The Act will erode industry's competitiveness: B Muthuraman

Interview with Vice-chairman of Tata Steel and former president of CII

B Muthuraman, vice-chairman of Tata Steel and former president of the Confederation of Indian Industry, shares with Mayank Mishra his reservations on the land acquisition Act. He also recommends steps to ensure land acquisition is completed in about 24 months. Edited excerpts:

What do you think will be the Act's overall impact on project costs?

The provisions stipulated in the Act will increase the cost of land acquisition by three to three-and-a-half times, and the cost of relief and rehabilitation (R&R) entitlements by about three times. This will erode the competitiveness of industry. In the formula for calculating land acquisition costs, we have suggested no solatium (compensation for emotional pain) should be imposed over and above the multiplier.

In case solatium is to be retained, it should be reduced to 30 per cent, and the multiplier reduced from two to one and a half. Further, instead of using the broad term "affected families", the category of families has to be clearly defined. A suitable compensation package should be laid down, in line with the losses.

The Act specifies a time frame for each stage of the land acquisition process. Is that not a better process than the present one in which acquisition takes years?

While we welcome the specific time frame, according to the draft rules, the least estimated time from the social impact analysis (SIA) to possession of land by the collector will be about 56 months. To facilitate completion of the entire process in about 24 months, we have suggested the procedure for consent be started simultaneously with the SIA. Further, multiplicity of public consultations such as gram sabhas or public hearings for environment clearance, forest clearance and SIA might be combined, as these cater to the same set of persons.

What are your reservations about the consent clause?

Industry has always maintained the provision of 'consent' should be reduced to 60 per cent of landowners, uniformly and equally applicable to all cases, irrespective of the end-use. But 'consent' is important and fundamental, and should be kept in the process.

The Act specifies each land acquisition process must have an SIA study, with the findings vetted by an expert body. This seems a good innovation, at least on paper.

The SIA is a welcome move. Industry's primary concern pertains to the duration of the entire process.

Is the retrospective clause something to worry about?

Retrospective applicability of the Act is obviously a big concern. We have suggested in cases in which notification has already been issued and the process of land acquisition has commenced, the Act should not be applicable.

Further, possession of land under the previous Act should be deemed to have been completed if the compensation amount is lying with the court, the mutation of records has been effected, and the government or the district collector has issued possession (of land).

Any other changes you would like to recommend to the new government?

Industry has always maintained an improvement in the lives of the affected families should be balanced with industry's affordability. Some other suggestions are reviewing the provisions pertaining to return of un-utilised land; applicability of R&R provisions, even in cases of direct purchase above a certain threshold; restrictions on acquisition of multi-cropped land; and doing away with additional consent from 'gram sabhas' in Schedule-V areas.

The processes should be simplified and completed within 24 months.