Land: Too Cheap, Too Dear and Too Hot To Handle!

Government’s dropping of contentious amendments from the land bill will actually blunt the Opposition’s attack.

Government Compromises

• Government will now accept the joint parliamentary committee’s report due on August 7 and leave it to individual states to modify the 2013 Act
• Tactical retreat is good for the cause of cooperative and competitive federalism that Modi seeks to promote
• For private sector, open negotiation with farmers/landowners a must, so Congress’ protest on the issue might lose steam

Land acquisition from 1947 to 2013, operated under the colonial 1894 Land Acquisition Act. Combined with ‘land use’ legislation, also inherited from the British, the political-bureaucratic nexus is omnipotent. The 1894 law, with its overwhelming discretionary powers, was most serviceable for the state, as well for those it wished to favour.

This old law was only thrown over, via a radical Act of Parliament in the dying days of UPA rule, in 2013. And this, after elaborate debate and broad bipartisan support, most notably from the BJP, albeit under a different leadership, that wanted to go even further with it!

The new Act’s content went to the other extreme. It feather-bedded the land owner/farmer with elaborate consent clauses, and pumped up the compensation clauses to what many say are unrealistic levels.

Of course, how much is eventually paid out, despite the enshrinement of double the market rate in near urban areas, and four times that in rural regions, and how, will depend on the interpretation of the fine print.

Too Many Questions

But, notwithstanding the process, many interested parties have been wondering how the government and private industry propose to finance land acquisition? What will bloated acquisition costs do to the viability of envisaged projects? Alternatively, how realistic is it to partner with landowners and farmers unconnected with the businesses, industry, housing, offices or the infrastructure being built on their land?

When the pro-development majority government of Narendra Modi came to power in 2014, it immediately set about removing the excessive empowerment of the 2013 Act, without, however, disturbing the original compensation clauses.

But the initiative ran into stiff opposition, both from within the supporting organisations and cadres of the BJP/RSS, and NDA constituents such as the Shiv Sena and Akali Dal, plus large sections of the opposition. The proposed dilutions of the consent clauses of the 2013 Act were dubbed ‘anti-farmer’, and began to gain more than a little political traction, portraying the government as ‘pro-big business’.

The Ordinance Bludgeon

The government initially took a muscular stance, and promulgated the changes as an ordinance, and kept renewing it every six months. However, they made little headway with getting the amendments passed in Parliament. But tellingly, the ordinance was hardly used by its intended beneficiaries!

Now, 14 months into its tenure, the government has decided to abruptly bow out of the fracas, thereby stealing the opposition’s thunder. It will now accept the joint parliamentary committee’s report due on August 7 and leave it to individual states to modify the 2013 Act to suit. The tactical retreat is also thought to be good for the cause of cooperative, and competitive federalism that Modi seeks to promote. The BJP states, however, are expected to use it well.

Government compensation for land acquisition, in any case, has not worked very well. It has led to farmer agitations in Noida and Singur in recent memory. In Haryana, under former Congress Chief Minister Bhupinder Singh Hooda, while the pay-out was marginally more than others, it came in dribs and drabs. Interest was computed on outstanding amounts, and developed plots in lieu of acreage taken over, were to be allotted; but only as and when the state was able.

Open Negotiation

For the private sector, under the 2013 Act, apart from an 80% consent clause, it is an open negotiation with farmers/landowners, and then having to contend with huge additional expenses under ‘land use’ and plan sanctioning laws too.

The present realty sector, languishing for lack of demand, may perk up via this circumstance alone, because new developments could grind to a halt, except on existing land banks! The cost of acquisition is the sticking point. So Congress, and its friends, may not have much to crow about after all.

But seeking private and foreign investment demands a more welcoming and pragmatic attitude. The Tata-Singur land agitations of 2006-2008 did propel the TMC and Mamata Banerjee to power. But industry in West Bengal, seven years on, is still a non-starter.

Modi’s seemingly abject surrender may just win him Bihar, now that he is rendered ‘pro-farmer’ again, even as he goes out to bat calling Congress ‘anti-progress and development’.

(Gautam Mukherjee is a plugged-in commentator and instant analyser)