Curse of the Land

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The Singur verdict and the future of industrialisation in India

AKBAR ALI MANDAL, a farmer based in Singur, West Bengal, who had sold 22 bighas of land for Tata Motors’ proposed Nano car factory at Rs 2 lakh per bigha (against a market price of Rs 30 lakh per bigha), had told Open some months ago that he was angry he hadn’t got his land back. “I wouldn’t have bothered if the project had come up here and our young people, both boys and girls, had jobs here. This is a nightmarish situation. Even educated young people end up being farmers, or else they have to leave this state for lucrative jobs,” Mandal had rued.

On the last day of August, farmers like Mandal finally found closure. The Supreme Court declared that the 2006 acquisition of land in Singur by the then West Bengal government was illegal. The verdict means that these farmers will get their land back. However, it puts the spotlight on a grave problem that confronts the country: how to spur industrial growth and create jobs for its burgeoning youth.

The then Left Front government of Bengal had acquired nearly 1,000 acres of agricultural land in Singur for the Tata Group through its industrial development department. The plan was to establish an automobile manufacturing facility where Tata’s Nano would be rolled out. Matters did not pan out that way, and the rest is history. Some 400 acres of land was taken away from unwilling farmers under the archaic Land Acquisition Act of 1894. The violence and political unrest that followed played a major role in the defeat of the Left Front by the Trinamool Congress of Mamata Banerjee—who took up the protestors’ cause—at the hustings in 2011. It also resulted in another phenomenon: of corporate houses such as Tata developing an affinity for then Gujarat Chief Minister Narendra Modi, who was ready to help acquire land for such stalled projects. The Nano plant was shifted to Sanand in Gujarat.

Speaking to Open , CPM Politburo member Mohammed Salim says, “The verdict has come. It will now open a Pandora’s Box. Almost all land buys under the 1894 law can now be questioned. Therefore, it will directly or indirectly affect the process of industrialisation, especially in land-scarce states such as West Bengal.”

The forces unleashed by Singur did not stop at unseating the Left Front after three-and-a-half decades of being in power. At the Centre, the United Progressive Alliance (UPA) Government was alarmed by what had happened in Bengal. By then, the National Advisory Council (NAC), a sort of ‘super cabinet’ for the UPA, had already voiced its concerns. Proposing a new law for land acquisition, it had stated that ‘persons who lose their lands, livelihoods and shelter because of acquisition for any purpose must be brought under the protection of this [new] law, and their rights and suitable compensation, resettlement and rehabilitation benefits are fully protected in all cases.’

After routing the CPM-led Left Front in 2011, the Mamata Banerjee government had passed the so-called Singur Act to return the land to its owners, which was challenged by Tata Motors in court. The matter is still sub judice.

Two years later, the Centre put a new land acquisition law, replacing the 1894 Act, on the statute book: The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (LARR) Act, 2013. All that was required under the 1894 law for a government to acquire land was a simple notification by the collector of the district where the land was located. There were no precautions against the misuse of this power, something that resulted inevitably in social unrest over time. But under the LARR Act, the layer of checks and balances is so thick that it becomes almost impossible to acquire land. Says Bibek Debroy, member, NITI Aayog and renowned economist, of the 2013 law: “The tendency on the part of the UPA Government to have created a law on a state subject, land, was antithetical to the principles of democracy and decentralisation of power.”

The verdict has come. It will now open a Pandora’s Box. Almost all land buys under the 1894 law can now be questioned

Two of the new Act’s key checks, laying down conditions to be met for the state to acquire land, are its Social Impact Assessment (SIA) and Consent clauses. These are meant to establish a link between the claim for acquiring land and the actual benefits that will come to the community and individuals whose land is being taken away. Both are particularly contentious. On paper, SIA appears to be a good provision. But in practice, what it does is something else. To cite an example, suppose the land at Singur were to be acquired once again under the 2013 law. Even before an agreement on land transfer was to be signed, documents would need to be filed specifying the cost of the project and the benefits drawn by society from it. This would include the number of jobs generated, the actual benefits going to locals and the cost of displacement. The process requires an expert group to verify the SIA report. This group is to have just one technical expert on the project. Most of its members will be social scientists, local leaders and experts on rehabilitation. For anyone who knows how these processes work, this will be nothing less than a ‘haggling committee’ to tilt the balance in favour of those affected by the project.

The other contentious clause requires the consent of at least 80 per cent of those whose land is needed before the property can be transferred. Anyone who is familiar with what happens when an announcement of any project—road, building, industry, virtually anything that requires transfer of land—knows what to expect. No sooner is there a rumour of a project, than prices begin to shoot up. Getting four-fifths consent is simply too onerous for land to be acquired at a reasonable price for a project. There are plenty of examples across the country of projects that got shelved because soaring land rates turned them unviable.

Under the 1894 law, the time taken to acquire land by the government— unless the process faced judicial blocks—was usually less than six months. If someone had an objection, then that was to be submitted in writing within 30 days of the first notice for acquisition. In contrast, under the LARR Act, it could take excruciatingly long. PRS Legislative Research, an independent think tank, has estimated that even if there are no delays, acquiring land under the new law takes 50 months.

