Semi Issue5 12810740410992541

Edited proceedings of a seminar organised
by the Centre for Politics and Governance,

Observer Research Foundation
E
BS
RVER R
Mega Project Development:

Issues in Land Acquisition
JULY 2010
ISSUE 5
NDATI
O
VOLUME 1
OU
ORF SEMINAR SERIES
EARCH F
ES

Edited proceedings of a seminar organised

by the Centre for Politics and Governance,
Observer Research Foundation,
New Delhi
2010 Observer Research Foundation. All rights reserved. No part of this publication may be
reproduced or transmitted in any form or by any means without permission in writing from ORF.
Summary
The issue of land acquisition has always been plagued by controversies. For
many years, contentious issues like inadequate compensation and
rehabilitation and resettlement (R&R) of the oustees have dominated the
discourse on the subject. The purpose of acquiring land has never been as
seriously debated in the Indian context as it should have been. Things have
changed in the recent years with the need for land acquisition having
increased, particularly after the Special Economic Zones (SEZs) and
mining and large development projects started coming up in a big way. In
recent times, a number of land acquisition attempts have led to protests by
those affected. Very often these protests have turned violent. Against this
background, the Observer Research Foundation organized a day-long
conference on the key issues and legal provisions involved in land
acquisition. Experts deliberated on the subject and suggested appropriate
strategies to deal with this important public policy issue.
Problems besetting Land Acquisition
Major hurdles to land acquisition are borne out of the country's

flawed colonial Land Acquisition Act (LAA), 1894, the most
contentious being the 'eminent domain' provision which
empowers the state and its associated agencies to acquire land
(often forcibly) by using the public purpose clause even in the case
of private companies.
Inadequacy or lack of compensation remains the single biggest

reason for popular opposition to land acquisition. India's abysmal
record in terms of providing adequate compensation and
honouring promises to the oustees has contributed to the present
trust deficit and consequent opposition on the part of owners of
land to part with it. In the public eye, the government is no longer
considered an honest broker.
Rehabilitation and Resettlement (R&R), which is crucial for

making most of the outstees to agree to part with their land, is the
most neglected aspect of land acquisition and causes considerable
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angst and opposition to any new land acquisition. The LAA, 1894
is silent on many of the legalities related to R&R, thereby creating
enormous space for its misuse/violations.
The absence of any provision of compensation for people who live

in the same area/project site as the owners of land (landless
agricultural workers, non-agricultural labourers, forest dwellers,
tenants or share croppers, etc) is adding fuel to the fire. The most
recent protests relating to land acquisition in Singur, Nandigram
and Kalinga Nagar were largely fuelled because of this.
Lack of institutional capacity for dealing decisively with many of

the critical components of the land acquisition process (including
negotiation, determining compensation, arbitration, etc)
contributes to the present impasse. The acquisition and R&R staff
who themselves are often not properly equipped to implement the
R&R schemes, add to the confusion.
An unholy nexus between private parties, officials and land mafia

has brought new dimensions to the problems of land acquisition.
There are usually huge mafias operating to profit from any land
deals.
There are growing cases of use of overt violence against the

unwilling landowners which is giving a bad name to land
acquisition, apart from inviting protests and opposition even
among its supporters. It is now common knowledge that whenever
there are protests against land acquisition, there are false cases filed
against the community members and activists.
Policy Suggestions
Suggestions that emerged from the seminar deliberations were two
pronged:
(a) Improving existing policies on land acquisition (b) measures or steps
required to rebuild a climate of trust and mutual understanding between
the two parties (oustee and the buyer). The main points include :
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Need for greater clarity in the existing law (LAA, 1894) by

substantially amending its scope and contents.
Draft Bills on Land Acquisition and R&R Policy, though lot better
than the existing laws, would still require some urgent fine-tuning
to make them more effective.
Public purpose clause needs substantial clarity as in the proposed

format (LAA 2007), even a pure private land deal can be treated as
'public'.
Similarly, many of the provisions/laws regarding compensation,

particularly pricing, provision for de-notification of excess land,
provision of time limit for filing the cases for arbitration, and
market valuation methodology etc., need greater clarity.
Apart from cash or land for land kind of compensation, there is a

need for considering alternative forms of compensation such as
kisaan equity options and rehabilitation jobs.
Private industry can set examples for others by developing

attractive compensation packages such as sharing of economic
benefits by giving higher compensation, by giving people shares,
debentures, options, etc. in some of the projects. Some amount of
the gross revenue of the project could be distributed as royalty in
perpetuity among all those who have given up land.
R&R should be treated as a right based entitlement scheme and not

as a welfare scheme. There should be legal sanction for R&R and
also a clearly defined institution for determining what the R&R
should be, making sure that it is properly implemented.
There should be grievance redressal mechanisms built into the

R&R process. The benefit of the project should go not only to
those who have lost the land, but also to those who get affected by
the presence of the project either because of pollution or other
problems that the project might create for them in course of time.
Land acquisition process should take the affected parties into

confidence and it should be based on their 'informed consent'.
People should have the trust that everything will be done for them
properly and transparently.
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Effective communication with affected people can go a long way in

settling many of their queries and apprehensions. The project
members need to spend considerable time with the affected people,
explaining to them the nitty gritty including the long term impact
of the project on their livelihood, jobs and possible business
opportunities.
The scope of compensation should stretch beyond cash or

monetary rewards. Concerned project authorities should look at
promoting cultural facilities, educational infrastructure and a host
of other key amenities in the vicinity which can win people's
support.
There is a need to recognize and protect the traditional rights,

particularly of the Scheduled Tribes who are in danger of losing
their distinct identities and livelihood. The Extension of Panchayat
in Scheduled Areas (PESA), 1996 needs to be honoured in any
acquisition in scheduled areas and constitutionally entitled Gram
Sabhas need to be taken into confidence to make the process more
legitimate.
Human rights impact assessments should be linked to the land

acquisition process.
Land grabbing in the garb of development or mega projects needs

to be stopped. There are, from time to time, allegations that more
land is being acquired than is actually needed. So, there has to be
some modality for ensuring, in consultation with local people, that
the minimum possible amount of land is acquired.
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Session I
Opening Remarks by Mr. Surendra Singh, President -Centre for Politics and
Governance,ORF
Land acquisition is an extremely tricky issue today. Approximately 70 per

cent of our population is dependent on agriculture for a living. Most of
them are small and marginal farmers. Added to this, a large number of
landless labourers and share croppers eke out their livelihood from the
farm lands. But the irony is that only about 25 per cent of our total GDP
comes from agriculture. Therefore, if the country has to grow steadily, the
bulk of that growth has to come from other areas, such as manufacturing,
services, etc.
Agriculture itself depends for its growth on infrastructure, as also on
industry, to quite an extent and therefore the need of land for nonagricultural use. This leads to problems in and controversies over land
acquisition. The result is that a number of large infrastructure projects are
at a standstill today because of delays in getting land. Very often we witness
flare-ups like Nandigram, Singur and Kalinga Nagar. Special Economic
Zones (SEZs) have become the arenas for fierce disputes. According to a
recent study by ASSOCHAM, delays in land acquisition are threatening to
endanger investments worth $100 billion in the near term. The negative
impact this will have on economic growth, generation of new employment
and on tax collection can well be imagined.
According to the Ministry of Steel, a large number of projects are held up
because of procedural delays relating to land acquisition. Although there
have been efforts in the last few years to introduce new legislative measures
to address these issues, the net result always has been that, at the end of the
process, nobody is really satisfied. There is no consensus on the issue. The
farmers are obviously unhappy when their land is taken away, more often
than not against their will, and with meagre amount being given in the
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name of compensation. The project authorities are unhappy because of the

delays and the other problems relating to land acquisition. Even if a perfect
solution cannot be found, we have to look for ways to minimize the clashes
that take place and the differences of opinion that continue to persist.
A Bill to amend the Land Acquisition Act of 1894 was introduced in
Parliament in 2007 and is still under consideration. The Bill has plenty of
issues which need detailed debate. Some of the important clauses in the
new Bill are regarding 'eminent domain' and 'public purpose'. What does
the term 'public purpose' mean here? Should a project for which land is
acquired, citing public purpose, be something that the public would own,
control and have open access to, such as, for example, a road? Or should
considerations like general benefit, economic development, tax
generation, employment creation, export promotion, etc. also be included
in the definition of the term? This is a topic of keen debate. Political parties
often take contrarian positions for the sake of their electoral interest. So,
on the one side you have public interest projects like a road or may be a
canal and on the other side you have industries, SEZs, schemes of urban
development, area development, housing schemes, real estates and so on
that also come under the definition of public purpose. Therefore, the issue
is: when should public purpose override property rights and who is to take
a decision about whether a particular project should be set up through
invoking the eminent domain clausei.e., for public purposethus
empowering the government to take over the land? Then, there is the issue
of paymentcompensation for forcible acquisition of land from a person
who does not want to give his land away. So, if his land is taken, a number
of questions need to be answered. What should the amount of
compensation be? How should it be measured? Who should be the
deciding authority? Then there are the issues of resettlement and
rehabilitation. What should the policy framework for it be? A draft policy
has recently been proposed by the Ministry of Rural Development. There
is some criticism that many of the features of an earlier draft policy
proposed by the National Advisory Council have not found place in the
new draft.
There are issues regarding lack of institutional capacity, which cause delays
and a lot of dissatisfaction and heartburn all round. A crucial issue is the
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Mega Project Development: Issues in Land Acquisition
institutional capacity of the revenue staff. A lot of our land records are not
in a good condition, which creates serious problems in any land deal. The
acquisition and R&R staff who themselves are often not properly
equipped to implement the R&R schemes, do maximum damage to the
cause.
On the question of public purpose, perhaps the answer could be a sort of a
sliding scale for determining whether a particular acquisition is for a public
purpose or not. Where a public purpose is direct, eminent domain powers
could become stronger. Where the public purpose is less directly served
but yet the project is important, perhaps we could have a system where the
land owners, or at least a majority of land owners could have a greater say
in whether land should be acquired or not. This could be one of the things
that we might discuss and consider, something akin to a kind of a weighted
public interest in a particular project.
Then there are many concerns on the issue of compensation. There is
definitely a need for greater transparency and clarity on compensation.
One problem that comes across in most of the land acquisition cases is that
compensation is determined on the basis of the price at the time of
notification and not at the time of acquisition. So, generally by the time
land is acquired, the price goes up and that causes a lot of dissatisfaction and
controversies. The fact is that once the land is acquired and a project comes
up, generally the value of land in the surrounding area tends to increase.
But those, whose lands have already been acquired, do not get the benefit of
this increase. This causes resentment. Perhaps there could be a formula for
escalation of compensation in such cases. It would put many controversies
to rest.
A number of mega projects are coming up in tribal areasmainly mines,
steel plants and power projects. Special attention needs to be paid to
acquisition in tribal areas because it affects the tribal way of life. If not
tackled with a great deal of sensitivity, the area could become another
bastion for the Naxalites.
A Bill on rehabilitation and resettlement was introduced in 2007. It is
perhaps for the first time that the interests of those who do not own, but
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depend on land, such as tenants, share croppers, landless agricultural

labourers, etc. are being taken into account. While drawing up R&R
schemes, it is important that representatives of the affected persons should
be associated in these schemes and rehabilitation should be considered a
right-based entitlement, rather than as a welfare scheme.
In a nutshell, these are some of the issues which need a detailed discussion.
We have a list of very eminent speakers for this conference. In the first
session we shall take up the problems and challenges in land acquisition for
mega project development. In the second session, we shall discuss the
evolution of an appropriate strategy for land acquisition.
Mr. Sailesh Pathak, MD, PE Indian Infrastructure Fund
I will deal with the three groups involved in land acquisitionthe private
sector, the public sector and civil society. Let me begin with my first hand
experience of handling the Bangalore-Mysore Infrastructure Corridor
(BMIC), which I will compare with the Yamuna Expressway. Most of the
people have heard of these projects, but very few of you would have heard
of Shalboni in West Bengal, where Sajjan Jindal is putting up a 10,000 tonne
per annum steel plant. He has acquired the land without any problem at
all. When issues like 'the right of way' come into the picture, land
acquisition becomes much easier. It made Dr. Didar Singh's work in the
National Highway Authority of India (NHAI) much easier. Highways,
railways, power lines and, pipelines come into this easier category. But my
colleague from the private sector, who is setting up a power plant in
Chhattisgarh needs 800 to 1000 acres and that is much more difficult. Most
of the controversies are related to power, airports, ports, mining, hydro,
etc.
The most crucial point in land acquisition is its method and the process. I
consider India's way of doing things very silly because it is decided by
comparing the price paid for the land to the total project cost. If a power
plant of 1000 megawatts is to be set up it costs around Rs 4000 crore,
whereas the land will never cost more than Rs. 200 crore. And yet, the
single biggest impact on the project implementation is the problems
relating to the land. Since the land costs only a fraction of the total project
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cost an enlightened buyer from the private sector would willingly overpay
and save money by implementing the project speedily. But the private
sector is not an enlightened entity.
Under the1894 Act there is a Land Acquisition Officer who will always
play it safe because he is terribly scared of a departmental enquiry. He will
always go by the average of the last three years' registry of the land. And,
any Indian in this room who has ever bought land in this country knows
that we never pay more than 30 per cent of the actual cost in 'white'
(registered sale deed). So, in effect, you are never ever going to arrive at a
market price for any kind of land.
The innovations that I describe here are listed out in my paper, which has
been circulated. I will not talk about it right now. But the gist of it is that if
there is an increase in land price, how are you going to share the
appreciation cost with the person who is parting with land. The new Bills,
both on land acquisition and R&R do touch upon this. The important
thing is that 10 years back, the entire infrastructure was government
delivered. So there was absolutely no question about anyone making a
huge profit out of the land. Today, a lot of projects are happening through
public private partnership (PPP) mode and some projects are happening
completely in the private sector. Is public purpose a commercial purpose
or is it really for the public? Most government projects proceed on a stately
gait without any urgency or implementation efficiencies because no one
really cares to complete them in time. But in PPP, the private sector is
usually in a hurry to complete it. So, NHAI for instance is now being
proactive in saying we deliver 80 per cent of the land and you go ahead and
implement the project.
The last point here on the board is a big game changer and I have seen this
personally because I wanted to evaluate investments in the BMIC and the
Yamuna Expressway. The kind of price change that land undergoes due to
a project is simply unimaginable. Who captures that upside? Since I work
in the private equity industry, I emphasise on alignment of interests.
Unless there is an alignment of interests between the land owner and the
project developer, you are constantly going to have controversies over
land. In Special Economic Zones (SEZs) specially, the perception is that the
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government acquires land cheaply, transfers it to a private sector and the

