Will it serve the purpose?

The Winter Session of Parliament can witness a debate on the draft Land Acquisition Bill 2012 which will be introduced for approval. If the Bill is passed, it is expected to be an important moment for the infrastructure sector. But will the Bill serve the purpose?

A Group of Ministers (GoM) headed by Agriculture Minister Sharad Pawar has cleared the long-pending Land Acquisition Bill after a long debate on politically sensitive public interest issues, and paved the way for its introduction in Parliament during the Winter Session. The final draft of the Bill will now be placed before the Union Cabinet and is likely to be introduced in the winter session of Parliament. The Land Acquisition, Rehabilitation and Resettlement Bill, 2011 was introduced in Parliament in September last year and was referred to a Parliamentary Standing Committee, which submitted its recommendation in May 2012. In August 2012, the Bill was referred to the GoM after some ministers raised reservations on certain provisions of the proposed legislation.

Amendments

The government has recently made some changes to the Land Acquisition Bill. The consent required of landowners for acquiring land for private purpose has been made more stringent. The final draft of the Bill now proposes consent of two-third of "land losers" (from whom land would be purchased) for acquiring land for public-private-partnership (PPP) and private projects. It has no retrospective clause and instead there will be a cut-off date to be decided later. Rural Development Minister Jairam Ramesh has said that the cut-off date for retrospective impact on compensation for land procurement could be the date of introduction of the Bill in Parliament. The GoM was sharply divided on these aspects, with a number of ministers opposing the retrospective clause as well as the original proposal for 80 per cent consent by both "livelihood losers and land losers" before land could be acquired. A consent of 80 per cent will be required if it is a private project and consent of two thirds of the land affected will be required if it is a PPP project. The new consent figure of 80 per cent was a point of debate between the rural development ministry and the Congress party. Eventually, the latter won.

Meanwhile, in a communication to Rural Development Minister Jairam Ramesh, Association of Indian Chambers of Commerce & Industry (ASSOCHAM) said the suggested provision should be applicable even to the projects which are defined as other than public purpose.

RV Kanoria, President, FICCI, believes that the Land Bill in its present form could prove to be a dampener to industrial growth and, in particular, could completely jeopardise the development of the Indo-Gangetic plains, which encompass Punjab, Haryana, Uttar Pradesh, Bihar and West Bengal. These areas are among the most densely populated regions of the country and the passage of the Land Bill would result in denying the people of this area the opportunity of participating in the industrial growth of the country. He says, "In my opinion, the Bill in its present form would stop the gradual shift in the labour force we are seeing today from agriculture to industry and services in its tracks. It is highly undesirable that we condemn agricultural labour to low-paying, unskilled jobs."

"The percentage of land owners, whose consent is a must for acquiring land for private purposes, has been raised from 67 per cent to 80 per cent in the proposed bill. This will make it difficult for private developers to acquire land. This will also stall a number of infrastructure projects that are in the pipeline. So, we are a little sceptical of the Government’s move to increase land owners’ consent from 67 per cent to 80 per cent for acquiring land for private purposes," says Vikram Sharma, MD, Supreme Infrastructure India.

According to Sharma, the amount of land required for non-agricultural purposes is increasing by the day. "Since India is predominantly an agricultural country, there was a constant source of conflict between the private developers and farmers to acquire this land for non-agricultural purposes. Therefore, the land acquisition bill, which aims to end this conflict and benefit both the farmer and the developer community, is the need of the hour,ö he observes.

Rajeeva Sinha, Director, Adani Ports and SEZ, feels that with this proposed Bill, a whole lot of changes can be expected in infrastructure sector. "According to me, for a Public Private Partnership (PPP) project, government should initiate the land acquisition part as it is for public purpose. This will also enable a faster implementation of any project. In the present atmosphere, I would say that the government should utilise or rather keep aside bigger land banks for PPP projects or any other infra project. Besides, government should also take back land from those developers who have not started their projects after two years in government land." That said, will the implementation of the new Land Bill bring in foreign investment in Indian infrastructure sector? Experts, including Supreme’s Sharma, believe there will be an increase in foreign investments in the infrastructure sector in India with the implementation of the Land Acquisition Bill. "More and more international firms will be looking at investing in India with the relaxation of land acquirement rules," Sharma says. "This will ultimately benefit the infrastructure sector in India as well as the economy as a whole."

Resettlement & Compensation

On the resettlement-compensation proposition, Sharma is of the view that the government has fairly consulted all the stakeholders and taken on board all the suggestions to come up with this refined version of the bill. The most significant feature of the new Bill, he believes, is that it combines land acquisition with resettlement and rehabilitation (R&R).

Kanoria says, "It is important to convert the perceived advantage of our 500 million youth below the age of 25 into a true demographic dividend. The aspiration of a better life and new employment opportunities may be brought to naught if the very foundation of industrial development-the availability of land-is jeopardised. What is more worrisome is that such a denial could lead to social tensions and unrest."

According to Kanoria, the Bill also requires a clear definition of ‘public purpose’. ‘As we understand it, land requirements for large projects, such as the National Investment and Manufacturing Zones and the Delhi-Mumbai Industrial Corridor, would be included in the scope of "public purpose. This is a very welcome step and needs to be clearly notified in the legislation. Otherwise, the state governments will not be able to acquire land for such zones and thereby render the whole concept of development through such zones ineffective," he says.

Prospective legislation needed

Industry bodies are of the opinion that the legislation should be applied only on a prospective basis. A retrospective application would adversely impact the confidence of investors and create a perception of unpredictability of economic policies. While the Land Bill could be enacted after the Cabinet approves it, the legislation must come into effect only prospectively and with advance notification of the cut-off date. This is critical to ensure that projects currently under implementation are not adversely affected. The land use changes should be notified well before the acquisition. This would enable a fair evaluation of the land, including its future use. Ambiguities in this respect will severely impact price negotiations and may present a distorted picture in many cases.