Striking a middle path

The land acquisition Bill can't be allowed to harm industry

Almost three months ago, the Union Cabinet cleared the Land Acquisition, Rehabilitation and Resettlement Bill, 2011. For all projects without a public purpose and requiring more than 100 acres of land, the Bill had made mandatory the consent of 80 per cent of the people whose land would have to be acquired. In addition, the compensation for land was pegged at 100 to 300 per cent over the market price and there were provisions for a subsistence allowance of Rs 3,000 per month for every displaced family for a year and an annuity of Rs 2,000 per family per month for 20 years. Not surprisingly, the Bill had raised concerns over many of its provisions. These included the definition of what would constitute a public purpose project and who would define the market price on the basis of which the compensation amount would be determined. The Bill is now under examination by a parliamentary standing committee and it is to be hoped that it will be able to provide objective and transparent criteria for defining what should qualify as public purpose projects. Equally important will be a non-discretionary mechanism for arriving at a market price for land to be acquired under the new law.

Meanwhile, more questions on the new land acquisition Bill have surfaced. Legal opinion on the jurisdiction of a central law on land acquisition suggests that its applicability in states can be a matter of dispute. The central law is superior to a similar land acquisition law in a state only when the latter is seen as repugnant to the former. In other words, a land acquisition law in a state can remain in force unless the apex court has ruled that provisions in the state’s law are repugnant to those of the central law. It is, therefore, likely that industries may be obliged to follow provisions of two separate sets of land acquisition laws — one framed by the Union government and the other by a state government, until such time as the apex court rules the state laws repugnant to the central law. This is an avoidable situation and central lawmakers would do well to ponder over this to find a way out of such legal skirmishes.

Industry is concerned over the new land acquisition Bill for another reason. According to an estimate, based on the 997 acres of land acquired by Tata Motors for its Singur factory, the cost of land acquisition under the existing laws on compensation came to around only eight per cent of the total project cost. If the provisions of the new Bill are enforced, the land acquisition cost for the same project will have climbed up to 29 per cent of the total project cost. This is a steep escalation in the cost and can undermine the viability of many projects. While land-losers’ rights need to be kept in mind, it will do little good if the new Bill renders all new projects in several parts of the country unviable because of the high compensation packages. States in the eastern part of the country will clearly be the losers, while states with a lower density of population are likely to gain. A more pragmatic view needs to be taken so that industrialisation in any part of the country does not become a casualty.