private sector makes some profit. The issue is how to share the upside. We
have a High Court judgement in the Dadri case of Reliance where the High
Court has questioned as to whether the public purposes had been served.
Under the 1894 Act, acquisition of land by private companies does not
come under the category of 'public purpose'. It is a separate Chapter VII
which talks about acquisition of land for companies and the proviso there
makes it very clear that the only reason that you can acquire land for
private companies is for dwelling of workmen. Now, what most state
governments are doing is using the public purpose clause as a back to back
arrangement for the private sector entity and I am sure my colleagues from
the government can throw more light on it.
Direct land purchase is what the private sector has been encouraged to do,
especially under the new Act. Here, I suggest that the sensible way for a
government to sponsor a PPP, would be to stick to the 'eminent domain'
clause. For private projects, why does the government want to get into
land acquisition at all? There was a case in Jharkhand where a power
project builder bought up land entirely on his own and the government
had nothing to do with it. I call it KSOP, that is, Kisan Stock Option
Programme. Since the private sector people are enabled through employee
stock option programmes, the kisaan, who is parting with his land,
certainly deserves an option programme too.
Lot of people in India ask if telecom could have happened so quickly why is
infrastructure not happening? The answer is that the bandwidth is far
easier than landwidth. The unfortunate point is that the promoters who
are setting up infrastructure projects would like to minimize their own
equity upfront, but land is where the equity is needed upfront and the
banks don't lend money against land. The delay caused by the private
sector's efforts to minimize land costs ends up raising the project costs. It is
absolutely necessary for the developers to change their thinking on and the
pattern of land pricing and have the good sense to share the benefits of price
appreciation. The PPP is increasingly being perceived as 'public-privatepolitician partnership projects' and a lot of arbitrage profits are being
attributed to the political elements. The other problem is that the
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farmersparticularly in tribal areas where most of mining and pithead

power plants are going to be builthave been voiceless and it is only
recently that civil society groups have started to take up their cause. What
we have not realized in the last 10 years is that the telecom revolution in
India has connected the totally isolated populations in rural and tribal
areas. So it is no longer going to be as easy as Nandigram was originally
conceived to be. We need infrastructure and we need it in a hurry. I believe
only two things matter: price rationalisation and equitable sharing of price
appreciation benefits.
Chair
Very interesting and pertinent points indeed. The next speaker is Mr
Sanjeev Agarwal, the CEO of AES Chattisgarh Power Limited.
Sanjeev Agarwal, CEO, AES Power Limited
I would like to share with you the experiences of AES in setting up very
large power projects all across the world, particularly in the context of
India. Let me flag a couple of critical issues in land acquisition. Normally,
land in other countries is acquired by the government and given to large
project developers; in India it is left to the developers. That is where
probably the entrepreneurship really comes into play and people demand a
premium for doing all the development work. The question that has been
asked is: in any large development project, is there a huge value addition
through land acquisition? Probably the answer is yes. When people are
completing all the activities which are linked to the development of a mega
project, whether it is land acquisition or other any other activity, people
have high expectations. This is justified because of the enormous
challenges and the complexities involved in land acquisition.
I will share my experiences of carrying out land acquisitions for a major
power project and a coal mine project in Chhattisgarh. We needed to
acquire nearly 3500 acres of private, government and forest lands. It
involved all sorts of complexities; that is to be expected in a land
acquisition process today.
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Why do we need to worry about land acquisition? Quite obviously because

land is literally the very base on which stands the manufacturing
infrastructure, so important for the nation's economic health and
progressbe they power plants, roads, airports, ports and, of course, the
SEZs, which is as yet a grey area of the infrastructure. Many of the larger
projects, as Mr. Surendra Singh pointed out, are facing huge delays mainly
because of land problems. One needs to look at successful projects like the
JSW in Bengal (close to Nandigram). Why is the JSW project successful and
others not? Why are some states better than others? Why did Nano fail in
Bengal and succeed in Gujarat? Maybe the answers to these questions could
show us the way.
What are the basic issues involved in land acquisition? Why are we
struggling with land acquisition all the time even though our country is
fairly densely populated? It is probably because people's livelihood is
essentially dependent on the landbe it agricultural, industrial or domestic
and it is, generally speaking, the most important factor in family wealth.
With 70 per cent of the population earning their livelihood from it, losing
land would be like losing life. It is this criticality of land ownership to the
people that we must first fully appreciate if we want to find real solutions
to land acquisition problems.
The problem has become more complicated due to the ever growing
fragmentation of land ownership. The growth and fragmentation of
families has brought the average size of ownership down probably to just 12 acres. Then, there is the lack of ownership records. All put together, it is a
huge challenge. The buyer does not know who the real title holder is. He
could be a man with two sons and two daughters. Are the daughters legally
entitled to a share of the land? These are the issues that the buyer faces
besides, of course, the much vaunted 'public purpose' question. It is
basically the issue of people who are sacrificing personal comfort for a
public purpose. Are they getting a fair compensation? Do they know what
is there for them once the project is launched? Or do they just take the
money and go away, not knowing what their next step should be? Of all
the forms of displacement, economic displacement is the harshest because
the only way they know how to make a living is lost to them once they lose
the land. You may offer them a job per family but is that enough? Then
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there are sharecroppers, the people who derive a secondary employment

from the land. One can also not overlook the physical and sentimental
value the owner attaches to his property. The common sentiment often
expressed is: Six generations of my family have lived in this village. What
am I going to do once I move out?
Again, there are social issues. Women and children are probably the most
vulnerable section of the society and the worst affected in any such
displacement. In tribal areas of Chhattisgarh, the bread winners are mainly
women and they are strongly against selling land. But men are always
ready. Women are the ones who ask what they are going to do tomorrow.
You are not going to give us employment. Can anyone compensate tribal
culture, traditionsan entire way of life? Let me give you a concrete, down
to earth example of what tribal culture really means. In Chhattisgarh, rice
wine (toddy) is brewed by women and they use it throughout the year. It is
something that has come down for generations. They genuinely fear this
too would be lost along with the land.
About 10 to 20 per cent of the government land is illegally occupied and the
occupants know they would not get any compensation in an acquisition
deal. Then comes the role of land aggregators. One of the common
practices among the private entrepreneurs is to just to go buy the land on
their own. What, in such cases, should the compensation be, considering
that the land was agricultural land? In most states the law forbids the use of
farm lands for any other purpose.
Chair
Are you suggesting that those who are illegally occupying government
land should also be entitled to some kind of compensation?
Mr. Sanjeev Agarwal
Since these people and their ancestors have been living on these lands for
centuries, you cannot leave them out, without creating a lot of emotional
and social problems. There are other interested parties like the NGOs and
politicians that come into the scenesometimes genuinely and sometimes
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with ulterior motivesto protect the interests of the people. Nor can the
role of the media be underplayed.
Then, in cases of compulsory land acquisition, how is the government
machinery to be used? Will it be used to take the land forcefully or for the
genuine benefit of the people? Do you have an effective R&R policy in
place? Do you implement it seriously? I think absence of such mechanisms
complicates the land acquisition process.
Ideally, industries should avoid casting acquisitive eyes at forest areas, but
this is easier said than done. For instance, our company, AES is trying to
acquire coal rich lands for mining. Unfortunately, there is nothing any one
can do about the fact that around 60% of forest land happens to be coal
land. The government must clearly understand that coal being the most
needed energy source in the country, there is no other way but to give
mining rights in these areas because there is nowhere else to go. Second,
private industries should set an example by coming up with attractive
compensation packages, such as sharing of economic benefits by
givingbesides higher compensationshares, debentures and options in
some of the projects. All this has to be done in consultation with those
parting with the land, so that it becomes transparent to them that you are
going to do everything properly for them. Land for land formula, as has
been seen in the past is just not feasible. People have undergone the agony
of displacement as also of loosing their homes and such problems continue.
It is also important to keep the social fabric intact. In a village in
Chhattisgarh, where we are acquiring land for a power project, we have
had to set up four different settlements for different caste and classes. This
is because, in a caste ridden society like ours, it would be foolhardy to
expect people to suddenly change and learn to live happily together.
Before I close my presentation, I would like to stress on the need to talk
directly to the people, making them understand what we are trying to do
here and what there is in it for them in the long term, what the impact
would be on their livelihood with the opening up of jobs and business
opportunities. The idea is to win their trust and make them understand
that they are not giving up their land forever. They are going to stay here
and earn their livelihood from the same land, though in a different way. Of
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course, the government will continue to play its role in several areas,
including the invoking of the eminent domain powers. We can use the
government more effectively to create a relationship of trust between the
local people and the project developers. This can be done by setting up a
government agency that would deal with the company's R&R policy,
packages and the funds. People tend to have a greater comfort level with
the government than with the private sector.
Chair
Now, we have two speakers from the government. Dr Didar Singh,
Secretary in the Ministry of Overseas Indian Affairs, is a Member of the
National Highway Authority. We also have Mr Shyam Bhatt, the CEO of
the Karnataka Industrial Area Development Board.
Dr. A. Didar Singh, Secretary, MOIA
I have worked with the NHA for almost the three years. What I am sharing
with you are my personal views and should not be considered as those of
the government. Rather than trying to cover all the issues involved, I will
try to give a short overview of how things are rolling out vis--vis the
Authority and then make some specific points that need to be looked at
closely.
First of all, we should understand the theory behind land acquisition. It is
the concept of eminent domain which can be interpreted as compulsory,
expropriation and in many other ways. What it boils down to is the take
over of land without the owner's consent. Here, I want to flag an
important point we appear to have missed all along, which is that there is a
distinct difference between public use and public purpose. In the US
Constitution, it clearly says 'public use' rather than 'public purpose'. This
is a very, very important distinction. This was argued when the US
Constitution was being framed and it was finally decided to use the term
'public use'. The US Constitution allows its citizen to go to court against
such acquisitions and there are plenty of such cases being fought in the US.
But the basic premise remains 'public use', which can be defined as
acquisition where the public itself continues access and continues to use
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that for its own interest. Within the ambit of this definition comes public
safety, public health, public interest, public convenience and, of course,
public passageways (roads). There are also the schools and municipal
buildings and public parks. That means all of these are infrastructures
which the public is using and therein lies the distinction. Sailesh noted that
'public purpose', on the other hand, is now supposed to mean 'for the
development of the country'. In the UK, its Common Law system aligns
the concept of eminent domain with 'public purpose'. India has inherited
the UK system.
One need not go into the legal details about acquisitions as it is fairly well
known. But what needs to be pointed out is the distinction between the
Land Acquisition Act, 1894 the age old instrument of acquisitionand the
National Highway Act, 1956. The difference is that whereas the old Act is
invoked in all acquisitions (for public purpose or private companies), the
latter Act is used only for the acquisition of land for national highways. It is
the exclusive domain of the Union Government and meant only for interstate highway development. In other words, none of the sweeteners that
Sailesh mentioned is allowed under this Act. There have been cases of state
governments using the old Act to acquire land for highway projects. For
example even in the Yamuna Expressway and the Ganga Expressway cases,
the states concern are using Land Acquisition Act of 1894 and not the
National Highway Act. NHA uses its Act to take land for only the
highway but the state uses it to take land for housing and commercial
development, which turns out to be the sweetener that adds to the
commercial viability of that project. Under the National Highway Act,
land is acquired for just one purposeto build the highway. Of course, the
Authority would need little bits of lands for petrol pumps and motels
along the way.
Secondly, there is a misconception among the people that public-private
partnership (PPP) extends to everything where the government is used to
validate a private investment. It is not. In the classical sense, PPP only
relates to public utilities which are leased to a private company to build and
operate for a certain period and then transfer it back to the government.
This is the point. All national highways belong to the Central
Government and the projects for them are leased to the private sector to
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build and operate for 15 to 30 years. In fact, it is not the land but the right to
use it that is temporarily given to the company concerned. Same classical
procedure works for other infrastructural utilities as well. Such
acquisitions seldom cause problems. That is why the1956 Act has the
'compulsory' provison, which means the man who has lost the land cannot
go to court, except for the arbitration of the compensation amount.
To a great extent, this Act has been the catalysis for NHAI's phenomenal
performance. The entire Golden Quadrilateral of 6000 km is completed,
for which 10,000 was acquired. For Phase II which is the North-SouthEast-West Corridor of 7000 km, 95 per cent of the land has been acquired.
It is moving into phases II, III & V in which some 35,000 km will be built.
There are occasional delays and problems, but opposition from individual
stakeholders is not one of them. Also, what makes it easier for the
Authority is the linear nature of our acquisitions. The owner gives only a
narrow strip of his land and the rest of his land gains value because of the
highway. So this kind of acquisition cannot be compared with those of
industries and mega projects. Still, various problems do crop up and delays
do occur because the Act does not provide a rationale for compensation
and interest payments, nor has any time limit been fixed. The
methodology for market valuation is not very clear. In some countries
third parties have been used as evaluators and this may work for India too.
Then, there are some institutional issues such as changes in alignment, time
lost in arbitration, inadequate manpower, administrative issues and so on.
We are now moving for certain amendments in the National Highway
Act.
The NHA has scaled up its acquisition units as part of a process to
guarantee 80 per cent of land to the public-private partner at the time of
award of a project. A highly arduous task for the NHA is to get clearances
for environment and wildlife, among others, from the ministries
concerned at both the state and Central levels. The most difficult is the
wildlife clearance, for which the Supreme Court has appointed a Centrally
Empowered Committee. Without its clearance there is no way that that
project can go ahead. This can take anything from one to 4 years. This is a
very serious issue so far as the protection of wildlife is concerned. For
instance, in the national heritage areas of Rajaji National Park and
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Kaziranga National Park, the highway will have to be mapped out very
carefully, giving top priority to the needs of the animals.
The Government of India is going to provide for a comprehensive R&R
policy in its new draft Bill, which would have a provison for giving
compensation to sharecroppers and others in rural areas. But the
encroachers of government land will not be included in the proviso, even
though the World Bank and the ADB insist that R&R be extended even to
them. This issue needs to be addressed by the policy makers with the help
of the Supreme Court because the country's present policy is in
contravention of the World Bank and ADB provisions.
Finally, while acknowledging that land is a very sensitive issue, I believe
that we should recognise the distinction between public use and public
purpose and stop trying to gloss over it. In fact, even in the concept of
public purpose there should be a separate definition for infrastructure,
because that is public infrastructurepublic utilityas distinct from noninfrastructure related development. The SEZ is not an infrastructure
project in any sense. It is not a public utility. So, this distinction is
necessary if you want to carry all the stakeholders along. Of course, we
need to consider alternative forms of compensation as well such as the
kisaan equity options and rehabilitation jobs. These will have to be made a
part of the policy.
Chair
State governments appoint officers to oversee land acquisition activities.
Mr Shyam Bhatt, CEO of the Karnataka Industrial Areas Development
Board is with us to share his experiences in Karnataka.
Mr. T. Sham Bhatt, CEO, KIADB
Let me first emphasise on some of the positive steps the state has taken to
acquire land for mega projects. The Karnataka Industrial Area
Development Board was set up under Karnataka Industrial Area
Development Act (KIADA) of 1966 to promote the rapid and orderly
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establishment and development of industries and to provide the necessary

