Time to acquire

Delaying land Bill will hit growth

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The Land Acquisition Bill – now renamed the Right to Fair Compensation, Resettlement, Rehabilitation and Transparency in Land Acquisition Bill, perhaps because the United Progressive Alliance really likes to call things “rights” – has been further delayed. After two successive attempts to pass it through the Cabinet failed this week, it has been referred to a group of ministers so that it can be gone through “clause by clause”. This is partly because the Bill has been changed considerably following input from the standing committee, and partly because several ministers have felt that its provisions will greatly hamper growth, industrialisation and urbanisation. 

Certainly, the Bill is important, and the Centre must get it right. And there continue to be many problematic provisions, such as the arbitrarily set benchmark that prices for acquisition should be twice the market rate in urban areas, and four times the market rate in rural areas. Yet many troublesome criteria have been watered down. Multi-cropped land can now be acquired for infrastructure purposes, for example, which is an important change; the restriction on its acquisition for other “public purposes” is misguided, but the provision will not bite as much as it did earlier. States have been given leeway in the exact multiple of market price they pay farmers, the threshold limit before which resettlement and rehabilitation provisions will be invoked, and the amount of double-cropped land they can acquire.

Yet several Union ministers are reportedly unhappy. The urban development minister worries that town planning will be hit because social impact surveys cannot be prepared, and the finances of development authorities are too weak to pay compensation. The roads minister is worried that highway building will be hit, though it is specifically exempted from the Bill’s ambit. The commerce minister is concerned that special economic zones won’t be covered by the Bill. Most of these objections seem weak, as compared to the Bill’s impact — and they are definitely insufficiently thought through. The relevant ministries would no doubt say that’s exactly why another clause-by-clause reading is needed. But the question remains: the Bill has been pending for years, and has been considerably altered in that time. Surely the ministries have had sufficient time to present their case by now? Some of the more fevered complaints about the Bill suggest that it would hit growth hard. Even a large increase in the cost of land, however, might not have a big impact on total project costs: the rural development ministry says it will be at most three per cent of project costs. More to the point, the constraint on growth comes not from the price of land, but from the supply of land — and the supply effect of a streamlined acquisition process would be more than enough to offset any additional costs in terms of the effect on growth. The government has dilly-dallied long enough. It is time to clear the land Bill, and get acquisition moving again.