The tendency on the part of the UPA Government to have created a law on a state subject, land, was antithetical to the principles of democracy

Given the number of checks and balances built into the LARR Act, a determined effort to block a transfer of land can ensure that it never takes place. With tight deadlines and serious constraints imposed by project costs—such as cost overruns—a delay in starting the project can kill it even before the blueprints have moved from the drawing board to the project site. But most damagingly, under the new law, ‘public purpose’ has been defined so narrowly as to take it back to the original socialist interpretation that prevailed in India from 1947 to 1991. This makes it impossible in a changed environment—where the private sector is probably a more important generator of employment—to carry on the tasks of economic development. The Left Front government was right in its effort to invite private companies to set up factors and give out jobs. It failed in applying the land acquisition law properly.

THE BJP-LED Government that came to power in 2014 was conscious of the new law’s shortcomings, and has tried to modify the LARR Act accordingly. Through two ordinances, issued in 2014 and 2015, it sought to modify the SIA requirements for important projects in defence, rural infrastructure, affordable housing, infrastructure, including Public Private Partnership (PPP) projects where the land and industrial corridors are state-owned, but these changes got stuck in a political logjam in Parliament.

The second ordinance was introduced in the Lok Sabha as a bill in 2015, but it has not become law so far. The way ahead is not easy, as the LARR Act, and amendments to it, are based on hardened political positions. Unless some sort of consensus emerges on the issue, that Bill will remain stuck in Parliament. The likes of Congress leader Jairam Ramesh had attacked Modi bitterly over his proposal to amend the 2013 law, contending that the Prime Minister’s intention was to make land acquisition a business proposition.

As matters stand now, it is all but impossible under the LARR Act for any private company to acquire land with government help even if it’s for an industrial project that generates jobs for the jobless and large tax revenues for public use. Forget private projects, even rural infrastructure is badly affected. There are examples in Delhi’s periphery where land acquisition for water treatment plants in villages is stuck because of complications posed by the new land law.

These conflicting concerns are reflected in the August judgment of the Supreme Court, even if the law under dispute in the case—the 1894 Act—no longer exists. While the two judges who constituted the bench—Justices Gopal Gowda and Arun Mishra—unanimously held the Singur land acquisition to be bad in law and ordered its return to cultivators/owners, the judgment differed on an important issue: the need for a broader view of ‘public purpose’ which would include land being given to a private company as part of the state’s policy to generate employment. While the differences are couched in the finer points of law, the essence is clear. One cannot take too narrow a view of ‘public purpose’ while taking a decision in such matters.

As with the acquisition of land to create new cities, too, the new land law of 2013 is a major impediment. NITI Aayog CEO Amitabh Kant, who had played a crucial role in initiating the concept of smart cities in India as chairman of Delhi-Mumbai Industrial Corridor Development Corporation, has repeatedly argued that the law would create a lot of problems for states trying to acquire land. “Land is a complex issue,” he had said, “It is very difficult to get land of this size and scale. States are finding it [hard] to get land…” He had recommended central funding to help states get the money needed to buy land for such infrastructure projects.

It is high time that the Singur judgment awakens India to the pressing reality of job scarcity. Between 2010 and 2030, India will undergo a demographic transition that’s perhaps unprecedented in recent times. The country’s working age population—defined as persons between 15 and 59 years old— will see a massive increase of 220 million. In contrast, China’s working age population will decline by 43 million. By 2050, among major emerging economies, India’s share of working age population will be the largest.

This poses a huge challenge. Unless people are provided meaningful employment, the country would be at risk of vast social upheavals. The best way to push this relatively youthful ‘bulge’ into work is by giving them industrial jobs. Here India’s prospects are dim—and this does not have to do with the failures of one government or another—due to policy mistakes made over the last decade or so. The LARR Act is an outstanding example of a law that retards the transition from agriculture to industry. India has fared poorly on this front historically. During its socialist past, it relied on the public sector to generate quality industrial jobs. That did not happen. For example, from 1993-94 to 2007-08, the share of industry in employment remained virtually stagnant even as India was on the cusp of a historic expansion in its working age population. When the chance for pushing ahead with industrial employment—this time through the private sector—emerged, the country hurt its own interests by creating a law that makes it almost impossible for land to be acquired for the private sector, in the name of justice for the poor.

Ways out of this political conundrum are now being explored in states where the development challenge is especially pressing. One such experiment is being carried out in Andhra Pradesh, where instead of acquiring land directly for the new capital city of Amaravati, a land pooling scheme (LPS) has been put in place. Perhaps this was the only way out. The new capital requires 33,000 acres of land, something that is not possible if land were to be acquired directly. Instead, under the model adopted there, for every acre of land given up by a farmer, developed residential and commercial plots ranging from 900 to 1,700 sq yards are to be handed back to each once the development is complete. In addition, a farmer gets hefty cash compensation of up to Rs 50,000 per acre (depending on the location of his land) every year for ten years.

Perhaps it is experiments of this sort that will pave the road ahead for India’s developmental challenges.