infrastructural facilities and amenities. Many activities come under the
head of industrial infrastructural facility, such as research and
development, communication, transport, banking, marketing,
technology parks and townships. Added recently to this list are banks, post
offices, disposal solid waste tents, setting up of effluent treatment plants,
truck terminals, bus stands, R&D centres, hospitals and hotels. One can
say that almost all activities have been included in the list.
Under the KIADA, we initiate the land acquisition process by declaring a
specific area as industrial area. Accordingly, preliminary notification is
issued and thereafter the final notification. I will highlight some of the
important provisions under the said Act.
The notification is issued only after the survey and measurement of the
chosen area. Then comes the procedure of exclusion. This preliminary
notification, as per government guidelines, should not include areas where
there are temples, burial grounds, schools, playgrounds and dwelling
houses. The next step is to identify and exclude areas where various
industries already exist. Also excluded would be the lands which local
planning authorities have given approval for change of land use as also
areas where there are hospitals, petrol pumps and other amenities. What is
left for acquisition, thus, is only dry, single crop farmland.
The major difference between the Land Acquisition Act of 1894 and the
KIADA is that, in the latter, there is no time limit for acquiring the land
from preliminary notification to final notification, whereas in the old Act
there is a time limit of three years. Instead of mandatory awards, the
compensation amount will be determined at a trilateral meeting of the
acquirer, the land owner and a Price Advisory Committee headed by the
District Collector.
After the final notification, the land is in the state government's control
and is freed of all encroachers, whereas under the old Act, possession of the
land was taken only after the award was passed. Now, once the
compensation amount is fixed, the KIADA Board takes possession of the
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land. Then the transfer of land ownership and payment of compensation

will take place simultaneously. The problem that we face is resistance from
farmers spurred on by politicians. The Bangalore Mysore Infrastructure
Corridor (BMIC) project is a classic example of political interference
stalling the implementation of the project. The other important reason is
court litigations. Several environmentalists and NGOs have raised the
banner of ecological objections. With this concern in mind, the Supreme
Court of India has directed against the acquisition of lands within 1 km
radius of a village's boundary limit. But this is difficult, because most
villages in India do not normally have a legal boundary.
I will cite a few examples of acquisition problems. We have acquired about
1,350 acres for MRPL in Mangalore. Initially the farmers resisted, but once
we sorted out the problems, the entire process went on smoothly. About
609 families have been employed, rehabilitation packages given and
resettlement colony built. The company (MRPL) took a great deal of
interests in providing amenities to displaced families.
Under the old Act (Section11) the award is passed before taking possession
of the land. In our case, possession generally precedes payment of
compensation. Under Section 29 (ii) of the KIADA, the Special Land
Acquisition Officer determines the compensation (agreed to by the
receiver) and then the payment is made. The Price Advisory Committee
will be guided by the sales statistics of the previous three years. This is only
a guidance for the Price Advisory Committee (PAC), which can fix a much
higher compensation amount. Since the constitution of the PACs, the
KIDAB has acquired about 46,000 acres for industrial area and 39,000 acres
for single unit complexes. All compensations have been paid through this
agreement.
Karnataka has developed a novel land sharing scheme. Instead of
compensation, a portion of the developed land is being given to the farmers
at the rate of 9,583 sq mt per acre of land. But this scheme will be applicable
only to industrial areas and not to single unit complexes because the
corporate entities need the entire stretch of land. Since the land is fully
developed, its value is certain go up. The original owner has the choice to
accept partly land and the rest in money.
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Notwithstanding these happy stories, we are facing serious problems in

implementing the BMIC project. Its very framework agreement is under
challenge and the matter has gone up to the Supreme Court. Besides, there
are some political reasons for the delay. Despite these setbacks, we have
developed about 50,000 acres of land bank in the state. We have already
acquired about 50,000 acres of land and kept it ready for allotment to
entrepreneurs who will be participating in the next global investors meet,
to be held on June 3-4, 2010.
Chair
That was a very helpful presentation from the perspective of the state
government. Now, representing academia and civil society, we have Mr
Kannan Kasturi.
Mr. Kannan Kasturi, Independent Researcher on Law and Governance
I represent the people at the other end of the spectrum and their problems.
The first issue is with regard to displacement in mega projects. Land
acquisition is seen as the major point of mega project development. Large
scale development needs land, natural resources, water, minerals and so on.
But in this current model of development, it has no use for people living on
that land. This kind of development attempts to negate the very existence
of the people living right on the land. You can see boundaries being erected
to fence out the original occupants of that land so that the work can
proceed quickly. The developers' interest is entirely focussed on what has
to be done inside those boundaries and the rest is incidental. The original
occupants are not part of the development, nor will they benefit from it
except in an incidental way. Speakers before me have pointed out that, if a
highway is built the prices of land will go up and that some people would
get jobs and business opportunities. But these are all incidentalside
issuesand the focus is not on the people who actually have no stake in the
project. No wonder that such mega acquisitions beget equally mega
resentment.
One of the end results is that it is the local inhabitants who are the first
victims of what is nicely termed the 'externalities of the project'
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(reminiscent of Bush's 'collateral damage'). It means project fallouts

beyond the developer's control. This, in real terms, means spewing smoke
polluting the air and industrial waste flow polluting the groundwater, as
also competition for vital natural resources. The farmers are already
sharing the meagre waters of the Netravati with MRPL and soon they will
have to share it with the MSEZ. The actual manner in which land
acquisition itself is carried out is colonialist by its very nature, using as it
does a very authoritarian framework. The whole process takes years, and
those are years of uncertainty, years of haggling and running from pillar to
post to get the compensation, some don't get it at all. In short, they are
years that shatter people's lives.
The Raj colonialists framed the law, appending the 'public purpose' clause
only to justify their land grab activities. It is made out to be a commercial
transaction in which people are offered compensation as per the market
price. Truth be told, it is nothing less than forced acquisition, uprooting
thousands of people. For, the bleak reality of displacement is that people
lose everythingtheir occupation, jobs, land, homes, their community
and their common places of worship. Is it any wonder that people are
rising up against such anti-people, monolithic processes of 'development'?
What has the government done over the last 60 years? The colonial law is
very much in existence. I looked at the modifications to the law and most
of the modifications have been in the direction of enlarging the scope of
public purpose and all this has been happening right from Nehruvian times
of socialism to Indira Gandhi's times. But today the people are fully aware
of the fact that this 'public purpose' clause has very little to do with the
public or the state and that it is more a mantra for corporate land grab in
connivance with the state. In any case, as Dr. Didar Singh also pointed out,
there is a difference between public use and public purpose. That is why
there is not much resistance in situations of public use, as long as the public
perceives it as genuinely for their good. The resistance comes when it
becomes clear that corporate profit is the real motive and the rest is just
sops and eye wash.
The government of India has a long experience in mega projects and the
resultant displacements. It started in the 1950s, with the projects to build
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great dams, which led to the first experiences of massive displacements.

The Land Acquisition Act had no provisons for sharecroppers, and others
dependent on the land. Since about 20 years ago, there have been changes
for the better in the compensation policies for loss of jobs, rehabilitations
and resettlements, though much more needs to be done. Movements like
Narmada Bachao Andolan (NBA) have brought to the fore what happens
in the dark corners of the country that are not visited by too many people.
We do not know what is happening there or what tribals and other people
in the interior are subjected to when juggernaut projects invade their
homeland.
I have my reservations about the R&R Bill, though it is being flagged as a
major step. First and foremost, the Bill does not mandate the resettlement
and rehabilitation of all affected citizens so that they are able to maintain, if
not improve, their current standard of living. If people are being forcibly
displaced so that an industry can be set up, the minimum you can do is to
ensure that they maintain the same standard of living, if not abetter one. It
would ensure the goodwill of the people. The very concept of the land
acquisition law is authoritarian in this that the state has the right to acquire
land but is not bound by duty to compensate. In its current form, the Bill is
presented as an act of state benevolencea measure to mitigate the
suffering of affected citizens to the extent permitted by external
circumstances and, that too, subject to various conditionalties. If there is
land, the government will give you the land. That land may be useless land,
unproductive land, but so be it. If there is a job you will get it. These are all
the conditionalities of that Rehabilitation Bill. The point to be noted is that
the Bill equates the displacement forced upon the people by the state with
the displacement caused by natural calamity. That means an acquisition
victim would have the same entitlements as a cyclone victim! It all appears
to be old wine in a new bottle. First the government takes a man's land
claiming it is for public good, and then you equate him with any natural
calamity victim and very 'kindly' try to help himnot as a duty, but as an
act of state benevolence, if you please.
So, in the opinion of many, the R&R Bill is not a law, but a policy
statement in the garb of a law. For all the modifications, the basic outlook
remains the same: the focus is on the project, not the people. Law or policy,
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it will not bring about any worth while changes. Land is a matter of life and
death for the people. The opposition to its acquisition will continue and
even grow stronger and stronger as those affected realise what is being done
to them and their land.
My next point can be taken as a sort of warning. If developers fence out the
local people from the project site so as to continue working without
interruption, it would amount to throwing out the people. The already
existing resentment and tension would turn into permanent hostility and
the displaced peoplethe neo- outcasts in a neo colonialist setting, as it were
would be forced to seek other means of redressal for the perceived
injustice done to them.
A solution to this complex issue does not lie within the ambit of an
Actold or newthat sticks to the public purpose dogma. It lies in making
the people genuine stakeholders in the whole process of land acquisition.
That is the first step and there are several ways to do this. One way is to
promise development for that area. It would be an exercise in futility to
develop a project and not take its benefit to the people of the area. This
should be an integral part of any master plan of a project. For instance,
Delhi Metro has a land use plan. Ultimately the state has to accept the fact
that there is competing needs for land and it must accommodate people's
needs and aspirations within the plan.
Large projects should also include plans at the district or panchayat levels,
ideally looking at cultural facilities, educational infrastructure and a host of
other amenities in the locality. If redevelopment of the area is made a part
and parcel of industrialization, there will be more positive response from
the people. Here is an example from Chennai, where I live. There are areas
in the city with great land value, but with very old houses. The builders
approached the owners, who have no money, and offered to rebuild their
houses. They would build six to eight flats within a year and give the
owners two to three of them. one to live in and the other two the builders
would rent out for them at a price appropriate to the owners style of living.
They would generally look after everything. The owner found it an
attractive offer, very different from state takeovers. All the same, it is a fact
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that the overall planning has to be carried out by the state. It cannot be left
to corporate entities. The state has to play a part in fixing the prices and
ensure that the people are not cheated. This would enable the transactions
to proceed smoothly. But, the nagging question remains: what happens
outside the walls of these developed areas that we buildthe poor areas?
Chair
I request Dr Usha Ramanathan to share her comments as a discussant.
Dr. Usha Ramanathan, Environmental Lawyer and Independent
Researcher
It is not an easy job to tie-up this entire discussion and I am not even going
to try. We have been made quite aware, over the years, about the three
perspectives addressed here today. In my presentation I will not follow any
order because, as a discussant, I can take the liberty of being completely
disorderly. To start on a lighter note, I was rather amused, but not really
surprised, when it was noted that the victims of both natural calamities and
planned project displacement are treated on par. After all, a system that can
come up with a concept that equates 'eminent domain' powers with the
power of God can quite easily equate displacements due to natural
calamites with those due to mega projects on the premise that they are
both 'acts of God'.
I think there are certain things that we have now learnt to recognise over
these years. The first thing which has came across in every presentation is
that we are dealing with forced evictions and national governments are
very often wary about acknowledging that this is a process of forced
eviction. But international law and international institutions have taken it
into account and I think it will be useful to see if people who are forcibly
evicted will be treated according to the mandate of international law.
There is good literature available on this. There is something called respect
for the people who are being evicted, even in the process of eviction. So,
maybe we need to re-visit some of that whenever evictions happen because
of land acquisition.
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Much has been said about the lack of adequate compensation, but the
whole domain of procedural justice has been overlooked. The Land
Acquisition Act has a procedure for registering objections. Though the
concerned people are permitted to register complaints there is no process
mandating that the complaints be considered and dealt with in a
transparent way, so that people know where their complaints stand. The
procedure might as well have not existed. It is this much ignored element of
justice that needs to be looked at. This whole assumption that land is
acquired either through the government or directly from people bypasses a
vital issue of fundamental rights. It is the peopleand only the peoplewho
have the right to decide what they want to do with their life or
landwhether they want to keep the land or sell it.
The third point that I want to raise should have been the first. I do not
think this debate would have been happening if the transaction costs had
not gone up so much. If people had not protested, and refused to move out
from their lands, none of all this would have happened. When I hear about
a rare case where land acquisition has gone through without any problem
at all, I begin to wonder if this had happened because there was nobody
there who knew how to organize a protest, or because it really benefitted
the people. One also needs to admit that so many people rising up against
land acquisition is because they do not perceive it to be in their interest.
Rehabilitation work over the years has generally been lacklustre and there
have been no corrective measures consequent to this non-performance, as
is evident from the Bill referred to by Kannan. You can make any promises
you like, but the whole point about any Bill dealing with land policy is that
it must provide for sanctions on non performance. The Rehabilitation Bill
does not even pretend to make such a provision. A point of great relevance
to this discussion has been missed. Because of the protests due to the
increase in transaction costs, a notion has been thrown up for an
alternative process that would cause the least amount of displacement. This
means curtailing land acquisition. I was perplexed by the silence because I
would have thought it very important to explain why the amount of land
asked for is the minimum need of the project and it cannot do with less.
This would have been a powerful argument at least in terms of establishing
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the extent of land required even if the public purpose or public use criteria
has to be invoked to justify the acquisition quantum.
Now we find a movement in the opposite direction: under the SEZ Act, if a
fixed minimum amount of land is not asked for, the Act will not come into
play. So, it appears that the government is always finding ways to say 'take
more land and corporatise it'. This is certainly not gaining any goodwill
among those who are going to lose land. I think Mr. Kannan's question as
to why these people are not included in the process is rhetorical. The
ongoing process of development has no place for displaced people because
they just do not have the skills required to get jobs in the industries being
set up on what was once their land. Nor is there any project preparation
time in the project to give them the needed skills. They had no right of
choice when they were evicted; now they are beggared of choice in the job
market. Implicit in many of the presentations was the acknowledgement
that the whole process was leading to the impoverishment of the evictees.
But the protective attitude that many here share for the interests of project
authorities does not seem to carry over to the far more fundamental
security interest of the oustees, or the victims of development, as it were.
The deep sense of insecurity the oustees feel through out the long
displacement period cannot be plumbed.
Approaching the issue of eminent domain from the 'encroacher' point of
new, we need to make some clear distinctions. Most of us have little
sympathy for encroachers, as was obvious from Mr. Singh's question on
the entitlement of the encroacher. Looked at in the context of the legality
of peoples' rights, we can say that the encroacher does not legally own
anything; that they are a class apart, a large number of people scattered all
over the country who live in a state of total poverty and total deprivation.
So much so that we tend to forget they are as much the citizens of this
country as you and I. When, for sheer survival and subsistence, they come
and live on what is called 'government land', they are called encroachers.
This just does not work. The argument does not hold water. It must be
kept in mind here that the 'eminent domain' principle only empowers the
state to take over of private land for a public purpose. It has nothing to do
with common lands. It has got nothing to do with government held lands.
These do not come within the power of eminent domain. So, under what
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power are these lands, which are being held for common use and in public
trust, being handed over for private purpose? Even if the private purpose is
the production of fertilizer and chemicals which is going to be bought and
used by the public, it is still a private purpose (individual profit) and not
public purpose. There is enough literature to illustrate that the whole
point of corporate law is to make profit making the primary goal of
business and businessmen. The shareholder is the primary person to whom
the company is answerable.
When there is resistance to and protests over land acquisition, it is not
because people have nothing better to do or because they are cantankerous
troublemakers. It is a myth propagated by vested interst parties to project
the civil society and NGOs as troublemakers who put up obstacles and
that they need to be dealt with. Instead of dealing with them and land
owners, it is the problems that they need to deal with.
Now let us come to the thing called liberalisation-globalisation that has, in
the last three decades, transformed the world's eco-political thinking into
one that is the ultimate capitalist dreamaccumulate as much resources as
possible and keep it with yourself. The ethic of liberalization and the
globalization, put simply, is that everybody should build up and build up
as quickly as possible and become big capitalists as quickly as possible. The
result is a lot of grabbing all round. I must confess that, to an outsider like
me, there is a lot of vulgarity in this grab culture. The assumption is that all
the resources that there are should be taken out from under, on and over
the earth, and used up within the next 10-20 years. This makes no
environmental or economic sense. If growth, corporatization and use of all
resources add up to development, then why are such a large number of
people raising a hue and cry over it? Obviously the aware and sensible ones
among the civil society have entered the arena to fight against such
changes.
We need to seriously look at and use human rights impact assessments. The
environment impact assessment and the economic-social impact
assessment are not just some kind of one time audits; these are an
acknowledgement that projects have a tendency to impact human rights
and that they have to be looked at over a period of time, because even if it
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initially does not seem to be affecting human rights negatively, we need to

