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Do Bigha Zameen The Vexing Problem of Land Acquisition in India

Case study prepared by Dr. Kasturi Das for class discussion
On May 8, 2014 Thiess India, the Indian subsidiary of $24.4-billion Australian infrastructure, mining and real estate
firm Leighton Holdings received a letter from NTPC terminating the contract between them. Despite several extensions,
the notice said, Thiess had failed "to make any headway" in extracting coal from Pakri Barwadih, a coal block in
Jharkhand. At one level, the notice was the latest broadside in an increasingly acrimonious dynamic between the two
companies. At another level, it was the latest act in a cautionary tale of how vexing and twisted land acquisition has
become for India Inc. in general and the mining sector in particular.
'Pakki Barbadi'
With geological reserves of 1.6 billion tonnes, Pakri Barwadih is the largest coal block given out by the Government of
India for captive use till date. In all, since 1993, the government has given out 195 blocks, 155 of them between 2004
and 2011. Of this, very few have got going. Most have been held up in processes or clearances, land acquisition being
one of the issues. Pakri Barwadih was allotted to NTPC in 2004 - at a time when the company wanted to meet 20% of
its coal requirements through its own blocks. "The company's then-CMD told us it was a goldmine for NTPC. We could
use it to meet our coal requirements," recalls a former senior employee in NTPC. "Employees now call it pakki
barbadi (definite ruin).
Located about 23 km to the south of Hazaribagh, BJP leader Yashwant Sinha's erstwhile constituency, this is a poor part
of the country. Most of the 2,000-odd households living over the block eke out one crop from their fields during the
rains and work as labour in Hazaribagh or elsewhere the rest of the year. NTPC, and 26 other companies who were
allotted blocks in the Karanpara coalfield, had to acquire land and start mining. So far, NTPC has not been able to and
once almost saw the block de-allocated. NTPC blames Thiess. "Mining in India entails passionate involvement in local
conditions and managing the environment," argues Arup Roy Choudhury, CMD, NTPC. "None of these initiatives
could be seen in the local representatives of Thiess. Hence, no work could actually happen at the site." According to a
senior Thiess India official, however, the arrangement was that NTPC would acquire the land and Thiess would develop
the mine and carry out operations thereafter. NTPC, he adds, neither made land nor basic infrastructure available. A
legal battle seems likely!
Land Rights
The blame game notwithstanding, one of the key reasons why Pakri Barwadih could not be operationalized is the
messiness of land acquisition in India. As with most projects, the 6,600-odd acres that NTPC needed to acquire had
diverse owners. Based on the legal statute of their holding, these can be classified under three heads: (a) revenue land
owned by farmers, (b) forest and deemed-forest land owned by the forest department, and (c) government land.
Acquisition ran into trouble in each of these three categories. People are living and farming in the lands shown as
belonging to the government and the forest department. "With land acquisition running into delays, we were told to start
work in the forest area NTPC had obtained," says the Thiess manager. "After a survey of about 1,200 acres, we found
people were cultivating 206 acres." Weak laws and social patterns collide here. Many of these people have been
farming here for several generations. They see the land as theirs in spirit, but the law does not confer legal status on all.
"For sarkari land, the 'adverse possession' rule and several court orders say that anyone who has lived on government
land for more than 30 years should be paid compensation as per government rules," says Sunil Kumar, collector of
Hazaribagh. But there's no policy for those who have lived in these places for less than 30 years. The Forest Rights Act
(FRA), passed in 2006, conferred legal status on forest dwellers; but it has been poorly implemented. "Some villagers
had applied under the FRA, but we never heard back after submitting our forms," says Jitendra Bhogata, who lives in Iti
Sirma, a tribal village in the Pakri Barwadih block. Titles are not a problem in revenue land, however, which accounts
for 4,071 acres of the block's 6,600-odd acres. But NTPC, says the Thiess official, has acquired only 10%-15% of such
land. In this place where people are poor, have small landholdings and no alternative sustainable livelihoods, NTPC is
willing to pay Rs. 15 lakh an acre, twice the going rate. In addition, it is offering an annuity of about Rs. 3,000 every
month for 35 years, but not jobs. Villagers are unhappy with the compensation terms. "We cannot buy land in the
vicinity. The whole valley is going into coal blocks," says Satyajit Singh, a tempo driver from nearby Pandeypara
village. "We will have to look for land in areas new to us. Also, can we search for new land, buy it, build a house, etc.,
