The draft National Land Acquisition and Rehabilitation & Resettlement Bill, 2011 issued by the Ministry of Rural Development is a welcome step in the right direction which if pursued in earnest would go a long way to address a lot of problems that plagues land acquisition in India today. The draft bill has many progressive features such as the recognition of the fact that Land Acquisition and Rehabilitation and Resettlement (R&R) are two sides of the same coin. The draft bill lays emphasis on a participative and consultative land acquisition process. The draft bill has also tried to address the indiscriminate invocation of ‘urgency’ clause by the state governments to acquire land.
Having said that, there are certain aspects of the draft bill that needs a closer scrutiny. It appears that the draft bill has been guided by the past experiences of land acquisitions and the controversies emanating out of them. Two of the most controversial land acquisitions in the recent past that readily come to the mind are the land acquisitions at Singur and at Noida Extension, both of which got a lot of press and drew a bogey of diverse sentiments from different quarters. If one puts to test the draft bill to these two controversial land acquisitions, the results would be as under:
Singur: going by the affidavit filed by the West Bengal government in the Calcutta High Court in June 2007, at least 30% of the project land was acquired against the consent of the affected farmers. Taking these as facts, under the draft bill, no acquisition could have taken place as the draft bill requires consent of at least 80% of the affected families to enable the appropriate government to acquire land.
Noida Extension: here the protest was largely on account of inadequacy of the compensation paid or offered. The draft bill has tried to address this issue by bringing in a concept of ‘market value’ and an element of genuine ‘solatium’. The draft bill proposes a ‘land acquisition award’ which at its minimum would be six times the minimum land value specified in the Indian Stamp Act, 1899, in rural areas. In urban areas the minimum award would be two times of the minimum land value specified in the Indian Stamp Act, 1899. That apart, the draft bill also provides for a share in the developed land to the project affected people. The ‘land acquisition award’ and other entitlements regime under the draft bill look attractive and one may safely assume that had this draft been in effect as law Noida Extension at the relevant time, the expectations of the agitating farmers/land-owners could have been easily met.
It is therefore evident that the draft bill has benefited from the past experiences and has provided safeguards to avoid a repeat of past unpleasant experiences.
However, the aspect of the draft bill that needs examination is intricately linked to the provisions that are there to ensure a fair compensation for lands acquired. The avowed objective of the bill is to strike a balance between the need of land for infrastructure development, industrialisation and urbanisation and the interest of the land owners and those whose livelihood depends on the land being acquired. Further the foreword by the Minister, Mr. Jairam Ramesh, very honestly acknowledges the fact that land markets in India are imperfect and that there is asymmetry of power (and information) between those wanting to acquire the land and those whose lands are being acquired. It is for this reason that the government sees a role for itself to make a meaningful intervention and hence the bill.
Thus, the focus of the legislation is to ensure fair compensation to the land owners whose land is being acquired. As aforesaid, the draft bill proposes to address this issue by prescribing a method to determine the ‘market value’. The method prescribed proposes to take into account “the average of the sale price for similar type of land situated in the village or vicinity, ascertained from fifty per cent of the sale deeds registered during the preceding three years, where higher price has been paid”. This proposal has the potential to distort the market as it may lead to an artificial increase in the market value wherever any land is to be acquired.
The land markets especially in rural area, lack depth and hence are susceptible to easy manipulation. The imperfection of the land market and the presence of ‘more informed’ would mean a lot of speculative deals in the area where an acquisition is in the pipeline. A provision whereby such speculative deals become the benchmark for fair compensation would not only further encourage speculation but would also encourage them to transact at unrealistic prices so as to push the compensation amount up. One may say that as only fifty percent of the sale deeds are to be taken into account, such speculative deals would get disregarded while choosing the relevant fifty percent. A good argument on the face of it but given the ground realities may not hold much water. Rural India runs on cash economy and land transactions invariably are done at the circle rates to avoid any additional stamp duty. Thus the fifty percent of the sale deeds which are to be chosen would invariably be from the hundred percent of the speculative deals. One more argument that can be put forth in defense of the draft bill is that as artificially high-priced speculative deals would make the acquisition unviable, this itself would act as an inherent check on speculation. This argument too is flawed as acquisition at times would be only for the remaining twenty percent of the land after the Industry has already acquired eighty percent and hence it would put the acquirer in a weaker bargaining position. In any event, whether the Industry pays through its nose to acquire remaining twenty percent or scraps the acquisition – none of the scenario is welcome and at least shall not be something that the law should encourage.
So what is the solution? A multi-pronged approach to The solution is two fold:-
(i) As a part of the comprehensive overhauling of the acquisition related issues, by law the state governments shall be enjoined to revise the circle rates at a periodic interval – say five years. This will ensure that circle rates are closer to the market rates. Apart from curbing the speculative transactions, this step will have spin-off benefits increasing the stamp duty collection and reducing the black money generally involved in land transactions.
(ii) The Collector should be empowered to enquire into the land transactions to ascertain whether it’s a bona-fide deal or is speculative in nature. For example, a purchase of land tract in village in Jhajjar by a person who ordinarily resides in Delhi and has no connect with the said village in all possibility is a speculative deal rather than a genuine purchase to carry out farming! Apart from rejecting such transactions for determination of ‘market value’, the Collector shall have power to penalize the speculators by reducing their award entitlement.
The above suggested steps though may not completely rule out speculation, but will definitely act as deterrent.
The author is a Partner with DSK Legal, a Mumbai-based firm with offices in Delhi and Bangalore. Views are personal