ensure that this does not happen later. I do not think we have taken this
seriously enough. In fact, the government's track record in human rights
has been miserable.
The last thing is about the various methodologies needed to deal with this
contentious issue. When some of you talked about the PPP projects
particularly related to highways projects, do remember that the land does
not belong to private player; it is only leased to him for a certain period of
time. But we find that on land acquisition the jurisprudence developed is so
iniquitous that it cannot be sustained over any period of time. For instance,
once the land is acquired under the Land Acquisition Act, even if it is not
used for the purpose for which it was taken, it still is not returned to the
owner. The land just remains idle with the state or with the project
authority. This complete control of the government over the land changes
the whole meaning of sovereignty. Sovereignty is something that was
meant to be exercised by a state vis--vis other states. But here the state is
exercising it to lord it over its own people who are by Constitution,
supposed to be the sovereign. It is a fact which people are beginning to
realize and unwilling to accept.
The last point is about complicity, which is still an evolving notion that
does not have enough legal recognition for us to say anything with full
assertion. But the concept is developing. A company owner goes to the
concerned agency and asks for land to start a project or, as it is more and
more the case today, the government invites the private sector to buy land.
When I read the concept note for this conference I was thinking there is so
much money waiting to be invested if only land acquisition process was
made easier. Say, the state invites the entrepreneur to come and set up an
industry, acquires the land and just hands it over to him and he simply has
to implement the project. But there is the rub. There lies the implication of
complicity because the entrepreneur is, in a sense, working for his own
profit hiding behind the back of the state and its policies of 'public good' or
'public use'. This is what is increasingly being conceived today as
complicity and tomorrow it may be used as a weapon to attack a project. I
sound as if I am threatening somebody. I am not. I am just stating a legal
position as it is evolving now.
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Chair
Very neatly put together. You made some very interesting points. I am
particularly impressed by your idea of human rights impact assessment.
This is something which not many speakers have thought about.
Q&A Session
Mr. Prem Shankar Jha
It has been a very educative session for me and I am trying to put together
what I have heard in relation to what I have seen over the last 20 years and
what I have also been trying to propose at various levels over the last 20
years too.
First, let me say a few words on the title Mega Projects for Development.
Actually, mega development has pretty well come to a stop without land.
For instance, nine of the ultra-mega power projects (7 originally) were
supposed to have been ready by 2012. If all goes well, the first one will
completed only by 2016. The other 8 are not even being talked about.
Many of the bids have not even been made. The main hurdle is that no land
has been acquired as yet. Two, there is an assumption of political stability
in which development work can continue uninterrupted. Well, a fourth of
this country is now very close to being a police state. If you read The Hindu,
Tehelka and Outlook on Maoist affected areas, you will see that, unless we
solve these problems post haste, neither your politics nor your economics
will continue to go forward at these wonderful growth rates of 8 or 9 per
cent that we talk about.
We need to put together certain guiding principles and work with them as
the basis. Each project will need to be treated differently, but this basis will
remain the same. The only way you can get around the land roadblock is
by making the owners of the land beneficiaries from the development and
for this we must first minimize acquisition. In 1985, I had gone to South
Korea. The Pohang Steel Plant was producing at that time about 6 million
tonnes of steel and it was in the process of scaling up to 9 million tonnes. It
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was producing this on 500 ha of land. Our Bhilai was then producing 3
million tonnes with 10,000 ha of land. The acquirers here try to get as much
land as possible while it is still cheap on, say a 50 year lease. They want to
grab all the benefits of inflation, with no care for the original owner. This is
a classic situation for turning people into victims. In 2005 in Bokaro, the
tribals tried to reclaim a huge expanse of land from the government,
claiming that the land had remained in disuse. Twelve tribals were killed by
police firing during a protest.
Secondly, the government should consider the standard 99-year lease
instead of the prevalent outright sale. I live on a plot of land on which I
have a 99 years lease. Why should not the poor tribal also get the same
lease? Give them status and ensure them certain sense of security. Thirdly,
the most important thing is to minimize your land requirements. It makes
it easier to run the project smoothly, as also to protect the homestead land
of the local communities who are going to suffer. Fourth, there is this offer
of zero coupon bonds, shares and equities. All this involves risk sharing.
Why should those who are losing land also be asked to bear a risk, laying
their hopes on some future development, even if they had been paid a good
price for the land? A simpler way would be to distribute, as royalty in
perpetuity, a small part of the future revenuesay 0.25 % to 1%of the
project to all those who have given up land. They would then be
automatically protected against inflation and become a beneficiary of any
increase in the output of the project. Any Act on land acquisition needs to
be simple and it needs to begin with the people who are losing their lands.
I am an economist. Not one of the things I have proposed even remotely
disturbs the market mechanism. It actually strengthens it. I would urge
that we please think. The only worrisome thing about this discussion was
that there was too much argument about things that are already in place. It
is not important whether it is public purpose or public use, because in any
case someone is losing something.
The final point is regarding traditional rights versus recognizable
commercial rights, the endowment for some in a capitalist context. Rights
that you recognise in a court of law are post-colonial. Traditional rights are
not recognised. We are almost the only country in the world that does not
recognise it. However belatedly, Australia, Canada, and the US have all
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recognised them. Mexico, they tried to recognise them. The day they
derecognised them was the precise day on which the Chiapas Revolution
started. We should learn from Mexico.
Chair
Mr Kumawat, you have a lot of experience of working in tribal areas and I
am sure you are acutely aware of the problems being faced by tribals with
regard to land acquisition, which is one of the key reasons for the rise of
Naxalism in these areas. Would you like to comment on that?
Mr. Mahendra Kumawat, ORF
At the outset I would like to say it is not one of the causes but the main
cause for growing extremism that we see in the red belt today. In fact, two
years back a report on this growing connection between displacement and
Naxalism was submitted to the Planning Commission. This entire report
is only about land and all the things that have been discussed at this seminar
are all there in the report. Having been in the government and seen its
functioning, I doubt whether all these things have been even looked at by
the people who are dealing with this subject. This is an 84-page report and
it is with the government. The Prime Minister has been saying that the
main reason why tribals 'are not with us' and 'are with someone else' is
only because of land. Dr Jha's proposals are very radical and good. They
need to be implemented urgently if we are serious about uprooting the
very causes of radicalism. We must make them stakeholders in
development rather than take their land forcibly. My own land is being
acquired to build a highway. The land value will go up, but it will benefit
only those with large chunks of land, not those who have, say, a shop on a
tiny bit of land. Why not make them stakeholders in toll plazas and other
small setups the NHAI will need? Only yesterday we read that, of the
Rs.25, 000 crore collected by highway authorities in the last 10 years, 60%
had gone into the pockets of scamsters and mafias. In fact, the MoD and the
National Highway Authority are at loggerheads with each other on this
issue. We need to make the local people the stakeholders with long term
interests, as Mr Jha rightly said. They should also be allowed to reap the
benefits of land value upvaluation, as has happened in the case of Orissa,
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where it has gone up from Rs. 330,000 to Rs. 350,000 in just two months.
These are the issues which must be kept in mind, as also this report which
also talks of R&R and the Bill which is pending in Parliament.
Mr. K. Subramaniam, IPS (Retd.)
The important distinction between public use and public purpose has been
ably argued and clarified by Mr. K.B. Saxena. He has mentioned three
things related to public purposefirst, security and strategy, second
infrastructure development and third welfare activities. He has said that
the concerns for infrastructure, security and corporate growth are
sidelining development and welfare activities for the poor people. This
radical shift is the clearest indication of the reversal of our founding
father's ideology of a welfare state.
Analysing the Land Acquisition Bill, 2007, he says one sees no basic
changes in either the law or the government policy on the acquisition of
land for development projects. As a result, there is going to be no let-up in
the acquisition of land from the peasantry, be it through force or
negotiations. There is little hope of a brake being put on this process that
deprives the poor of their land, leaving them impoverished. The changes
proposed in the Bill do not reflect any reconsideration of the economic
policies which is based only on the transfer of land from farmers to the
government and corporate agencies.
In 1969, the Ministry of Home Affairs came out with a report titled
Causes and Nature of Agrarian Tension in India, in response to the
Naxalite movement in the 1960s and it was placed before the Parliament.
But no action was taken because there are no institutionalised
arrangements in the ministry to feed these reports in to the policy making
process. And now there is this latest report (2008) of great importance from
the Planning Commission, but nothing is happening to its
recommendations. In 1986, Mr B.D. Sharma, a respected name in tribal
development field, wrote a seminal report. The report was endorsed by
Prof. Upendra Bakshi who said it was second in importance only to the
Constitution of India. That report was given to the Ministry but nothing
of any substance was done.
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Ms. Manshi Ashar, Activist and Researcher

I have had the opportunity to travel to many of the areas where these large
development projects are coming up and to interact with the affected
communities. I will put forth some of the points which I think have been
covered by Kannan and Usha. Why has there been no opposition and
protest against acquisition in certain areas, especially Gujarat? In the last 23 years, I have done a lot of field work in Gujarat to find out the reasons.
Not much has been spoken here about the corruption and the lack of
transparency that dogs every land acquisition deal, be it through the Act or
done directly in the open market. A system has been put in place in which
local revenue officials and panchayat members are bought over and hand
managed, with communities kept in total ignorance. This is especially true
of private purchases. It is not a straight forward affair where the company
staff and land owners negotiate the rates. That is not how private purchase
happens. There is a series of land dealers (mafia) in the middle. The person
who is selling does not know what the land is going to be used for.
Everyone gets a different rate, everyone who is in the middle gets a
commission including the panchayat officials and revenue officials.
Nobody is talking about how this goes on. Private purchase is painted out
to be no different from a clean, straight trade in the open market. In truth,
there is a complete lack of transparency even where large corporations are
concerned.
What is true for Gujarat is true for other areas as well. There are various
pressure tactics that are used by the state to coerce people into selling their
lands. This has happened in 2 or 3 cases of SEZsthe SR plant, the Gift
City SEZ. It is done very meticulously through rumour mongering. A
rumour is floated that your land will be acquired and the owners in panic
are intimidated into selling their land to the company. This has happened
in several cases. There is another way. The prospective buyer enters the
area by getting wastelands and government lands first. So, it buys a part of
the village and then starts to coerce the villagers into selling their lands by
letting the word spread that a certain project is going to come up and if they
don't sell the land now, it will be taken over sooner or later; in any case
your lands are going to be taken over some day or another. In short, the
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company creates the classic situation for panic sales. Nobody is looking at
these dynamics that are by now a common practice.
Use of overt coercion and violence during the process of land acquisition
are a common phenomenon. Whenever there are protests against land
acquisition, there are false cases filed against the community members and
activists. There are other kinds of pressures as well. You can get killed if
you try to oppose certain mega projects. There is a huge land mafia that
operates in Gujarat and other states. The term land acquisition is a
euphemism for land grab. Nobody is talking about the large scale
displacement taking place now in the name of land acquisition. The
method now is to getor rather smoke people out ofonly the agricultural
land and leave out the homestead land, so that you don't have to spend on
rehabilitation costs. It ends up being a no win situation for the local
peopleno gain, no benefits. Instead, they become the first casualties of the
airwater pollution caused by the smoke and waste drainage of the new
industryfactories, mines, and so on. These are the weapons of coercion
that discussions like this should stress on and, in particular, the use of the
urgency clause 17-iv. One is that, though there is a provision for filing
objections, they are never taken into account. But there is a provision
which says that there if there is urgency, there is the 17-iv clause of the Land
Acquisition Act which permits the acquiring of the land concerned.
Urgency for whom and for what? This is the instrument of law being used
in the case of SEZs in Andhra Pradesh, as also for the Renuka Dam in
Himachal Pradesh.
It generally used to be invoked in case of disasters or for defence purposes.
But this draconian clause is being used now by the state in non-urgent cases
as well where people do not have the right to file objections. As is obvious,
this is an issue that needs to be looked at very seriously. It is very difficult
for researchers, activists and common citizens to access land related
information from officials in Gujarat. But there will be a special seat, say, in
Jamnagar District Collector's office for the company's officials to sit and
do their paper work and access land records easily. From the viewpoint of
the community this state-corporate camaraderie is nothing short of a nexus
or complicity, as Usha pointed out. Our contention is, if the common
people are going to be looked upon as obstacles and harm to them as
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'collateral damage' or as 'externalities of the project', then one wonders if