in that Rs 15 lakh?" Villagers like him have calculated the quantum of coal lying below each acre by dividing the size
of the coal reserves by the block's acreage. Says Singh, "Agar koyla ka ek tonne Rs. 2,000 ka hai to ek acre ki kimat
kitni honi chahiye? Hame to uska adha per cent bhi nahin mil raha hai (If a tonne of coal costs Rs 2,000, what would
an acre of land cost? We're not even earning half a per cent of that)".
The Theiss official estimate that, by not operationalizing the block, NTPC is spending Rs. 7,000 crore importing coal
from Australia 10 million tonnes of relatively better coal at Rs. 7,000 a tonne. In contrast, he says, coal from Pakri
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Barwadih would cost just Rs. 3,000 crore 15 million tonnes at Rs. 2,000 each. According to him, the company could
easily resolve the issue by giving jobs to the project affected families. "At Rs. 15,000 a month, or Rs. 1.8 lakh per
household per year, that would work out to Rs. 36 crore a year," he says. As it is, the cost is passed on to the customer."
But NTPC does not have any policy on providing employment. "Hence, the numbers which are being talked about are
only hypothetical and cannot be commented upon," says the NTPC spokesperson.
As tempers have flared, the site has seen police firing. People have died. The company continues to acquire land. But
that is due to the imposition of Section 9, which prohibits locals from selling land to anyone but the company. All this,
despite the fact that the land acquisition in Pakri Barwadih is under the Coal Bearing Areas Acquisition and
Development (CBA) Act 1957, which makes fewer demands on a project proponent than the new land acquisition law,
which has come into effect on January, 1, 2014.
The Land Acquisition Act, 1894 The Old Law
The new land acquisition law, titled The Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013 (henceforth the LARR Act) replaces the archaic Land Acquisition Act,
1894, which existed from the colonial times.
One of the glaring lacunae of this archaic Act was the lack of a comprehensive definition of public purpose, which
determined the need for land acquisition. Further, it included an Urgency Clause, which never truly defined what
constituted an urgent need, leaving it entirely to the discretion of the acquiring authority. The outcome was that almost
all acquisitions under the Act invoked the urgency clause.
As for the compensation, the rates paid for the land acquired were the prevailing circle rates in the area, which were
notorious for being outdated and hence not even remotely indicative of the actual rates prevailing in the area. Above all,
there were absolutely no provisions in the 1894 law relating to the resettlement and rehabilitation of those displaced by
the acquisition.
The result of the aforesaid features was that under the 1894 Act once the acquiring authority had formed the intention to
acquire a particular plot of land, it could carry out the acquisition regardless of how the person whose land was sought
to be acquired was affected. There was no real appeal mechanism to stop the process of the acquisition either. Although
a hearing was prescribed, the views expressed were not required to be taken on board by the officer conducting the
hearing. The 1894 Act, thus, gave the government sweeping powers to acquire land at low rates and by ignoring
local concerns by citing public interest.
The 1894 Act was seen as a legislation that used the eminent domain principle to allow the state to gain access to land
by subverting the right to property, the human rights pertaining to housing, livelihood and other allied rights of the
affected people. From a rights-based approach the land acquisition legal framework in India was grossly lacking in
terms of: (a) the understanding of the impact that land acquisition could have on the affected communities, (b) a
participatory approach for bringing in the views of the affected communities (say, by way of public hearing), (c)
provision for acquiring land with prior informed consent of the land owners; and (d) an effective legal mandate
regarding the rehabilitation and resettlement of the people affected due to the land acquisition.
Fallout of the Old Act
According to Chitrangada Choudhury, a journalist and researcher, (a)mong the worst excesses committed in Indias six
decade-old democracy, the forcible displacement of rural Indians in the name of nation-building ranks high up. And
within this, the brunt of the oppression, emanating from the states claim of eminent domain, has been borne by Indias
adivasis. In 2011, the Twelfth Five-Year Plan blandly noted that of the estimated that out of the 60 million people
displaced in development projects since independence, as many as 40% were adivasis; whereas their share in the
general population hovered around 8% only. According to the critics, that Indian society lacks quantitative or
qualitative insight into violence against such communities for developmental and industrial projects is a measure of how
policymakers and citizens have routinely devalued the adivasi point of view and experience.

