Focusing on land owner

The lease provision in the new Bill and assessing local stakeholders will go a long way in making land acquisition smoother, Saji Gopinath says.

Considering the escalation of cost of entire project happening due to this delay in acquisition and ensuing costly legal procedures, the increase in land price resulting due to the implementation of the new Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2012 will be insignificant. Further in most of the large infrastructure projects like power plant, highway or a factory, the land cost accounts to a very small part of the total cost and the increase (even if it is two to three times the existing level) will not have significant impact on the total cost. However, inordinate delays often increase the project cost which is much more significant.

The Bill also provides the provision of leasing the land (keeping ownership right with the farmer). This allows that the owner of the land also benefits from the overall development resulting from the new project, which is missing currently. If used properly, this provision could ease many problems of acquisition of land for productive infrastructure which results in overall increase in land price, like road, public utilities etc.

A national approach: Lack of transparency in the process as well as lack of concern for rehabilitation and resettlement (R&R) of land losers, coupled with the fact that these land givers often would not derive any benefit from the new infrastructure being built, makes the existing Act ineffective. Even though the new Bill may cause a little pain in the short run due to modest increase in land price, resettlement cost etc, this will reduce, if not eliminate the perpetual pain existing in the current system due to cost escalation resulting from delays.

The Bill addresses many of the current issues in some specificity:

• The land cost is not limited to existing market rates which are often undervalued and in some cases artificially enhanced.
• Stakeholders, hitherto ignored, are better considered. People who are not owners but derive livelihood from the land getting acquired, including shopkeeper tenants, labourers etc, are almost completely ignored during land acquisition.
• Currently, the land loser has few benefits, other than compensation, from the new infrastructure (and ensuing increase in land value) being built in the land acquired. Through the leasing option the Bill addresses this to some extent. IIMK has suggested to Government of Kerala (GoK) to further make it attractive by dematerialising this ownership right as tradable instruments so that the land loser gets a platform to derive benefit from ensuing land price. The GoK is considering this as part of the stateÆs R&R policy.

In the short run: It increase land price marginally, but also ensure that the projects gets implemented fast as there is provision of reversal of land back to owners or compensating them. As 70/80 per cent prior consent is necessary, this may slightly delay the implementation in large projects at least in the initial stages. Further the revenue official (Collector) has a more proactive role as per the new Bill.

Medium term: A lot of pending projects may get settled, completed or closed. As Act will be implemented retrospectively, this will unclog the stalled developments.

The overarching clause: The lease provision is an interesting add-on to the bill. It is not always the livelihood losers who stall acquisition process. Many times people who buy land for speculative or investment reasons block the acquisition process as they see no benefit emerging for them from the new infrastructure. Through the leasing option, they keep ownership, which will make them also a partner in the development.

However the current bill does not specify what will be downside risk in this case. For instance what happens if a shopping mall built on this lease land does not generate enough revenue and hence did not enhance the land price in the area? In the proposal made by IIMK, this was addressed by guaranteeing a risk-free return though a proactive government intervention.