in this context. This cropped land shall be acquired except for way of shifting of land could be made up
section says that the states are free to those purposes provided under sub-sec- by increasing the productivity of land,
enact their own laws to enhance or add tion (2) (Chapter in, Section 10), that is, Increasing productivity of land needs to
to the compensation package, and the broadly defined public purpose. Fur- be done in any case, irrespective of
r&r. This means that the states can ther, even in such cases irrigated land acquisition or no, to increase the incomes
have their own laws which improve would be acquired under "exceptional of farmers and to make India food secure
upon this act. It has been found that circumstances, as demonstrable last (Sathe2oi2).
many states, especially in the south and resort ". Further such land cannot be On the other hand, in almost fully
the west, have been successful in acquired beyond a certain limit specified irrigated states like Punjab and Haryana
acquiring land and have proceeded by the government. The ordinance these provisions mean that no further
with a high rate of industrialisation and allows the irrigated land to be acquired acquisition and hence no further indus
urbanisation (even before the act and for the five exempted purposes, as long trialisation, etc, is possible. The chief
the ordinance). They have developed as such land is the minimum land ministers of Haryana and Punjab have
specific packages that are acceptable to required. It is argued that if farmland is already asked an exemption (and have
all (Sathe 2015). switched to non-agricultural use, then got it) from this clause.
One recent example of this can be the the food supply would fall and India
innovative manner in which the prob- would become food insecure. This means 5 Jobs
lern of lower floor space index (fsi) in that even though everybody would be Under the act, the r&r award for each
areas close to airport has been overcome affected to some extent, the poor would affected family includes mandatory
by Maharashtra government (Indian be affected the most. employment for the members of the
Express, 22 May 2015). The City and At an all-India level, we find that the affected family "in the project or
Industrial Development Corporation of land acquired by the sezs (formally arrange for a job in such other project as
Maharashtra (cidco), a state-run under- approved and in-principal approvals) may be required." The ordinance says
taking along with the Nävi Mumbai turns out to be around 0.063% of total that at least one member of the "affected
International Airport (nmia) project has area of India and 0.116% of agricultural family of a farm labourer" must be
acquired 671 hectares from 1,200 villag- area (http://www.sezindia. nic.in/wri- given a job.
ers. In lieu of surrendered land, the Gov- tereaddata/updates/Groundrealities pdf ). There are some complications here,
ernment of Maharashtra offered the We can carry out an experiment here. When a farmer dies, all his sons (and
owners developed land measuring Let us assume that 3% of total agricul- now daughters too) get an equal share
22.5% of the acquired land in Pushpak tural land is going to be sought for all in the land. With just one person in the
Nagar Township that cidco is develop- kinds of non-agricultural purposes, family getting a job, de facto, it means
ing near the airport. An fsi of 2 has been Total agricultural land in India is that all others are left high and dry.
offered to all the farmers. But then, 18,25,730 sq km; 3% of this is 54,771 sq The field experience of the author
apparently it became clear that all farm- km. According to the World Bank Indica- shows the reality to be somewhat bleak,
ers (adding up to 18 hectares of land) tors database, 35% of India's land is irri- For one, long-term jobs get created
cannot use this fsi due to the restric- gated, which comes to 6,39,005 sq km. Let mainly in cases where an industrial
tions on construction close to the air- us now assume that all the acquisition estate or a sez is developed on the acq
port. Hence it has been decided that the (that is, all 3%) is going to be from irriga- uired land; construction jobs on infra
affected farmers would be given Trans- ted areas. Then, 54,771 sq kms as a share structure sites, etc, are temporary. These
fer of Development Rights (tdr) in the of 6,39,005 sq km turns out to be 8.5% of estates/sEzs usually have capital-inten
same area. In this manner, the farmers total irrigated area. This estimate is, of sive, skill-intensive industries/services,
would be saved from economic loss and course, on the higher side as all acquired The villagers usually do not have the
the government has been able to make a land need not be from irrigated area. Be education/skills to get good jobs in such
acceptable offer to the farmers and in as it may, then 8.5% is the maximum of companies. What they end up doing are
face of some difficulties, develop an irrigated land that may be acquired. the lower-level jobs like security, house
alternative offer which seems acceptable Thus a steep fall in agricultural pro- keeping, catering services, etc. Addition
to the affected farmers. duction due to loss of irrigated land loss ally, the employers are not too keen on
is not a plausible argument. The real giving the locals jobs as that means, the
4 Irrigated Land problem is India's low productivity, local politicians getting a foot inside the
The acquisition of irrigated multi- When international comparisons are company.
cropped land has been put under "Spe- made, one finds that the productivity of When the act and the ordinance say
cial Provision to Safeguard Food Secu- land in India is extremely low. As com- that jobs would be given, it is not clear
rity" (Chapter m) establishing a link pared to China, India's productivity is from where these jobs are going to come,
between food security and acquisition of 55% in case of wheat, 51% in case of rice, A "village" in India can have anything bet
land. This needs to be put to scrutiny. 45% for oilseeds and 29% in case of ween 100 and 5,000 families. Can so many

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 NOTES

jobs be provided under one land acquisi- and the issue of agricultural population detailed packages which the farmers
tion process is the moot question, not shifting to non-agricultural occupa find acceptable. But the ultimate key to
Because the real issue is, where are the tions has not got the primacy that it peaceful acquisition depends upon jobs
labour-intensive industrial estates/sEZs? deserves in India's politics. The left parties being created, not only on the acquired
Most of them have been for capital and who should have been the natural cam land but generally speaking in the
skill-intensive industries and they do not paigners for this kind of a policy have economy.
create many jobs, in general or also for never raised this issue.
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Economic&PoliticalwEEKLY
Conflict, Transition and Development
February 28,2015

War, Conflict and Development: Towards Reimagining Dominant Approaches - Vijay K Nagaraj
Protests and Counter Protests: Competing Civil Society Spaces in Post-war Sri Lanka - Harini Amarasuriya
Contradictions of the Sri Lankan State - Devaka Gunawardena
The Reintegration of Maoist Ex-Combatants in Nepal - Chiranjibi Bhandari
Myanmar: Conflicts over Land in a Time of Transition - Soe Nandar Linn
Making Pickles during a Ceasefire: Livelihood, Sustainability, and Development in Nagaland -DollyKikon
Peeling the Onion: Social Regulation of the Onion Market, Nangarhar, Afghanistan - Glulia Minoia, Wamiqullah
Mumtaz, Adam Pain

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