Challenges in land acquisition in India, and its implications - Seeker's Thoughts

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Challenges in land acquisition in India, and its implications



 India has come a long way since liberalization was unveiled for the first time in the country in 1991. 
Today, the nation is not only considered to be an Asian giant, but also the fastest-growing major economy in the world. Maintaining a stable GDP growth rate of around 6-7 percent year on year is a remarkable feat in itself.

 However, one thing to take note of in this particular context is that our service sector contributes the most to this GDP growth story, whereas the contribution of the manufacturing sector is almost trivial.


 We are lagging behind in infrastructure and construction sectors as well. As a result, India is unlikely to emerge as the next China, in spite of having so much potential. 


A major hindrance in this particular regard is the land acquisition problem in our country.


The Problem:- For any large scale project, we need land. For setting up a large-scale manufacturing plant, we need land. For implementing infrastructure projects such as building roads, railways, highways, etc. we need land. 


Even for the rapid urbanization programme and building of smart cities which have been taken up by the government in order to boost our economy, we need huge amounts of land, and here lies the hurdle. 


The Indian economy as a whole is still primarily dependent on agriculture. Over 50% of our working population still works in farms. So, if their land is taken away for industry or some other purpose, they consider is as a direct threat upon their livelihood. 

Moreover, the agricultural land in some regions is extremely fertile and is not considered to be worth giving away for a price by the farmers. 

Then, in states like West Bengal, we have got too many marginal and small farmers, who, on average, hold less than 1 acre of land. Thus, in order to acquire a piece of land, the concerned authorities have to strike a deal with more number of farmers for the same amount of land, had it instead been located in Punjab, Gujarat or Maharashtra. 


Add to all these complexities the political angle. Any issue related to farmers is politically extremely sensitive in India. So, whichever political party is in opposition, be it at the center or the states, makes sure to raise their voices, even when there is the slightest perception that the ‘kisan’ is being deprived in some way or the other. 

The ruling parties have also learned from past experiences to ‘play it safe’, in case some farmers’ issue crops up.


It is important to not here that, India as a democracy has got certain limitations. It cannot simply bulldoze an opposition view or a protest like China. The governments in India cannot forcefully impose their decisions on the common masses and take away farmers’ land at will. 

Instead, they have to analyze the land acquisition problem by putting themselves in the shoes of all the concerned stakeholders, and thereby arrive at a sustainable solution, which is beneficial to all parties, in particular the farmers, who perhaps comprise the most vital stakeholders.

Two classic cases where land acquisition turned out to be a significant challenge :-

Case 1 -> Farmer’s agitation and protest movement against land acquisition for the Tata Nano plant in Singur : Tata Nano was a dream project for Mr. Ratan Tata, the erstwhile Tata group chairman. According to him, this project would help fulfill the dreams of all those people in the country, who could not previously afford to buy a car due to their purchasing power constraints.

 Once the project would be completed, anyone and everyone can buy a car in the form of Tata Nano, the price of which would be starting from just a paltry amount of Rs 1 lakh. It was decided that the Nano plant spreading over an area of around 1000 acres would be set up in West Bengal. 


Then state government gave him multiple options regarding where to set up the plant and Singur was Mr. Tata’s most preferred choice, thanks to its locational advantage.

                                    
Singur is situated only 40 kilometers away from Kolkata and lies on the sides of NH-19, more popularly known as the Durgapur Expressway. It would , therefore,be advantageous for any company to setup a factory over there to reap the logistics and supply chain benefits.

However, there was one big problem. A section of the farmers were reluctant to give up their land. Singur had extremely fertile lands and agricultural productivity was very high over there. As a result, these farmers, who were already earning a handsome amount of money from their land, found no incentive to sell that land for the factory. 

Meanwhile, the government started the process of land acquisition. It is alleged that land was forcefully grabbed from the reluctant farmers with the help of police and administration. 

Those who were still not willing to comply had to face the wrath of the state in the form of police atrocities and legal harassments. It is even alleged that ruling party cadres teamed up with the police to dissuade the farmers from participating in protests. 

However, the farmers were not eager to give up their land so easily and continued with their protest movement under the banner of “Krishi Jomi Raksha Committee” or Protection of Farmlands Committee. They clearly stated that the compensation package offered in exchange of their land was by no means adequate.

 They also demanded one job per family for all the farmers, who gave up their land. Some of them even stated that they would not give up their land under any circumstances, even if adequate compensation and jobs were provided. The result was large-scale violence and even deaths.


 Ultimately, the plant had to be shifted from Singur to Sanand in Gujarat, even as 80% of the work was completed. The inevitable result was delay in launch of the product, which ultimately led to reduced consumer interest and ultimately failure of the product.


