States wrest back control over how lands they want to acquire are priced

After the Centre failed to do so, state governments have diluted provisions in the land acquisition law which pegged compensation for owners to the market price of land

Over 5 years after it was legislated, how has the Land Acquisition Act 2013 performed on ground? In the first of a three-part series, Business Standard finds out why so many states have diluted the need for a Social Impact Assessment before acquiring lands

After the Bharatiya Janata Party (BJP) -led Union government failed to amend the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, it let states do so instead. One of the key provisions of the law that several state governments subsequently went about diluting was how to conduct a social impact assessment before acquiring lands.

Farmers of Nangli Razapur, an urban village in Delhi are perhaps best placed to understand why. They were fortunate. The Delhi government stuck to the Central law and regulations — it did not change any of the provisions. 

So, when the need arose in 2015 for the state’s Public Works Department to acquire land for a road project in Nangli Razapur village, the government had to order a full-scale social impact assessment. This assessment is now the only chance for the farmers in this village to get over Rs 7 crore per acre of land, rather than the Rs 35.2 lakh per acre that the state government initially offered for the acquisition. 

Sitting on a cot in his field, Nirbhay Singh, a farmer of Nangli Razapur, narrates the story which began nearly 25 years ago, when the government first forcibly acquired land in his village under the colonial-era Land Acquisition Act, 1894. The story ends with showing the potential that undiluted LARR held to increase the bargaining power of land owners and others to get a better price for their land from the government. 

Land of Nangli Razapur

In 1992, when the Delhi Development Authority (DDA), using the colonial-era Land Acquisition Act of 1894, tried to acquire a large part of agricultural land in at a meagre compensation of Rs 1,31,200 per acre. The land owners went to court. Nineteen years later, in 2011, they won a hollow victory. Their compensation was increased to Rs 4,30,100 per acre. 

Two years later, in 2013, the LARR Act was legislated. The law required the government to pay two times the prevailing market price as compensation to land owners in urban areas and four times the market price in rural India. 

By 2015, the attempt by the NDA government to amend the LARR had failed. Around the same time, Singh recalls: “The state PWD came in to construct a road on 8.5 acres of land owned by 20 farmers of Nangli Razapur. The PWD offered to pay Rs 35.2 lakh per acre to farmers. It used the 2008 circle rate for river-bed lands at Rs 17.6 lakh per acre as base and doubled it to make that offer.” 

But, through a Right to Information (RTI) filing, farmers found that in 2014 the PWD had bought a piece of land in the same locality at Rs 3 crore per acre from another government agency, the Delhi Development Authority. This the farmers claimed was the real market price and not the circle rate of 2008. They demanded, under the LARR, that they be paid double of this market price, plus annual interest. 

It was then that the state government initiated land acquisition under the LARR and ordered a social impact assessment (SIA). It hired the services of School of Human Ecology, Ambedkar University, Delhi, to conduct the assessment. 

Social impact assessment

The impact assessment, mandatory under the LARR, essentially maps out who all — not just the land owner — would be impacted by the acquisition of the land and how. These other stakeholders in lands, such as tenant farmers, are then to be compensated. But, one clause in the provision mandating the SIA raises the stakes even higher. The SIA is required to discover and recommend the benchmark market price of the land. 

This provision reduced the discretion the administration enjoyed in determining the compensation payable. Research has shown that in most cases collectors would take circle rates — the government-declared price on which stamp duty is charged — not revised for several years, as the market value. The 2013 law, requires that the SIA authors calculate the market price based on the average of the sales deeds registered in the region in the preceding three years to determine the market value of land. 

“SIA is critical to ensuring that all deserving families get their fair share of compensation and rehabilitation,” says Ishani Sonak, researcher with the Centre for Science and Environment. In the Nangli Razpur case, the SIA accepted the farmers’ contentions. 

Its findings concluded that the price (Rs 3 crore per acre) at which DDA transferred land in the same locality to PWD in 2014, should be considered as the base market value of land. It also recommended rehabilitation and compensation for 19 tenant farmer families living on the land. 

Singh, emboldened by the SIA findings, said: “Each farmer must get at least Rs 21,000 per Gaj,” he asserts. (An acre equals 4,840 Gaj). “We are not going to accept anything less than that,” he added. Singh and other farmers Business Standard spoke to were unanimous that they would put up a legal fight if the Delhi government did not accept the SIA recommendations. 

In other states, multiple researches show SIA provision of the LARR Act as being increasingly bypassed by several state governments, ostensibly to make the land acquisition quicker and cheaper. But in future that could lead to continued long-running litigation, warns Asmita Kabra of Ambedkar University who led the SIA study. 

“Our experience shows that farmers are well aware of prevailing market prices of land and their rights under the law. Either through SIA or without it, they would not settle for a price less than the actual market value,” she said.

“In cases where the SIA provisions are not implemented and the land owners are unable to realise the market value of land, litigation would be imminent. That would only increase the cost of the project,” she added. 

If Kabra and other experts are right, this scenario could well play out in several states that have diluted the provisions for SIA. At least five states — Gujarat, Telangana, Andhra Pradesh, Tamil Nadu and Jharkhand — have enacted amended versions of the land acquisition Acts through which they have exempted a large category of infrastructure projects from the requirement of the SIA. States such as Uttarakhand, Chhattisgarh, Kerala and Madhya Pradesh have kept the SIA mandatory for all projects that the central law requires but have diluted the process by drafting their own versions of rules. 

But the changes the states brought in were not limited to merely the requirements of a robust SIA. There were several others.

Part 2 of this series will explain all the changes that different states have made to the LARR, some as recently as last month.

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