A backlash was perhaps inevitable, as witnessed over the past couple of decades, in particular. In fact, the flashpoints
keep increasing by the day: the Posco steel plant in Jagatsinghpur, Orissa; Reliance SEZ in Raigad, Maharashtra; Salem
SEZ in Nandigrm, West Bengal; Tata Motors in Singur, West Bengal; Coal India in Korba, Chhattisgarh; Vedanta in
Niyamgiri, Orissa ... stories galore.


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Highlights of the New LARR Act

The new The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act,
2013 (LARR Act) is an attempt to revamp and make the land acquisition process more humane by addressing the
glaring lacunae in the 1894 Act, according to the erstwhile UPA government, which enacted the legislation. Introduced
in 2011 as 'The National Land Acquisition and Rehabilitation and Resettlement Bill, 2011', the title was eventually
changed on a suggestion by Congress Vice President Rahul Gandhi to highlight the right to fair compensation and
rehabilitation and resettlement package, which, according to the drafters, was the fundamental premise on which the law
was based. According to Jairam Ramesh, the then Rural Development Minister, the new Act was based on four main
components: (a) consent of landowners, (b) compensation, (c) resettlement and rehabilitation, and (d) procedures.
Requirement of Prior Informed Consent of the affected families: In cases where public-private partnership (PPP)
projects are involved or acquisition is taking place for private companies, the Act requires the consent of at least 70%
and 80%, respectively of those whose land is sought to be acquired. This is apparently aimed at ensuring that no
forcible acquisition takes place. This is by far is the most unequivocal recognition in a law of the peoples constitutional
right to participate in decision-making over projects that affect them, and more importantly, to be able to say no to
such projects. The clause is an essential acknowledgement of the numerous, and increasingly intense, protests unfolding
across India, despite state and police efforts to intimidate and stamp down such citizen movements against forced
displacement. Forcible acquisition of land was now "history" under the new land law, claimed Jairam Ramesh while
addressing the media in September 2013.

Better compensation: Given the inaccurate nature of circle rates, the Act calls for payment of compensations that are up
to four times the market value in rural areas and twice the market value in urban areas. In addition to those losing land,
the Act provides compensation to those who are dependent for their livelihood on the land being acquired.

Legal stipulation of Rehabilitation and Resettlement measures: The LARR Act not only links land acquisition with
the accompanying obligations for Rehabilitation and Resettlement (R& R), but also makes R&R mandatory. R & R
provisions in the LARR Act are applicable to all land acquisitions by central and state governments. In the case of a
land acquisition by a private entity, including companies, R & R provisions will only be applicable if the acquisition is
of more than the prescribed limit determined by the state government. Over five chapters and two entire Schedules have
been dedicated to outlining elaborate processes (and entitlements) for R&R. The Second Schedule in particular outlines
the benefits (such as, land for land, housing, employment and annuities) that shall accrue in addition to the one-time
cash payments. Rehabilitation and Resettlement (R& R) has been made mandatory in this Act. Sec 16 of the Act deals
with the preparation for R&R schemes. The Collector is the Administrator for R&R scheme. The functions of the
Administrator include conducting of survey for the census of affected families and preparation of draft R&R scheme on
the basis of this survey. The LARR Act also deals with the provision for R&R committees at the project level involving
local people and elected representatives. Separate Commissionerate for R&R at the state level and National Monitoring
Committee for R&R at the central level oversee the functioning of R & R mechanism. The adjudicatory function is
vested with Land Acquisition, Rehabilitation and Resettlement Authority which is presided over by a Judge.

Mandatory Social Impact Assessment: Social Impact Assessment (SIA) is a new introduction to the land acquisition
process by the LARR Act. Given the socially and environmentally damaging legacy of mines, industries and dams, the
SIA is considered as a tool which would help in understanding the implications of a proposed land acquisition of the
affected population and various stakeholders. The LARR Act mandates that the SIA has to be conducted by the
appropriate government in consultation with the Panchayat and Municipality leading to preparation of SIA report. The
SIA report so prepared is to be appraised by the expert group, who recommends whether the land acquisition is
necessary or not on. The expert committee reaches at this opinion on the basis of social-cost benefit analysis. This is in
sharp contrast to the erstwhile requirement of project proponent-commissioned Environmental Impact Assessment
(EIA) reports. Over almost two decades, these assessment reports have amply demonstrated that such documents
provide an impoverished even dishonest account of how large projects impact local populations. Prepared by
company-hired consultants, EIA reports see no need to engage with to-be-displaced communities to capture their
concerns and ties to ecology.