words like democracy and human rights have any meaning any more.
There is a serious flaw in the way this growing problem is being
approachedthe problem of growing economic imbalance because of the
biased manner in which land and related resources are being transferred
from one party to another. In the name of privatisation, it is the less
privileged, voiceless community that is being dispossessed, and
impoverished. There is no concept of informed consent. The Land
Acquisition Bill, no matter how it is amended, will remain an unjust
instrument of power unless the concept of informed consent is
incorporated into it.
Mr. Sakaram Somayaji, TERI
I have just come from Singrauli in Madhya Pradesh, where a large multipurpose project is shaping up. We are presently working on acquiring a
large tract of land. I cannot take any names because of client-server
relationship. But I have a telling story to share with all. In 1960, there was a
project which displaced a large number of people, who went and sat
around 60 km away. In 1982, a couple of public projects came up and the
same people were again displaced. Same set of people had to shift again in
2006 and 2008. In this case of multiple displacements, the 84 families
concerned have had to shift/migrate four times. One shivers to think of
the trauma and agony of their plight. This lays bare not only the sheer lack
of care and planning, as also the fact that there is no such thing as grievance
redressal system. The fundamental problem is that neither the government
officials nor the corporate honchos even care to listen to the grievances of
the affected people. Resistance, protests and violence is but the natural
outcome of such of callous attitude.
Mr. M.L. Chautani, Director, AMDA
Being an urban planner I will talk in that context. Realistic assessment of
the land required for a particular mega project is seldom carried out and
acquirement in excess of requirement often leads to problems.
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Second, if the development authority is not able to protect the land it has
acquired for 'public purpose' from encroachment, then that is a fait
accompli. This is an important issue which we have to take into
consideration. If we acquire, it has to be protected for the purpose for
which it was done. Usha spoke of returning the land if the project failed to
take off. In the State Town Planning Act, (particularly in Gujarat) and in
other Acts on land development, there is a provision that if the land is not
in use ten years after its acquirement, it has to be returned to the original
owners. But in practice it never really happens.
Thirdly, these mega projects are taken as isolated entities and not, as it
th
should be, as a part of some overall planning process. Now, as per the 74
Constitution Amendment Act, every district must prepare a development
plan. In those plans, the location of all these mega industries, mega projects
and their requirement should properly be incorporated. This is the holistic
approach development needs, because otherwise, any SEZ or some other
project would be an island of prosperity in an ocean of deprivation.
Mr. Sailesh Pathak
I have a reality check on the Samata Judgment of 1997 and its implications
on land acquisition, especially in tribal areas in particular. When all is said
and done, the country needs infrastructure now, not 10 years later. But the
Samata Judgement has made it virtually impossible for acquiring land in
anything less than four years.
Dr. Didar Singh
I agree with Sailesh. No matter which end of the spectrum we look at, land
is going to be acquired for various projects whether it be for private or
public purposes. Without land, you cannot move forward. Once that
reality is accepted, we must recognise the fact that we need land far more
for public use than for public purpose.
The second reality is that the stakeholders' involvement in public use is
much more than in public purpose. That is because (a) he is getting
compensation in terms of access, (b) there is no benefit for a small man
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when, say, a road gets built. We have had actual studies done by number of
NGOs which show that economic growth is three to nine times wherever
a highway is built. It is not a direct benefit in terms of cash, but it is a
subsidiary benefit which comes over the years. The fact is economic
development take place only when infrastructure is in place. Now, the
point is how do we address this issue in a manner which will be beneficial
for the country and its people? What do we need to put into the new Land
Acquisition Bill? If you want to make any serious recommendations, they
should be on the issue of public use and public purpose. Then there are
questions about the amount of compensation, involvement of the
stakeholders and the future of economic development. There are different
models to do it. Whether you want to do it in terms of royalty payments or
zero coupon bonds or equity stakes, they should be spelt out in a manner
which is open and transparent. Manshi Ashar was absolutely correct when
she said that deals that take place on private land acquisition are probably
ten times worse than what happens in government acquisition. Therefore,
why not let the government do the job, ensuring absolute transparency
and ensuring that the displaced population is at the epicentre of the
development project.
Chair
To an extent I think what our colleague from Karnataka said about public
purpose is relevant here. As I said in the beginning, we could have a sort of a
graded or weighted mechanism for distinguishing public use and public
purpose, because the two have grey areas that tend to overlap each other.
For instance, take the case of a school. Even if it is set up by a private
individual, it is a public purpose utility.
Prof. Jamal Ansari, former Director, School of Planning and
Architecture, New Delhi
We town planners are quite used to using this term public purpose. But if
you take planned development of a town as coming under public purpose
category, then 'public use' will become a kind of a restrictive terminology.
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I do not entirely agree with Dr. Didar Singh's propositions on publicprivate partnership projects. This kind of partnership has gained favour
because it makes land acquisition cheaper and much of money will be spent
up front. The government coffers cannot keep up with the rising cost of
land and so the need to involve the private sector through a scheme of
incentives. Otherwise, many of the projects would not happen.
The third point is that certain acquisition procedures have not been
adopted and the stakeholders have not been taken into confidence. No
doubt land has to be acquired for developmental projects and private
developers can be of great financial assistance. But problems occur when
there is a dishonesty of purpose, as in the case of SEZs.
Dr. Usha Ramanathan
In regard to the Samata judgement, the urgency to acquire land and the
impatience over the four year wait to acquire land in Scheduled Areas is an
issue that calls for calm thinking. The logic behind it is that we need to
protect these Scheduled Areas. We need to protect both the tribal way of
life and their territory. That is why they were put under scheduled
category in the first place.
Mr Sailesh Pathak
I am not questioning the validity of the Samata judgment. I am sure there
are excellent reasons for it. But the fact remains that we are not going to
overcome our infrastructure problems if we go at the pace we are going
now.
Dr. Usha Ramanathan
One of the biggest problems that we are faced with today in tribal areas is
the extent to which land can be acquired and the extent of manageable
displacement. The rights of the tribals are thrown to the winds because of
the huge mineral wealth just sitting in the area. In an ideal setting, there
would be negotiation with stakeholders and every body's interest would
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be taken care of. That is not happening. Past experience with projects have
taught people to be suspicious and put up resistance. The large number of
people being forcibly evicted for all these projects know for sure that they
would not be among the beneficiaries. It is not just about welfare state, but
also about distributive justice and it cannot be meted out in the existing
process. What is very disturbing is that certain people on the developers
side hold that, no matter what it costs or takes, the projects have to be set
up and they must get the land by any means.
The moment this becomes the imperative, you can forget all other issues,
as we have been seeing since the '50s, when the local populace became
victims of marginalization. Till the 3rd Five Year Plan, the thinking was
that those who fall outside, would be marginalized and therefore, either
some kind of a sop, like the 'trickle down' theory would be needed just to
rd
keep the marginalised from becoming totally demarginalised. In the 3
Five Year Plan, for the first time they were given recognition. By now the
people have learned their lesson. Mass protests against this kind of
expropriation have become the norm. If the developers are to continue
with their ruthless attitude, then there can never be a meeting point at these
discussions and I see that coming. Therefore, I disagree with what Sailesh
said about the Samata judgement.
Samata is an extremely important judgment because, in the whole
acquisition process, it is above all the tribals who must be protected
because, once their lifestyle and livelihood is shattered, they will be left
with nothing. And if this is allowed to happen just to sustain the precious
economic growth of 8-9 per cent per annum, the country would be
mindlessly destroying a whole class of peoplea whole way of life made
extinct for the much vaunted 'national growth'. The very thought is
anathema to those with any sense of fair play and even a modicum of
feeling for the downtrodden. I have not yet seen a single project where
there was even a tinge of empathy with people who are being displaced. Dr.
Didar Singh made the distinction between victims and beneficiaries. The
victims have remained victims. Nothing has changed. But people are not
fools and they know they have been misled. We have seen that in the
choices they make election after election. These were voluntary choices.
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So, if one were able to guide their voluntarinesstheir willto where you
think it ought to go, then they would be with you. So, Samata is an
important judgment which needs to stay and, in fact, be expanded to many
other classes of people, particularly the poorest.
Mr. A. Mittal, Jindal Steel
I am from an entrepreneur family that can build its project in just three
years time. But today, just acquiring the land takes three years. So does the
poor entrepreneur hand over the job to somebody else? This creates a web
for corruption. If you want to have a 500 acre land there are 500-1000
families involved and all their signatures are required for this. So does he go
from house to house collecting signatures? Each time there is a problem in
acquisition, the concerned government just looks the other way. So now it
has become the responsibility of the entrepreneur. State governments
want growth in their states. Therefore, they grant permission and sign
MoUs with companies. Now they leave the responsibility for land
acquisition with private players who might be sitting 1000 km away from
that place. Why can't the state government take the responsibility of
acquiring land, whatever be the cost of compensation, since the
entrepreneur is ready to pay the sum? This will help check corruption and
stop time and cost overruns. But if the state government becomes a third
party, a spectator, this problem will continue forever.
Chair
Your suggestion is not very clear.
Mr. A. Mittal
When you sign a MoU with a state government, it should acquire land
wherever it wants development. They should be doing whatever necessary
to get the land, which includes compensation, rehabilitation and so on. A
direct approach by the government can check middlemen and mafias from
robbing the poor people who are losing their lands for pittance.
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Chair
What you are saying is that instead of an entrepreneur being asked to
purchase land directly from the farmers, the state governments should
acquire it and hand it over to the entrepreneurs.
Ms. Manshi Ashar
When I was talking about the problems with private purchase, I was not
advocating land acquisition by the state as it is happening today. The point
continues to be about peoples' rights, whether they recognise this
'development' as their own development and whether their consent is
sought and taken. Any kind of acquisition or transfer of resources should
be carried out with an informed consent of the people.
Sailesh Pathak
Since we need a peg, the new Bill on land acquisition has defined public
purpose. It may well be examined whether we agree with this definition or
not. I have said in my paper that in all such discussions, passionate and
forceful arguments replace reasoning. So, let us just get back to the public
purpose definition that is being proposed and decide whether we are in
agreement with it or would like to change it.
Dr. Didar Singh
This definition of public purpose is that there are certain projects which are
meant for government's purposes, that is for government use, such as
provisional land for strategic purposes relating to defence or any work
connected to national security. These are purely for public purpose.
Second comes the land for the government's infrastructure projects where
the benefits accrue to the general public, such as road, hospitals, etc. The
third can be contentious. It deals with land for any other purpose useful to
the general public for which 70% of the required land has been lawfully
bought by a person but 30% remains to be acquired for the project. This is a
very sensible and enabling clause, as it allows the company, which has
bought 70% of the land already, to ask the government to step in and help if
there is an obstacle to its getting the rest of the 30% of land.
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Chair
Some of these suggestions will be discussed in great depth in the next
session when we are supposed to work on the strategy. Overall, it has been
an interesting and at times spirited discussion. A number of very important
points have come up and some of them need to be flagged. One is about the
quantity or the kind of land to be acquired and the phrase used was 'to
minimize the acquisition.' There are, from time to time, allegations that
more land is being acquired than is actually needed. This is very relevant in
the context of SEZs. So, there has to be some modality for estimating, in
consultation with local people, what the minimum area that needs to be
acquired. Then there are issues of fixing prices and total compensation.
Wherever a reasonable price is fixed, the resistance to acquisition seems to
be low. This has been the case in Karnataka, where there is a government
body for determining the prices. Land owners, the government and project
authorities are all involved in the exercise. This model has worked well and
is worth considering.
There was a suggestion that, in addition to the compensation, there should
be a development plan in the project for the benefit of the people in the area
too and not just for the shareholders.
Unused land should be given back to land holders. Some kind of modalities
should be in place for such things. R&R should not be treated as a welfare
scheme, but rather as an entitlement scheme. There should be legal
sanction for R&R and there should be a clearly defined body for
determining what the R&R should be and for making sure that it is
properly implemented. In addition, there should be grievance redressal
mechanisms built into the R&R process. The benefit of the project should
go not only to those who have lost the land, but also to those who get
affected by the presence of such projects either because of pollution or
other problems that the project might create in course of time.
Traditional rights, particularly in the case of the schedule tribes have to be
protected. As the value of the land goes up as a result of the project, the
benefit of that enhancement should go to the affected people. That has to
be suitably factored in to the R&R policy.
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Besides, there should be a sharper definition of public purpose and perhaps

there can be different kinds of modalities for determining what the public
purpose in a particular case is.
Private land acquisition and the kind of coercion and panic that Manshi
Ashar mentioned should be addressed in an urgent manner. The problem
of multiple displacements may not be common, but project authorities
should certainly take it into consideration. One such trauma, I think, is
more than enough. We had an intense debate about the Samata Judgment.
I hope some, if not all of you, will stay for the second session. Having
identified the problems we would next like to benefit from your ideas
about the kind of a strategy that needs to be evolved.
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Session - II
"Towards Evolving An Appropriate Policy Strategy"
Opening Remarks by Mr. Surendra Singh (Chair)
For those who did not attend the first session, let me just give you a brief
background. As you know, land acquisition for mega projects is becoming
a problem both for project authorities as well as for those whose land is
being acquired. It has resulted in a lot of controversy and bad blood. There
have been skirmishes, violence, lives have been lost, and a number of
projects are getting delayed. According to an ASSOCHAM study, some
$100 billion dollars worth of investments that could take place in the near
term are getting endangered and a number of projects, such as steel plants,
power projects, urban development plans, roads, etc., are being affected.
In the first session, we had representatives from the private sector,
government institutions and from the civil society to examine all the
aspects of the problems. Some very valid points and proposals have been
made.
The second session is aimed at evolving an appropriate strategy for land
acquisition for mega projects. In this session we shall have presentations
from Prof. Sebastian Morris from the Indian Institute of Management,
Ahmedabad, Dr Ambika Nanda of the UNDP, Mr D. Raja, MP from the
Communist Party of India and Mr Nayan Raheja, Director of Raheja
Builders. Then we would have a discussant on the presentations before
having a general discussion. We expect the Minister of State for Rural
Development, Mr Pradeep Jain, to join us shortly and enlighten us on the
Government's thinking on the issue. I now request Mr Raheja to make his
presentation.
Mr. Nayan Raheja, Director, Raheja Builders
We are currently developing the Raheja Engineering SEZ in Gurgaon.
The SEZ would be located in an area that is close to: the IGI Airport's new
terminal, the section of the National Highway 8 that runs from Delhi to
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Manesar-Palwal Expressway (KMPW) and the new industrial Ring Road

for the whole of Delhi. The zone is located on the side of Gurgaon adjacent
to the Pataudi Road, an area that is the beehive of developmental activities,
the benchmark being the IMT, Manesar. We have been allotted and have
got the approval for 5000 acres (mostly farmland), out of which we have
been notified 255 acres.
When the new policy was announced in 2006, we were one of the first to
move into this area, ready with a new business model. Being primarily a
real estate company, this was a logical progression for us. The Reliance
SEZ (25,000 acres) is also located here. We have been successful in
accumulating 255 acres of contiguous land where development works have
already started. We started off back in 2007 with land acquisition.
We chose this location because it is connected to the KMPE and is close to
NH8, besides the Garhi Harsaru ICD is just around the corner. Our survey
team found that this was just a one-crop farmland area, which had not been
included in Gurgaon's R-Zone and was not at par with the circle rate. The
villagers, therefore, were not a very happy lot. All the same, it was a tough
task for our team to make them understand and accept our proposal. We
went to them and explained to them in Haryanvi what our project was all
about. The entire agenda of the project was displayed before them and,
once they understood that they would be part of the development project
and not be left out, they came over. The circle rate at that time in the area
was around Rs. 20 lakhs per an acre. The DLF and some other companies
have also acquired land in the vicinity in partnership with a couple of local
Haryana bodies. We chose to go directly to the people, find out what their
aspirations were and tried to fulfil them.
We offered them two or three partnership models. One was outright sale
with the price at par with the R-Zone rates. People would often ask as to
why the person across the road is getting so much money. We had to
explain to them that it was because the person's land was in the R-Zone and
then match our prices to keep them happy. We gave them 4-5 times more
than the circle rate. The second was the partnership model in which the
deal included facilities like education, employment in the upcoming
project and accommodation, which enhanced the comfort factor. Then
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there was an emotional approach, in which we, the sarpanch and the local
people all sat together and discussed their on-the-ground needs. We offered
to absorb all the skilled persons from the families in our project. One of the
partnership models was that we give them some money upfront and, as and
when the project gets developed, they would get the rights to a certain
square footage per acre which they could lease out or we could lease out
for them to industries that later came into the SEZ. Finally, the villagers
readily agreed, knowing that at the end of it all they would be getting 10
times more than the land's worth right then. They would own developed
space in the SEZ and live, work and educate their children there. I think
that did the trick for us at that time and we were able to execute the lease
deeds in our favour in approximately seven months from the time we had
started.
Chair
Could you elaborate the point about employment for the skilled persons?
Do you have provisions for providing skills to the unskilled persons?
Mr. Nayan Raheja
No. We assured them that, once the project was launched, we would do all
the things I have mentioned above; but we did not get in to the issue of
imparting skills.
Again, it was like killing two birds with one stone. The project got the
necessary workforce and the people got what they wanted. We were able to
acquire 255 acres of contiguous land through various models, either
outright sale or through the model where we were giving them money
upfront. Apart from this, we said that we would offer a certain amount of
crop loss compensation every year besides compensating the money they
spent on tube wells or any other infrastructure. We said for every tube
well, we would offer Rs. 50, 000. We also offered them medical facilities by
promising to build a hospital in the area and they would be given
preferential treatment. I think it should be obvious that the whole process
meant good money and an assurance of a good future for them. We were
successful. In fact, today we are in active talks with a lot of industrial houses
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who want to set up manufacturing units in our SEZ. The infrastructure

