[Reader-list] Land Acquisition

Rakesh Iyer rakesh.rnbdj at gmail.com
Sat Aug 1 14:04:41 IST 2009


Dear all

Land acquisition has been a very hot-topic in our times, starting with
Singur, but also extending to other areas, and I felt that an article such
as this can also help in understanding the issue in a better way.

Do read the article. Enjoy.

Regards

Rakesh

Link: http://www.hindu.com/2009/08/01/stories/2009080155420900.htm

Article:


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* The real issues behind land acquisition *
Pranab Bardhan * The proposed pieces of legislation on land acquisition
represent an improvement over existing ones, but are still unsatisfactory. *

The opportunistic and partisan stalling of the Land Acquisition and
Rehabilitation and Resettlement Bills in the Cabinet recently by Mamata
Banerjee has provided an opportunity to rethink some of the important
provisions of the Bills (which she is not concerned about, but should have
been).

Under the prospective legislation, a company must first buy directly from
landowners 70 per cent of the land required. The state steps in to buy the
rest in case some recalcitrant landowners are holding out; even here, the
sellers are guaranteed a 60 per cent premium on the average land price over
the previous three years. While this is an improvement on the existing
colonial land acquisition law, this is quite unsatisfactory, particularly
from the point of view of stake-holders in agricultural land. Let us spell
out the reasons:

First, while leaving the major part of the transaction to the market may
stop the matter from becoming a political game of football in populist
competitive politics (as has happened in West Bengal), it is an inadequate
solution to a complicated problem. Even assuming that the purpose for which
the land is to be transferred is a legitimate one from an economic and
environmental point of view, Indian history is replete with instances of
uninformed, cash-strapped peasants being induced to sell their land at
nominal prices by the lure of ready cash from developers, speculators, and
touts of large corporate interests. This is how many Adivasis have lost
their land even in recent years. Even in the case of informed, market-savvy
sellers, thousands of small, uncoordinated farmers are no match for a large
corporate buyer in the bargaining process.

Of course, in many cases the State government did very little to get the
landowners a good price; but there is potential here for community
organisers (and panchayats) to get involved in ensuring a fair price. In
particular, the provision of a 60 per cent premium on the past average price
is not good enough. The average past price is for the land as agricultural
land, whereas use for industrial or infrastructure purpose will probably
multiply the value many times, the gain from which the farmer is deprived.
So, over and above the value of the agricultural land being considered as a
minimum floor of basic compensation, the farmers should be compensated with
a share in the enterprise or company, so that they can benefit from future
profits.

Of course, the poor farmer may not have the capacity to bear the risks of
fluctuating share prices. Here the role of the state is to put the farmers’
shares of the new company in an independently managed trust fund which will
bear the risks at the cost of some management fees. Out of this trust fund,
the farmer should be paid a steady “pension” (or annuity) every six months
or so. Given the large gap between productivity in agriculture and the new
activity for which the land is acquired, the farmer can be assured of a
reasonable stream of pension. This will go a long way in assuaging the
anxieties of an uncertain future that the farmer may contemplate in selling
the land.

Also, a regular pension may be more advisable than a one-off cash payment,
which often tends to get frittered away. In case the land is acquired for
public infrastructure building (where there may not be any direct company
profits to be shared), the land should be given out by the farmer on
long-term lease with the rent periodically readjusted in accordance with the
current value of surrounding pieces of land and the rental increases
deposited in a trust fund.

Secondly, a land sale displaces not just landowners, but other stakeholders
as well (sharecroppers and agricultural labourers working on the land, for
example). In West Bengal*,* the government had announced compensation to be
paid to registered sharecroppers (which Ms Banerjee never paid much
attention to). But the state also needs to be involved in some form of
welfare payments (and job training and so on) to unregistered sharecroppers
and landless workers.

Thirdly, the state often needs to get involved in building roads, providing
electricity, water supply and so on for the new company, and this may
require coordination in the land transaction itself between the transactors
and the state right from the beginning.

Of course, politicians often lack credibility in any process of obtaining
fair compensation to land sellers*.* Cases of politicians, middlemen, and
contractors defrauding poor sellers of their compensation and resettlement
rights are far too many. So it may be desirable in some cases to hand over
the responsibility of determining fair prices and managing the process of
transfer and resettlement to an independent commission, provided political
interference with the working of such a commission can be minimised and
enough opportunity is given to community leaders and organisations to serve
in such commissions or present their cases at hearings before the
commission, and to generally act as watchdogs in the whole process.

Thus, what is at stake with the new Bills is much larger and deeper than Ms
Banerjee’s political gripe.

*(The author is a professor of economics at the University of California,
Berkeley.)*
* *

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