Case 2 -> Land acquisition hurdles in Mumbai-Ahmedabad bullet train corridor : The Mumbai-Ahmedabad bullet train corridor is one of Prime Minister Narendra Modi’s dream projects. For implementing this project, huge amounts of land need to be acquired. To be precise, the corridor will pass through at least 312 villages in Maharashtra and Gujarat. 


Although, the process has been relatively seamless in Gujarat, a lot of resistance has emerged from Maharashtra. 

The maximum amount of resistance has been coming from tribal dominated villages in and around Palghar district.

At first, the government tried to acquire land through price-based private negotiations. Prices equivalent to or even higher than the market price were offered to farmers. However, the attempt mostly proved to be futile, and the government is now planning to invoke section 96 of The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, Resettlement Act, 2013 to forcibly acquire the remaining portions of land, which has been stuck till date. 

This is raising new concerns among the tribal farmers’ community, and protests are on under the banner of Bhumi Adhikar Andolan (BAA), an umbrella of various outfits protesting on the same issue. CPI(M) affiliated All India Kisan Sabha (AIKS) leader Ashok Dhawale said in a statement, “We will resist the state government’s move to forcefully acquire land with all our strength. We have been opposing the land acquisition for more than a year now, and will continue to do so. Taking away their land is the same as taking away their livelihoods.”

The project is estimated to be completed in 7 years from its date of inception. The implementing agency National High Speed Rail Corporation Limited (NHSRCL) is trying its level best, so that the project can be inaugurated on 15th August, 2022, on the occasion of India’s 75th Independence Day. However, this deadline can easily be jeopardized if the farmers’ agitations continue and a sustainable solution is not arrived at quickly.



The Solution :- In order to arrive at a sustainable solution, it must be ensured that the land acquisition deal must be of long-term benefit to the farmer. 

Providing a one-time compensation equivalent to the market price is no longer enough. A lot more needs to be done. 

It has been observed through multiple researches that when people having very little or no financial education all of a sudden end up with a lump sum amount of money, that money is most of the time used in a very imprudent manner. 

A major portion of the amount is often spent on alcohol and other such sources of short-term pleasure. As a result, the whole compensation amount gets spent within a few years, after which, the farmer and his family is again rendered helpless. 

Therefore, instead of simply providing one-time packages, measures can be taken to ensure a continuous flow of income for the concerned farmer’s family. A few innovative models can be considered in this particular regard.


Model 1 -> The first concept is that of land bonds, which is currently being thought of by Government of Kerala. Land bonds were first tried in Ireland, after which, developing nations such as Brazil, Guyana and Jamaica also implemented the same. 

This concept recognizes the fact that when prevailing rate if offered for a certain piece of land, it doesn’t take into account the future appreciation value. So, providing farmers a portion of this increased revenue due to future appreciation would work as an incentive for them to sell off their land.

Model 2 -> The second model that can be applied here is that of land auction. This idea was first proposed by two eminent economists, Mr. Maitreesh Ghatak and Mr. Parikshit Ghosh, way back in 2011.

 To understand the concept better, let us assume, the government needs to acquire 600 acres of land for setting up an automobile plane. The government, in this case, can simply arrange for a land auction and ask farmers of the neighborhood to submit an asking price for their land. 

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Thereafter, the government should proceed to buy the cheapest 600 acres of land available. 
Now, it is obvious that these 600 acres of land is sparsely located. However, this problem can also be solved by paying an additional relocation compensation to the unwilling farmers and relocating them to land sold by willing farmers outside the project premises.

Model 3 -> Finally, a third model can be derived from the Magarpatta project in Pune. Instead of forcible land acquisition, the local community over there pooled together around 400 acres of land and set up a private limited company, which was responsible for developing the land. 

This land would eventually be used for a commercial-cum-residential project. Instead of simply receiving a one-time compensation, the local farmers were now turned into shareholders of this project. Two types of shares were initially offered; preferential shares and equity shares. Later, preferential shares were eliminated and equity shares were the only option available. 

As a result of this system, farmers not only got fair price for their land, but they also started receiving dividends against shares held, rent from tenants, employment/contractual work and decent homes to live in, thereby exponentially improving their standard of living. 

Of late, the city of Kolhapur in Maharashtra has also been trying to replicate the Magarpatta model for the purpose of land acquisition.

Summarizing the whole discussion in a nutshell, the government must ensure that force and state power should never be brought down on farmers, in order to acquire their land. Maximum emphasis should be put on dialogue with the farmers and creating suitable incentives for them, so that they themselves become ready to offer their land. 

The situation should never be imagined as a battle between farmers and industry. Instead, it should be a win-win scenario for all the stakeholders involved, so that both the farmers and the industries get benefitted in the long run.

writer

Kapileswar Mallick

(1st year MBA student at IIT Delhi)










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