position right now is that the roads are being built; we are ready to bring
power as soon as a couple of industries start working. Ours is an example of
success, although not with the hype, hullabaloo and grand standing that is
the way of the world today.
Chair
You did not have problems with people who held out, as it were. You got
the whole contiguous land?
Mr. Nayan Raheja
We made it a point that we would move forward only if the piece of land
touching our piece of land had been acquired. We took an organic
approach to the whole thing. We asked the people agreeable to our
proposal to talk to others in their vicinity about our offer and ask them if
they would like to be a part of the project. There were lot of offers. Some
people from the other corner wanted to join us, but we decided against it.
We said we wanted to go step by step. That is how it happened.
Chair
It means that they have allowed agricultural land to be used for industry.
Mr. Nayan Raheja
According to the Special Economic Zone Policy, an SEZ can be set up only
on agricultural land.
Chair
I would now call on Dr Ambika Nanda to speak.
Dr. Ambika Nanda, UNDP
The UNDP initiated the formulation of a holistic R&R policy for the
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Orissa Government in 2003. R&R needs a one-time, start-to-finish policy

and not one that is staggered. At the time of negotiations the cost of the
land was less than 5-10% of the estimated project costs which, at that time,
included land costs, but not those of the R&R. At the last session, it was
observed that the poor people's claims and rights are often set aside in the
land acquisition process on the premise that they were illegal or
illegitimate. The irony today is that the concern for economic growth has
blinded the corporate and state establishments to the plight of the poor,
particularly the tribal population, whose uplift itself should be the prime
concern of development. How do we create a balance between these two?
We had initiated a democratic process where all the actors including the
stakeholders came together and thrashed out solutions to these problems.
Prior to 2003, Orissa had different R&R policies for the different sectors.
Then the UNDP, along with the state, was engaged for three years in
evolving a holistic policy to guide industrialisation activities. We brought
in the industries, and the civil society into the ambit of consultations at all
levels. In 2006, we came up with an R&R policy. Orissa is perhaps the only
state which has a Cabinet approved R&R policy. The justice factor,
discussed in the last session is still at the policy level. But, at the same time,
the government has set up R&R directorate as part of the policy. That is
basically what was being discussed in the last session. If the government
comes up with a directorate exclusively on R&R, it will result in a far more
efficient monitoring of on the field activities, such as the rehabilitation of
the displaced people and the support being given to them. At present the
UNDP is monitoring nine industrial districts. We have seen projects
which have come up post-2006 policy. Even before starting the building
work, the UNDP has begun the tasks of rehabilitation, resettlement
colonies, education and skill building. The point here is, when a state has a
R&R process in place to guide and monitor the activities, the work
progresses far more smoothly.
Post-2006, the UNDP has been busy building capacity and creating
institutions at various levels in the nine districts. We have a number of
industries coming up, especially in the steel and power sectors, including
large government irrigation projects. We have set up an R&R cell in each
district. The cell acts as a grievance redressal mission. If a displaced family is
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not able to get its due, the mission looks into it. There are various
committees for peripheral development. It coordinates among industries
and other institutions to facilitate a number of development projects. In
the mining districts like Keonjhar, Sundergarh and others, the roads were
really in bad shape. But district collectors and the RPDAC committees
were able to use these resources to rebuild the road network, not just for
the benefit of the mines but also for the general public.
In 2006, we started building the capacity to resettle and rehabilitate
displaced people after an authorised institution carried out a socioeconomic survey. It is now clearly spelt out who the authorities are. Prior
to this, the industries would engage any organisation which would go and
do the study and come up with a report. In the district of Angul, where a
power project is coming up, the particular industry did not have the
appropriate authority from the R&R Directorate. But they had a letter
from the District Collector. When they went to the people and told them
that we have come to conduct a survey, the villagers who were earlier
provided with orientation on displacement, asked the survey team to show
the letter of authority. When they showed them the collector note, the
people said that collector was not the appropriate authority. They were
people made aware of their rights and, therefore, were in a position to
demand it and, if necessary, negotiate. This illustrates the real meaning of
informed consent. Recently, Orissa decided that consent must be given not
by the sarpanch alone but by each family that faced displacement. This
decision will be notified very soon.
It is just not possible for project developers and related groups to handle the
emotional upheaval concomitant to being uprooted from an area that has
been the people's homeland for generations. It demands a humane
approach, especially from those at the helm of affairs and those at the
senior level. Above all, they need to be genuinely sensitised to the feelings
of the affected people. Recently, I was at place where a 600-700 sq.ft
building was being constructed to house the displaced families. People
wanted lots of open spaces and lots of sunlight, but once they saw the
model building, they were quite happy. But then there was a hitch. Then
they wanted some additional facilities, but the project people said it could
not be done. Because of this insensitive approach at the field level, this
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minor problem became a big controversy. Finally the people got their way
and the changes were made. Small changes are not going to add hugely to
the project costs and, if it means a slightly better living conditions, the top
project people should care enough to handle the matter themselves. If
things are not handled sensitively, there may well be problems at the last
minute of land transfer.
In the previous session, the dominant opinion was that there must be a
justification for the quantity of land required. Industries tend to ask for
large tracts, leading to larger displacement numbers. In many cases, they
try to take only the agricultural land, leaving the homesteads alone so as to
avoid paying compensation. It is not very difficult to sideline the simple
tribal, who does not have the culture of accumulating property and so
wouldn't even begin to know how to claim his due. The industry's
approach is pure pragmatism. There is nothing humane about it. The
UNDP's engagement with the State of Orissa, therefore, has been to create
enabling institutions that would deal with these R&R issues. So far we have
been able to set up this R&R Directorate and affiliated cells in the nine
districts. We have come up with the Regional Peripheral Development
Committee which contributes resources for the development fund. The
District Collector, in consultation with various groups, does what is
needed to facilitate the development processes.
Secondly, given the long association we have with it, we are now
requesting the Orissa Government to build human resources capacity in
the next 10-12 year phase. We intend to withdraw from this arrangement
once we have helped build the required capacity and the state government
is in position to move forward on its own. Our plan is to expand our
operations from the present 9 to all 30 districts of Orissa. With the
directorate already in place, we are hopeful that the activities will be
coordinated and managed better. Industries that have come up since 2006
are more aware of the issues and we also train their people to become R&R
savvy. We have distributed policy pamphlets in Oriya and in tribal scripts
to the people so that they come to know about their rights and are able to
negotiate. In a nutshell, the whole effort of the UNDP has been, through
engagement and active communication, to make land acquisition a just and
a humane process so that industrialisation happens on a positive note.
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Chair
Thank you very much Dr Nanda. Prof. Sebastian Morris has studied the
whole issue of land acquisition reforms in considerable detail. I request him
to make his presentation.
Prof. Sebastian Morris, IIM Ahmedabad
As you all know, there are two Bills waiting to be tabled in Parliament.
One is the Amendment to the Land Acquisition Act and the other is the
Rehabilitation and Resettlement Act. The amendment Act is to an extent
based on some of the work that we did, but as usual it does not really
incorporate all the changes that we wanted. But I am hopeful that the Act,
once amended, will rid the acquisition process of many problems.
Now, just let me run through the problems. The flawed acquisition
procedure is the root cause of delays and cost overruns and, most
importantly, for mass resistance and sometimes violent protests. It tends to
create an anti-developmental attitude in the civil society and feeds postmodernist elements that stand in the way of economic growth. I believe
that the way land is acquired today is perhaps the most important reason
for the Indian state to be considered less than democratic. It is an assault of
the State on its people. The current Land Acquisition Act is clearly not
democratic. It does not meet the test of democracy. It creates fertile
grounds for politicisation.
First, let me approach the problem conceptually before looking for
solutions. Firstly, the transfer of land ownership is difficult because, more
often than not, there is the 'hold out' problem. You cannot easily buy a big
expanse of land because there is a snag in the aggregation process. If an
industrialist or the government wants to aggregate land, the potential value
of all the pieces of land put together comes out to be much higher than the
value of the individual pieces. What happens in the aggregation process is
that if one out of the many owners holds out on his property, he can grab
the difference between the aggregate and the individual values. This is why
public use or eminent domain principlesthat allows the government to
forcibly take away a citizen's landis seen as justified. All democracies in
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the world have this principle in place, but use it with great restraint. India is
an exception because its government is far more free and unrestrained in
the use of this discretionary power.
Other India specific features that multiply the problems of land acquisition
are: high population density; ancient settlement laws; high dependence on
agriculture and, most importantly, the existence of disguised
unemployment. The traditional western ways of land valuation can just
not be the models for this developing country. Which means you cannot
simply take the rental value of land and capitalize it because a lot of Indians
dependent on agriculture are living in a state of disguised unemployment.
It is the total value added land which needs to be capitalized and accepted as
its minimum value, which would be much higher than the market value
even if there were no distortions. Put simply, the value of land is much
higher than the NPV (Net Present Value) of the rental value and closer to
the NPV of agricultural land, even if it is virgin land with no other
potential use.
Land markets are highly distorted because of the very high transaction
costs, such as the 10, 12, 14, 9, 8 per cent stamp duty besides other
transaction costs. These are absurdly high. Income taxes related to land
transaction are not very clear. Even selling ancestral land may attract some
kind of capital gains tax, and presumptive tax. The high transaction taxes
virtually kill the land market and puts it into the hands of the mafia because
the good ordinary citizens are overwhelmed by the huge tax burden when
they try to get possession of the land title. If the land has to change hands
three times, only those who can make agreements to sale can actually enter
the market. Here enters the mafia because only they can ensure, or rather
show, that property right laws have been adhered to even with a sale
agreement. There is no clear entitlement. In this area, reforms are moving
in the right direction.
India is the only country in the world that has not moved towards a
rational land title record. What do I mean by this? Typically if you take a
motor car registration then there is a lien on the motor car. Which means
any loan taken is recorded in the registration. When you buy a second hand
car you know whether somebody else has a claim on it. Every thing is clear
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cut. This is not the case with land; the land records and the title records are
held in one office and the sale deeds or the sale records in another. The
absence of even a working communication between the two offices allows
vested interest groups, such as the mafia, to exploit with impunity the title
problem and sell the land to multiple buyers.
Real estate businesses have, to date, failed to set up an insurance market
because the risk involved could be as big as 30 per cent. Only those with
mafia connections are doing fat business, delivering value for money.
This lack of clarity also means that there is a title arbitrage when a
government agency takes over land, cleans up the title and gives it to you.
The mere fact that the title is no more in dispute catapults the price sky
high. That could be the reason why clearance is required for nonagricultural land use states like Maharashtra and others. It is supposedly
meant to protect agriculture land, but this is silly, since no farmer would
have a credible project to get the non-agricultural clearance. All that it does
is to take away the value from the farmer and give it to the builder or
whoever is the intermediary. But after somebody has aggregated it because
he has a project, he can get the clearance. And typically, when the category
of land use shifts from agriculture to non-agriculture its value shoots up
from I to 5, 6, and 10. So, there is a huge jump up in value because this
happens selectively. Usually the value multiplies by 10 times. This is a
mathematical absurdity witnessed only in India. The acceptable jump
would be from 1 to 2.
There are other anti-farmer policies. For instance, a farmer cannot sell to a
non-farmer. It is like saying one can sell cars only to those who can't afford
it. So, there is a big problem here. The non-flow equity capital into
agriculture is just one of the minor reasons for farmers' suicides. The real
reason is the low value put on their lands. And yet, the value of the very
same land sky rockets once it is cleared for a government takeover. One
can safely assert the farmer is justified when he feels cheated even if you
offer them the market price.
Now, let us look at eminent domain and what impact it would have on the
land acquisition. Here, perhaps, is the most anti-democratic element in the
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Indian system on which there is no corrective even in the current Billa

Bill that seems to say, "I cut the cake, so I choose the piece". The Collector
decides which land he wants and what it should cost. This is not done even
in less developed democracies like Thailand, Malaysia and many other
countries and, of course, it would be anathema to developed countries.
This hangover from the British colonial days has to go. They were the
conquerors who were under no democratic constraints not to go beyond
eminent domain if they so wished. So, as far as the valuation system is
concerned, India is still teething, squatting far back among the
underdeveloped nations. There is no rationale to valuation in India; it can
be said, rather aptly in this context, that valuation remains eminently in
the domain solely of the state. On the government/developer side of the
spectrum the value is 10 and on the people/farmer side, it is 1.
The recorded price of land is highly under valued. Even today, when
market compensation is given, the up valuation due to land use change is
not taken into account and several problems arise. Say, for dry land with
wells, first the price of the land is determined and then the value of the well
or wells. But a well is not the only cost involved. There is also the value of
the aquifer, to which the land owner has a natural right. But that is not
getting valued because for that you may need to build more wells. This
would probably be only 20 per cent. So, typically, government estimation
is Rs.100 per tree. That does not work in the case of natural resources. In
other words, the natural resources are also not valuated.
These are minor problems. The major hurdles are the NAC, and
legislations on town planning. Till now, neither has the right of the
dependents on the value added cost of land been recognised, nor the rights
of the interstitials, that is, those who do not own land, but are totally
dependent on it for livelihood. It is only now that the amended Bill and the
new Rehabilitation Bill recognises these rightsbetter late than never.
The other problem is the open ended nature of the public purpose rule. It
gives the government of the day a free hand to define it in any way that suits
them and even the legislature has no restraining powers. The British
needed it and kept it alive. But even they did not misuse it as much as the
government of free India has been misusing it since it began to promote the
public sector and started acquiring private companies. The government
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can today acquire land for a third ashram, for an IIT or an IIM and keep it
idle for a long time, thanks to the public purpose clause. For Vizag Steel,
25,000 acres were acquired when no steel plant requires more than 500
acres. All this can and has been done and the final recipient does not have
to pay a penny. This accumulation of land, be it for a factory or for town
planning is far in excess of the requirement, going by population density. It
is a white elephant at the cost of both the original land owner and the
taxpayer. It is anti people. The contest today is only on valuation. It is
flagged as public purpose, but what does it mean? Nothing except the
government's will or whim. But, thankfully, the new Bill does move
forward and lists areas where the clause would be applicable. Implicitly
concomitant to these acquisitions is massive transfers in the economy.
Perhaps some of the richest persons in the country are, in one way or the
other, involved in land deals.
There is also a distortion of facts about who has land and those whose lands
have been acquired. Such distortion was clearly showcased in Nandigram.
This is completely biased, imperialistic in origin and shows no
considerations for democratic norms. There is no formal provision for
private acquisition of land. This means that private parties can go buy land
without hindrance, though it also puts them at the risk of hold-outs. It is a
double edged sword. About five methods of valuation are taught and the
standard argument given is the eminent domain principle or rule. If a
builder wants to acquire a large piece of land or an SEZ operator wants to
acquire a huge plant, he can go to the state department concerned and
invoke the eminent domain mantra. Actually, this mantra should not
work for him if he wants land for industry because industries can have
multiple locations and no public purpose is involved. So how does he
acquire land then? He has several options. He can choose a certain village
and, without revealing his intentions, buy a bit of land. He can then impose
negative externalities on the village's land owners and intimidate them to
sell out. Or he can make below the table payments to the local leaders and
get things done a lot more quickly. While the proposed Act recognises the
need to curb such practices, it does not specify the measures that need to be
taken. Mamata Banerjee has rightly gone on board flagging this lacuna in
the Bill.
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So, what is the way forward? Either throw the Act out of the window or
make radical amendments to it, instead of the vague or ineffective changes
that are being made now. Valuations should be carried out by independent,
authorised bodies, which would use several methods. The highest
valuation should be given where eminent domain is involved. Rubbish the
whole notion of non-agricultural clearance. Land use should be subject
only to town planningand urban agglomeration clearance, if necessary.
This would have to be done, but only for restricted amounts. Remove
restrictions on who can buy land except in tribal areas. Remove the entire
crop restrictions and define public purpose for the use of eminent domain.
Use the economics of market failure and form definite principles for
national security.
The main question is whether certain specific land is involved. So, deep
water ports, dam sites, mineral rich lands and right of way passages for
roads and railways, as also central places are the areas that come in the
ambit of eminent domain because they are all for public purpose.
Educational institutions, appropriable industries and housing are best left
to builders to negotiate with the market. We have a ridiculous situation
developing vis--vis educational buildings. A number of schools are being
built outside the city limits because the open spaces allows for a far larger
land allotments, with the results that many schools, such as the DPS,
Ahmedabad, becomes more like a transport (bus) company. If IIMT,
Nagpur is located 30 km out of the city, what chance does it have of
attracting customers? If medical colleges are set up outside the city, where
are they going to get the patients or the hospital? All these institutions need
to be located at the right place in the cities after a liberal and independent
valuation.
There should be a framework for non-compulsory acquisition. A private
party should have the option to do the work itself or seek state help. If a
large expanse of land is required, the party should notify the areas through
advertisement and mark out the plot in the cadastral maps with survey
numbers. It can then start the acquisition process on its own. It can
negotiate on the principle that the highest price it pays for a particular plot
of land would apply to the rest of land it buys. In such a process, the entire
community would be involved in the negotiation, optimising the chances
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of a fair deal. It would allow the community to negotiate as hard as the