Public participation provisions: The LARR Act attempts to bring more legitimacy to the land acquisition process by
way of public participation mechanism. Public participation is being conceived at the SIA report preparation stage, by
way of consultation with the concerned panchyat or municipality and by conducting a public hearing in the affected
area. There is a provision for the inclusion of two representatives of Panchayat or Municipality in the expert group
which appraises the SIA. The views of the representatives have a significant role in the social-cost benefit analysis.

Safeguards against displacement: The LARR Act provides that no one shall be dispossessed until and unless all
payments are made and alternative sites for the resettlement and rehabilitation have been prepared. The Third Schedule
even lists the infrastructural amenities that have to be provided to those that have been displaced.
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Special safeguards for tribal communities and other disadvantaged groups: The LARR Act states that as far as
possible, land will not be acquired in the Scheduled Areas. In case of acquisition or alienation of any land in the
Scheduled Areas, the prior informed consent of the concerned Gram Sabhas or Panchayats or autonomous District
Councils are required to be obtained.

Retrospective operation: To address historical injustice the Act applies retrospectively to cases where no land
acquisition award has been made. Also in cases where the land was acquired five years ago but no compensation has
been paid or no possession has taken place then the land acquisition process will be started afresh in accordance with
the provisions of this act.

Caps on acquisition of multi-crop and agricultural land: To safeguard food security and to prevent arbitrary
acquisition, the Bill directs states to impose limits on the area under agricultural cultivation that can be acquired.

Share in appreciated land value: Where the acquired land is sold to a third party for a higher price, 40% of the
appreciated land value (or profit) will be shared with the original owners.

Return of unutilized land: In case any land, acquired under this Act is not unutilised for the purpose for which it is
acquired, for a period of five years from the date of taking over the possession, the appropriate government is required
to return such land to the original owner of the land from whom it was acquired subject to the refund of one fourth of
the amount of compensation paid to him/her along with the interest.


End of land wars?

Even though the new LARR Act makes an attempt to reform the land acquisition process with right based approach
measures, there are way too many gaps and loopholes in the present legislation, which could lead to an ineffective land
acquisition framework, according to critics.

For instance, it is pointed out that given numerous instances of officials and corporations usurping the powers of the
Gram Sabhas, the Act should have recognised violation of the prior informed consent clause as an offence, to be
penalised by fines or imprisonment, just as it has laid down such penalties for violation of compensation and
resettlement clauses. Moreover, the prior informed consent provision in the LARR Act is limited to the land acquisition
for private companies and PPP projects. Excluding the prior consent requirement for land acquisition in other cases fails
the very purpose of informed consent requirement. Hence, it is apprehended that most of the land acquisition under the
LARR Act would also be coerced land acquisition, as under the previous legislation.

It is further argued that having witnessed problems regarding land acquisition by private companies like Singur land
issues, it would have been appropriate to incorporate R&R mechanism in every land acquisition by private persons or
entities. Giving powers to the state government to determine the limit above which R&R scheme has to be implemented
in case of land acquisition by private entity could lead to the failure of the R&R mechanism conceived under this
legislation. Moreover, Schedule IV of the LARR Act provides a list of legislations to which the LARR Act would not
be applicable, which includes, the Land Acquisition (Mines) Act 1885, Damodar Valley Corporation (DVC) Act 1948,
National Highways Act, 1956, Coal Bearing Areas Acquisition and Development (CBA) Act 1957, Atomic Energy Act,
1962, Railways Act, 1989, Electricity Act, 2003, SEZ Act 2005, among others. The land acquisitions under any of these
legislations do not have to follow the various progressive measures provided for under the new LARR Act. This would
in-turn be a loophole in the new land acquisition legislation, the critics argue.

There are also emerging concerns regarding the appraisal of the SIA report by the expert group. Given that the expert
group is being appointed by the government, it leads to conflict of interest. Moreover, the expert group report regarding
whether the land needs to be acquired or not, could be vitiated by the government. This loophole weakens the
mandatory SIA provision. Hence there is a major issue of lack of transparency and accountability in the present
framework regarding SIA under the LARR Act, according to the critics.

Another major concern is whether consultation and public hearing would remain as mere procedures without any
effective dialogue and deliberation between the various stakeholders, which is the experience with public hearing under
the Environmental Impact Assessment notification!