buyer and, if the negotiations prove too hard for him, the buyer can go
somewhere else. The benefit in the aggregation would be shared equally.
Such provisions are there in the stock market. Minority shareholders are
also given an offer at the same rate when there is a takeover by a company.
The same principle can be applied in land deals, except that there must be
an ex-ante registration. This is very important in the case of land
acquisition. The new law says if 75% of land has been acquired or agreed
upon, then the rest will be acquired compulsorily. This creates a loophole
and incentive for malpractice as within this aggregation process there are
likely to be ex-ante registrations and this positions the state and the penal
system as an albatross on the process and the citizen.
There are many cases where there has been no need to acquire extra land
for a lot of the urban development works such as in Ahmedabad and some
other cities of Gujarat that follow the Bombay Town Planning Act. Under
this Act, the municipality pushes aside the common practice of acquiring
land, plotting out the plan, laying roads and then handing it over to
somebody. Instead, it maps out certain areas or localities that it intends to
urbanise. Currently, say around 10 per cent of the area is public land with
winding roads, bus stops or just open grounds here and there. If the
municipality wants 10 to 20 per cent more land to widen and develop the
streets, it maps it all out. Each plot now shrinks by 25 per cent if 20 per cent
more land is required as places for public use. The municipality comes out
with a new map in which each plot is shown with 20 per cent area
reduction, with the FSIs specified. Then, once the community gives the
nod, the plan is signed and ready. The land has suddenly become urban and
the state also knows where to lay the roads. Ahmedabad has some of the
widest roads in the region. It is a kind of 'ready to serve' urban growth.
They may also use transfer of development rights (TDRs) clause, as it has
been done in Bombay. If you give higher FSI in one place, people in other
places stand to lose. So they are given TDRs so that others can build higher
only if they buy the TDRs. You can clear a lot of slums by giving TDRs to
dwellers. If the builder wants to set up a colony some where else, he has to
buy the TDRs.
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It all means that there are lot of ways in which the poor can be brought into
the process of urban development. The combination of town planning,
land acquisition and the low FSIs in cities is a major problem for the poor
and the lower middle class. They cannot dream of owning a flat because of
the humungous cost of the land, not the flat itself. By our calculations,
most people in cities above the rock bottom 20% would be able to afford
two-bed room apartments in decent enough city localities if the FSIs are
rationalised. Do not go by Californian standards. But all our town
planning departments go by Californian standards because when the Ford
Foundation provided the technology, they forgot to remove the variable
numbers. Pardon me for exaggerating, but I am just trying to put the point
across. However belatedly, cities like Bombay are beginning to see reason.
The Delhi Metro would have been far more viable if its stations touched
points of high population density, that is, where the poor live. What I am
saying is that we need to reorient our town planning to the needs of the
poor.
Regarding the all important issue of rehabilitation, it is unfortunate that
the State is unwilling to spell out and lay down judiciable rights as a legal
fact of life. Most of the people who work in the field say they couldn't care
less about government policies. What they want is judiciable rights. What
this means is that under no circumstance should a citizen's
income/livelihoodpresent or futurebe put to any kind of risk in a take
over of land. China firmly follows this principle. That is why it is able to
acquire enough land to shiftrather than displace1.5 million people
without causing much of a protest. It has a very positive approach to land
and developmentparticularly for acquisition and rehabilitation. We need
to learn from that country.
Some final points. Total land cost must be incorporated in to the project
budget. Tribals must be given all marginal rightsfishing in reservoirs,
tourism rentals, mine-forest producewherever their land is taken over. It
is really marginal and very a small thing from the government-developer
point of view, but for the tribals it could be manna from heaven that could
greatly increase their income. Lease agreements can be worked out, but
there are issues related to equity shares and so on. The amendment Bill on
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land acquisition Act makes a big thing of equity stakes proviso but the
acquirer doesn't want it. He wants closure or, at best, a well defined equity
stake.
Chair
Prof. Morris, it would be useful if you could sum up your points for the
benefit of the Minister of Rural Development, who has just joined us.
Prof. Sebastian Morris
The way we look at land and its values, there are major problems in the
Land Acquisition Act. It requires major changes. First and foremost, Land
Acquisition Act needs to go. There is already a Bill which former UP Chief
Minister Kalyan Singh was looking at. That kind of Bill goes half the way,
but it needs to be tightened and brought out in a way that acquisition
becomes fair to the people. I am saying this because one cannot take the
position that agricultural land will not be used for other things. If you take
that kind of a position, then you are forcing a huge number of people to
migrate from Bengal, Bihar, and eastern UP, which have both the
maximum agricultural land and the maximum population. In the long run,
they have to get industrial jobs and all of them cannot go to Gujarat, where
maximum non-agricultural lands are available. Therefore, we need changes
in land acquisition laws. Today, the District Collector holds the takeover
and valuation powers. That must go. If the Collector uses the eminent
domain clause for compulsory acquisition, then the valuation should be
done by independent valuers and the standard principle of the highest
value should prevail. Also, all prior restrictions should go because these
help the industrialist or the acquirer or the beneficiary of the government
acquisition, rather than the person who is giving up the land.
The first thing to do is to remove all kinds of clearance provisos that are not
in the Act. The current Act makes some positive attempts with a statement
which says that the future use value must also be taken in to account along
with the current price. But the collector is not specialised enough to carry
out such an intricate task. We need to formulate a professional,
independent valuation system. Except in tribal areas, we need to remove
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restrictions on who can buy land. While the current law does not define
public purpose, the new law attempts to do so. But the definition has to be
far more clear cut and specific about where the land is required. For a deep
water port, you need a particular, specified site on the shore. A dam can be
built only at a gorge, not anywhere on the river. Therefore in all such cases,
the public purpose clause is involved. Needless to say, this argument holds
for mining and urban development
Areas which fall out of the ambit of public purpose are housing,
institutions, appropriable activities, industries and so on. In SEZs too, the
government should not be acquiring land. Then what happens to private
parties who want to acquire land? Here again, there must be a framework
in the Land Acquisition Act in which the government has only a
mediatory role. We need a registration process whereby in any large
acquisition, the private party has the option of going and registering his
requirements, such as areas where he wants the land, the survey numbers
and so on. He should name at least two or three locations. Once registered,
his requirements would be known by the interested parties, thus
facilitating the negotiation process. The maximum price he has offered for
any piece of land would apply to all other pieces. Once this is done, entire
community will join the process of negotiation. So, now the community
has two options: to agree to the terms, or say no deal unless the price is
raised, in which case the buyer goes away looking for better pastures. It
becomes a community versus the acquirer, not an individual versus the
acquirer which can lead to a lot of shady deals. Village leaders, local dadas
(local muscle) and goons stand to make a lot of money and the restusually
the ordinary villagersget heavily underpaid. The new process would do
away with all the murky deals and the buyer too will find himself
unburdened of his risks and other headaches. Such arrangements have
worked well in other countries.
Equally important is an absolute clarity about land titles and banish the
illusion that computerisation of records is the answer to the problem
because, for all you know, you may just be computerising garbage. The
initial runs in Andhra and other places proved useless because it was
computerisation for its own sake. Nowhere in the world are the title data
so much in a tangle so much so that even experienced foreigners failed to
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ORF Seminar Series
start an insurance market for it. The root cause for this fiasco is that there
are two separate offices dealing with the subject: one is the revenue record
office, which holds the title and the other the sales registration office.
Elsewhere in the world they have, through a torrent system, merged the
offices. The moment you do that the title becomes something like the
registration card.
When for instance, one is buying a second hand car, one look at the
registration card reveals there is a loan on it. So either the loan sum is
adjusted, or the car remains unsold. This is how it should be in land deals
too. There will then be no title arbitrage. Lot of middle class people buy
land from the government however inflated the price is because they get
clarity on the title. They will have an intermediary. The builder who
clarifies the title gets the benefit. The best way to go about it is to actually
clarify the title and the entire civil service can actually do the job. The
torrent system was invented in Australia and was picked up by New
Zealand, The UK, the US and many other countries. India, for reasons best
known to the state and other powers that be, has put the cart before the
horse by going in for computerisation but keeping on hold a perfectly valid
system.
Chair
I request Dr Basudev Chaudhari, Director of CSH, to submit his
comments.
Dr. Basudev Chaudhuri
It would be presumptuous of me, after all that I have heard here to pretend
that I have lot of new ideas to offer. I have an interest in the subject as an
economist. Our research centre has been involved in several projects that
involve large scale operations of the government of India. We are involved
in the evaluation of NREGS and SEZs. So, I will try to link the discussion
to that area. Mr Raheja has laid out in detail what big building companies
are doing and what gaps they were filling in. Prof. Morris then pointed out
the failure of the Indian State to provide a certain number of inputs for
public good in a number of areas. These areas require different agencies,
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such as the private industry or certain other groupings to come in and

create these public goods. So, I will just concentrate on these issues. Prof.
Morris's presentation was very complete and so thorough that there is very
little to add after that. I agree with you on almost everything that you said.
I will just raise a point on what you said on SEZs. We are far behind China
in this area. It has around a hundred SEZs whereas we have less than a
dozen. Given the way India has been moving over the last 15 years, why
can't we deregulate our framework not only to have more SEZs but to
bring in as much Indian territory as possible to make it in to one vast SEZ?.
The framework is already in place. Prof. Kaushik Basu has pointed out
recently, after coming in as Advisor to the Finance Minister, that India
needs to open up its economy further. Echoing this belief recently at a
Planning Commission meeting, Montek Singh Ahluwalia said there is a
limit to which we can remain a closed economy or even a partially closed
economy. We have undoubtedly opened up, but have failed to benefit
from it because we are pretending to protect the poor. If we bring in
different inputs and infrastructure for a rapid upward mobility via public
goods for those we call the poor, then the potential of the Indian economy
to weather out different kinds of financial storms will be much higher. So,
it is necessary to think in terms of a new paradigm where we open up
precisely in order to enable the people more. That is the general
framework which I would like to see in place.
Prof. Morris has succinctly pointed out the two main points under which
we as economists would evaluate this entire problem in terms of market
efficiency or economic efficiency and in terms of criteria of equityequity
in the sense of justice and fairness. I will just try to reframe what he said in
this framework. He pointed out the problem of land valuation, the fact
that markets are not allowed to valuate land properly because of a variety
of historical reasons and interference in the market mechanism. The
second thing is the following and this is where I would like to join up the
two things that I heard. People obviously place a high value on land as a
source for multiple uses and for different opportunity costs that they
might incur from their use. Third, land acts as an insurance against risk.
This particularly concerns Singur and Nandigram, as we heard in the
discussion. I organised a talk on this issue in the Indian Statistical Institute,
where we had people like Abhirup Sarkar and Debraj Ray, who are well
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known development economists. They both pointed out that people with
low income can obviously be bought out or forced out much more easily.
If these people are faced with the possibility of an income stream that is
much higher, their bargaining capacity will increase and that is where the
public goods failure has come in. As the Government of India statistics
show, there is a paucity of Indian public goods over more than threefourths of the 590 districts of India. It is very clear that this incapacity to
enable people in upgrading their skills in technical educationbe it
through education or social infrastructureis responsible for the people
having so little bargaining power. It is just not enough to rely on land.
They badly need the ability to move upwards into urban markets. If today
we have a problem in Maharashtra, where a section of the local people do
not want people from Bihar and UP to come, there are those who do not
mind because the 'outsiders' are taking away only low end jobs. It is
because Maharashtra has moved up in the development ladder and is
creating more high value added jobs that the people are not very keen on
these low value added jobs. And this situation is also related to the
problems of migration. The point is, the rise in the quantity and the quality
of public goods means an increase in the income/livelihood opportunities
for the people, besides shaping the value we set on land. This, in turn, will
diminish the problems involved in bargaining over the cost of land,
problems so starkly highlighted in Nandigram and Singur.
As to providing training and orientation to the people being displaced, it
should have been done much before. Several generations have already been
lost because they have not been provided such facilities. As Prof. Morris
pointed out, the public interest legislation was used in Chicago for land
acquisition way back in 1932. India needs to redefine its public interest
litigation proviso. Of course there are alternative industrial and
agricultural uses. It has been much easier for states such as Rajasthan, with
semi-arid conditions, to acquire land than in fertile states like West Bengal
and UP. Perhaps, as Prof Morris said, the government, instead of directly
intervening, should play the role of an umpire to help the negotiating
parties reach a mutually agreed land prices. As he pointed out in the case of
West Bengal, the arguments that were put forward against the
Government of West Bengal for helping Tata to acquire the land were
perfectly valid. These are issues that will not just vanish. The challenge for
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the state, its judiciary wing in particular, is to put in place a mechanism that
ensures speedy justice in land acquisition deals.
Chair
Let me invite Mr. D. Raja of CPI to share his thoughts on this critical issue.
He might also like to share his experience of this problem in relation to
Singur, Nandigram and Ratnagiri.
Mr. D. Raja, MP, CPI
We voted against Ratnagiri in Maharastra. This is a national issue and that
is the precise reason why Parliament is debating these Bills. Why should
Parliament not leave these issues to the state governments? First let us be
clear on that point. I acknowledge there will be differences in methods and
approaches. For example, I may not agree in totality when Prof. Morris
says India should become one big SEZ. We have been demanding in
Parliament that the SEZ Act be amended. Of course, I have benefited from
the arguments from both sides.
Going by its classical interpretation, land is vital element of economic
development. But for a billion plus population, the country's land
availability is meagre. We are talking about food security and today itself
the Food and Civil Supplies Minister said the prices of milk products will
go up. So stop taking tea with milk. Forget whether it is a statement which
will lead to further hoarding and black-marketing. The point here is how
are we going to improve the productivity in agriculture, how are we going
to link the whole question of land with food security, which comes first in
the national agenda. It needs to be discussed in totality at the national level,
not just in states. For instance, while talking about housing and urban
development, someone said this government has a vision of slum free
cities. Sounds very good, but here in Delhi, the poor can no longer afford
to live and it is increasingly becoming city of rich. That is why I am
questioning the entire growth model. Poor people simply do not have
access to basic things.
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Prof. Morris
The Centre must raise FSIs to 7, 6 and so on. The moment you do that the
city compresses, higher density is there, metros become viable. You have
the poor staying at the right place, you do not have to push them to jhuggis
and deprive them of their incomes. There are very oppressive things
embedded in the very details. Higher FSIs will bring the infrastructure cost
down too.
Prof. Ansari
I think it is very easy to say we should go for 7 FSI or 8 FSI. What is not
known is the level of infrastructure available. City Centre is ok.
Otherwise, even the National Commission on Urbanization under Mr
Charles Correa said no to high density urban form. Some of these
statements are sometimes very out of place. Can slum people live in a 20
story building? I am a town planner; I know the implications of poverty.
Prof. Morris
Good that you raised the point. Look at the dynamic East Asian cities, all
beautifully structured in terms of higher density.
Prof. Ansari
Again, it's a question of infrastructure. In Delhi, building up to the 4th floor
was allowed, but can the infrastructure scale that height?
Next Speaker
That is because the state does not have the capacity.
Prof. Ansari
In that case, is it possible in an old area? These questions require very
detailed studies.
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Prof. Morris
It is possible. There are methods like TDRS the architects know nothing
about. Town planning has to be done by economists, not architects.
Prof. Ansari
I am a town planner. I have spent entire life in town planning for the last 40
years.
Prof. Morris
That is why Indian cities are so inhospitable to the poor.
Prof. Ansari
This kind of pointed remark is out of line, sir.
Prof. Morris
I am willing to dispute it. I am on a Committee with Charles Correa on the
Goa Development plan and I have finally managed to convince him.
Mr. Nayan Raheja
Rural rehabilitation has already been started. As for the FSI, it has gone up
to 2 in the new Master Plan. But we have to take a conservative approach.
Can we take it to 7, given the state of the infrastructure? We have had
power shortage for dog's years and we are far from solving the problem.
All the same, it is true that densities definitely need to go up.
Dr. Chang Ho Kwag, Director & Global Research Head, POSRI,
South Korea
I am a columnist and researcher. I am here on a business trip. What I heard
about land acquisition issues this morning is very informative. I do not
have much to say about the issues in India, but I will share some
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ORF Seminar Series
experiences of South Korea. In Korea we do not talk much about