Solution to a vexing problem or a stumbling block?

Sachin Sandhir, managing director, Royal Institute of Chartered Surveyors (South Asia), is among those who back the
Land Acquisition Act. "The new Act will be the guiding principle for all land acquisition by the central and the state
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governments. The Act brings in stricter norms and increases the compensation to displaced landowners significantly,"
says Sandhir. Indirectly, the new Act sets a course of reforms through a policy framework for rehabilitation and
resettlement, too, he adds. In fact, just after the Land Bill was passed in Parliament last year, analysts had seen it as a
positive and transparent move by the government. Speaking about subdued home-buyer sentiment, Anshuman
Magazine, chairman and managing director, South Asia, CBRE, a real estate consultancy, had said the land Acquisition
Act was expected to improve transparency and the investment climate in India.

While the new law is expected to bring down legal complications and grievances related to land acquisition, an increase
in land-related costs could make projects much more expensive, according to the industry. Further, the consent clause
will also add to the delay of projects, as the time consumed in getting the consent will simply add to the long approval
process. Stating that it had become "virtually impossible" to acquire land for construction of roads, ports and creating
other infrastructure under the existing Land Acquisition Act, DIPP Secretary Amitabh Kant has also stressed on the
need for amending the Act. "Land acquisition for roads, ports and similar other economic activities has not been
happening ever since the new Land Acquisition Act came into being," Kant said. "A number of road and port projects
are stuck up on account of the Act and there is an urgent need to fast-track road and port projects which can be possible
when necessary amendments are made to it," he added. Even so, a bureaucrat terms the new law "misdirected
generosity" that may make projects involving land hard to implement.

"This new Act has swung to the other extreme," says Gaurav Jain, a real estate professional who worked with Emaar
and DLF before setting up his own consultancy, Samyak Properties & Infrastructure. Little land acquisition has
happened under the new law, partly because of the economic slowdown and partly because of the law itself. Change
might be coming, however, given that a stated intent of the new BJP-led government at the Centre is to get the wheels
of industry moving. "Till now, industry was saying the Act needs a relook. But now, even the new government is saying
the Act has made land acquisition difficult and expensive," says Jain. "It will undergo changes. There is no way out."

Way forward or backward?
A department under the Commerce and Industry Minister Nirmala Sitharaman is reportedly making a submission to the
rural development ministry which is in charge of the land acquisition legislation to do away with the 'social
impact assessment' before land acquisition.
Even the state governments have joined the chorus against the new LARR Act, saying its provisions will adversely
impact infrastructure projects and the overall investment climate in the country. "With this land acquisition bill", says
Vishal Dev, industry secretary, Orissa, "We can just forget about attracting industry." "If land acquisition took four to
five years under the old act, it will take 1.8-2 times as long with the new one." That is because, he says, the new bill
wants more notices to be given out, more studies to be commissioned and stipulates long periods for communities to
respond to these notices.
In the last week of June, 2014, the Rural development minister Nitin Gadkari has indicated that the government may
change some provisions of the LARR Act to address concerns of the industry such as the rising cost of acquiring land
and procedural delays. The minister, however, said sections of the law that deal with compensation, rehabilitation and
resettlement would not be changed. In fact, from its initial remarks after taking over, it appeared that the Modi
Government would retain the new law, but work on improving its implementation to make it easier for industry
while being considerate to the needs of the land owner. It's a balance that was, even after 10 years, never achieved at
Pakri Barwadih. Will the Modi Government be able to achieve it? Only time will tell!
References
http://www.livemint.com/Politics/LuhKprUHfEbD54LmHgyUUK/Nitin-Gadkari-hints-at-rethink-of-Land-Acquisition-
Act.html
http://www.epw.in/web-exclusives/adivasis-and-new-land-acquisition-
act.html?ip_login_no_cache=4860b8dc40bba5836816bc1863045f77
http://articles.economictimes.indiatimes.com/2014-06-12/news/50536740_1_land-acquisition-reliance-sez-new-act/2
http://www.livelaw.in/new-land-acquisition-law-critical-review/
http://www.livelaw.in/new-land-acquisition-law-critical-review-2/
http://www.livemint.com/Politics/FXZ9CrJApxRowyzLd8mb2O/All-you-wanted-to-know-about-new-land-acquisition-
Bill.html