amendment of laws and rules and regulations. We all accept the current
legal system about land acquisition because the issue was settled long back.
Of course, there have been no disputes about land acquisition itself. There
is some kind of consensus in Korea that we should follow the rules of the
land. When it comes to compulsory acquisition by the state and if the
project is a national project, then everybody has to accept what the
government decides. Seoul, the Metropolitan City, is surrounded by many
new satellite cities. The Government of Korea is the sole authority to
decide which area will be the site for the new city. Then everybody
including the owners of that area has to sell and an independent institute
will evaluate the land price through advertisement, which will be binding
on everyone. Most people have to accept it. But it is the private entity that
initiates any project. They can develop small townships but that is totally a
private matter. Government does not get involved. So, everything has to
go by agreement among the stakeholders.
Listening to all of you, I can recall that recently even in Korea we have had
some incidents. Not so many, but at least 2-3 agitations, regarding
redevelopment of cities. But all those agitations and disputes are about the
process of implementing the legal system, not about amending the existing
laws or rules and regulations. It is on the issue of the process of
implementation. What I am emphasising here is that, even here, when you
talk about issues such land acquisition, apart from debating about new
legal system or rules and regulations, we should focus on the
implementation process of land acquisition. By dividing it in that way, it
will be easier to draw some implication and some conclusions.
Although I have many things to share, I am afraid the situation in Korea
and the situation in India are pretty different. Right now in Korea only
around 5 per cent of Korean population is dependent on agriculture sector
and agricultural sector contributes less than 10 per cent of total GDP. So
land acquisition is not that serious an issue in Korea. Developing industrial
park, Special Ground Zones and so on are solely decided by the
Government. Therefore, everyone has to accept the price that has been
evaluated by an independent institute for developing industrial parks and
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Special Economic Zones. Now every Korean agrees that, even in a private
initiative project, if more than 80 per cent agree to sell, then rest have to
agree too. That happens because of peer pressure. Otherwise, everyone
will blame those 20 per cent. That is the situation in Korea, which is
completely different from what is going on in India.
Mr. Sony Kunjappan, JNU
You were talking about technical aspects (the computer model) which can
help us save 20 per cent land by optimally utilising available space from
here and there. While that is a good thing, the problem is, where land is
concerned, so much cost is involved. There is this thing called generational
cost as well. For example, I have some property that has had investment
value for years including the communitarian bond. How do you estimate
its cost? How does one calculate that generational investment on a
particular property?
Prof. Morris
If you want to see this whole process of town planning in action, come to
Ahmedabad. We just finished the Sarkij-Gandhinagar link of the outer
Ring Road Extension. In rural areas the application is of much lower
significance. But it is of great significance when applied to clearing what is
called ribbon development and converting it to corridor development.
One of the major problems is that when there is an old highway
somewhere, some kind of a road comes up and soon shops and residences
crop up along the highway. There is no regulation. So, almost everybody
has built something or the other on a highway. A good example is the
Bangalore-Mysore Highway, which is cramped. If it is decided to acquire
land to expand the highway, the d values will peak just like that. The first
property has, let us say, value X. The next property has half of X or 1/3 or
2/3 and the third one is probably about 25 per cent. The fourth one has the
value of agricultural land. This very steep cost gradient is a universal
phenomenon. But other countries have found ways of getting around the
problem so that the road can be expanded. Now, if the value of the asset
built is not very high, one can reach a deal. One takes a map and marks out,
say, km on either side of this road, depending on the size of the road. All
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ORF Seminar Series
the beneficiaries are pushed out of that half kilometre stretch of land, the
road is widened and intersections and access points provided.
Kerala is one economy which has been stumped by this kind of a problem
and the land value has just collapsed. This is because the state government
cannot afford to pay the exorbitant prices and the private buyers have a
problem with land for land system. Today private business can grab the
opportunity. With a few crore you can buy up this small access point and,
possibly, the interior. Instantly, the value soars. It has been done in other
countries. In Bangkok, as Google Earth shows, they have converted
ribbon development into corridor development.
There are other instruments like the TDRs. Take a case where the access
points to the highway being laid are few and far between. The trick would
be to create higher population density around them by concentrating on
the development worksuch as shops, etc.around them. Attract the
people by giving them all the rights and benefits if they shift to these
points. Make the development contingent on people buying these rights or
accommodating them. Unfortunately, these initiatives are more often
than not still born because the technical experts for things like road
engineering and town planning are not brought in. The civil servant has to
do the work and he has no help from any technically capable institutions.
There is not a single institution specialising in real estate in India thus far.
For every 3 MBA schools in the US, there is one real estate school. India has
been lagging behind because real estate was in the government domain and
there was no point in studying the subject when the state intervened
everywhere.
A million and a half people in China were shifted in the Three Gorges
project. An entire town, roughly the size of Anand in Gujarat was shifted
up the hills by about 2000 ft before the gates were opened for inundation.
So, China is doing construction at a rate which is unimaginable. They
consume five times more cement than the next largest consumer of cement
in the world and by no means are they the richest country in the world. In
other words, it consumes about 15 times more cement than India. So you
can estimate the capital formation. People are being displaced by the
millions every year, but the whole point is they are being accommodated.
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That is the whole point. Let us not mix emotional freedom with political
freedom. Quite obviously, the Chinese do not have political freedom, but
it has a society that cares for and accommodates the people, the poor.
Indians have political freedom but the rights of the poor are being trampled
upon every day.
Mr. Kunjappan
Chinese model may not be a very apt model for us. If you read today's
Hindu, the film Avtaar, which highlights land disputes in an alien world,
has been banned in China. You may be aware of it. People are bulldozed
from their places.
Prof. Morris
No bulldozing can work in India. Complete debate will only work. I am
not saying the Chinese model is good. The Chinese model is good for
them.
Chair
The point that Prof Morris has made regarding land acquisition in China is
correct. If some piece of land is needed, the government compulsorily
acquires it. No questions are asked, no argument is entered into. The point
he is making is that there, the displaced persons are truly resettled. In India,
not enough is done for resettlement or rehabilitation.
Prof. Morris
True. It is difficult get the numbers from China, but every one knows
China's economy is about 12 times the size of ours. They have left us far
behind. Roads after roads have been converted from ribbon to corridor
roads. The corridors from Shanghai, Beijing and to the coastal cities are
being made into industrial corridors. People talked of the interior growing
slowly and development being confined only to the coastal area. That is ten
years old. In the last decade, China has put in changes equivalent to three
generations. Today the interior grows faster than the rest of the country.
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ORF Seminar Series
The whole world keeps saying that China is going to collapse because its
economy cannot grow at 10 per cent all the time. What they call
overeating. For the last 15 years they have proven every economist wrong.
Chinese economy is robust. In 1998 crisis, when China chose its own path,
the IMF and the world were highly pessimistic. But it held out. Then,
when Beijing put forward a $540 billion stimulus package, everybody said
the country is going bust. But it achieved the near impossible. They
brought the inflation down from 10.5 to 8 - 9 per cent. Understand
Chinese economy directly, not via the West. Ironically, they don't try very
hard to read English and therefore they don't import their economic
policies from the West. You cannot shape the economy of a billion people,
whose lifestyles are changing so very dramatically, by mere control. It is
not a demand and control economy, but a huge market economy that is
shaping China's development, though, admittedly, political freedom is
being controlled.
Next Speaker
Is it possible in India?
Chair
I do not think he was recommending that we follow the Chinese model.
Prof. Morris
We need to do it in our own way, but we lack necessary political will.
Democracy does not mean that the state can just take away a citizen's land
for free, so that the President can have an airfield in front of his houseall
for 'the larger good'. That is what has been happening for last 60 years.
What is the compensation? There are still people hanging around IIT
Kanpur who were handed out a pittance as compensation. The IIT's
occupancy rate remained 15 persons for 20 years. That was what is called
the jhangri weight. I will give you another example. The Orissa
Government wanted to acquire land somewhere in eastern pa rt of the state
and the Central Government wanted it too. It paid the state government a
huge sum per acre, but the people who lost the land were paid a pittance.
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This is our democracy. Introducing judiciable rights is the only solution to

these aberrations of democracy.
Chair
I think we had a very, very stimulating and useful discussion. We will now
put it all together and come up with some policy recommendations.
Mr. Sunjoy Joshi, Distinguished Fellow, ORF
I think we had a brilliant day-long workshop in which we covered the
whole gamut of issues, starting from the core sociological, political
problems concerned with land acquisition. We then moved on to issues of
implementation, which formed part of the first as well as the second
session. And, finally, we addressed some of the core concerns regarding the
oppressive land acquisition laws, which everyone had missed earlier. India
today has a totally distorted land market, so much so that I do not see a way
out of this mess.
In the whole gamut of very ill-defined categories, we have created a huge
confusion as to what is 'public' and what is 'private'. Some 30 years ago,
huge tracts of land were acquired at throwaway prices for undertakings
such as the IIT Kanpur, Navi Mumbai, and some public sector units.
Today some of the most environmentally degrading forms of operations
are being carried out at these units. Given the situation we are in, some
people have started to believe that we cannot leave the task of investment
in infrastructure development in the hands of the state alone. The trouble
is, the moment the private sector comes in to the picture, a very different
yardstick comes into play. This is a complex issue which needs to be
studied in great detail. We will be garnering some of the recommendations
made in this conference and come out with a discourse on the issue, which
will be sent to all the participants. This will be followed by further events
on the issue, where we hope to involve wider participation from the
political class.
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Edited proceedings of a seminar organised

by the Centre for Politics and Governance,

Mega Project Development:

ORF SEMINAR SERIES

Mega Project Development:

Edited proceedings of a seminar organised

Major hurdles to land acquisition are borne out of the country's

Inadequacy or lack of compensation remains the single biggest

Rehabilitation and Resettlement (R&R), which is crucial for

The absence of any provision of compensation for people who live

Lack of institutional capacity for dealing decisively with many of

An unholy nexus between private parties, officials and land mafia

There are growing cases of use of overt violence against the

Need for greater clarity in the existing law (LAA, 1894) by

Public purpose clause needs substantial clarity as in the proposed

Similarly, many of the provisions/laws regarding compensation,

Apart from cash or land for land kind of compensation, there is a

Private industry can set examples for others by developing

R&R should be treated as a right based entitlement scheme and not

There should be grievance redressal mechanisms built into the

Land acquisition process should take the affected parties into

Effective communication with affected people can go a long way in

The scope of compensation should stretch beyond cash or

There is a need to recognize and protect the traditional rights,

Human rights impact assessments should be linked to the land

Land grabbing in the garb of development or mega projects needs

Mega Project Development:

Land acquisition is an extremely tricky issue today. Approximately 70 per

ORF Seminar Series

name of compensation. The project authorities are unhappy because of the

Mega Project Development: Issues in Land Acquisition

ORF Seminar Series

depend on land, such as tenants, share croppers, landless agricultural

Mega Project Development: Issues in Land Acquisition

ORF Seminar Series

government acquires land cheaply, transfers it to a private sector and the

Mega Project Development: Issues in Land Acquisition

farmersparticularly in tribal areas where most of mining and pithead

ORF Seminar Series

Why do we need to worry about land acquisition? Quite obviously because

Mega Project Development: Issues in Land Acquisition

there are sharecroppers, the people who derive a secondary employment

ORF Seminar Series

Mega Project Development: Issues in Land Acquisition

ORF Seminar Series

Mega Project Development: Issues in Land Acquisition

ORF Seminar Series

Mega Project Development: Issues in Land Acquisition

establishment and development of industries and to provide the necessary

ORF Seminar Series

land. Then the transfer of land ownership and payment of compensation

Mega Project Development: Issues in Land Acquisition

Notwithstanding these happy stories, we are facing serious problems in

ORF Seminar Series

(reminiscent of Bush's 'collateral damage'). It means project fallouts

Mega Project Development: Issues in Land Acquisition

great dams, which led to the first experiences of massive displacements.

ORF Seminar Series

Mega Project Development: Issues in Land Acquisition

ORF Seminar Series

Mega Project Development: Issues in Land Acquisition

ORF Seminar Series

Mega Project Development: Issues in Land Acquisition