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Ending misuse of land acquisition laws by Ram Singh

Frequent and unrelenting protests against land acquisition seem to have compelled political parties to take the issue seriously. The Centre has promised to introduce a redrafted land acquisition Bill during the winter session of Parliament. As per official pronouncements, the Bill will provide for higher compensation to the affected parties. Besides, acquisition for private companies will be restricted to less than 30% of the total land required for the project.

However, it will be naive to expect the above measures to solve many of the problems resulting from misuse of the acquisition law. In the past, state governments have been highly innovative in devising newer ways ever to subvert the law for political and private gains. The prospective legislation must provide safeguards against misuses. Here, an enquiry into the actual abuses can be helpful.

Excessive acquisitions for private companies and inadequate compensation have been the primary causes behind the past protests against compulsory acquisition. However, courts have been rectifying the latter problem to an extent. In most instances, the affected parties have been resorting to litigation to seek higher compensation. On this count the judiciary has been very sympathetic; generally, it has been increasing the compensation amount. But, as far as the legitimacy of the acquisition per se is concerned, exceptions apart, the judiciary has left the issue to the prudence of the executive. Left unrestrained, states have ruthlessly violated not only the spirit but also the letter of the law, especially when it came to acquiring land for companies.

Part VII of the existing Land Acquisition (Amendment) Act, 1984, provides rules for acquisition for private companies. The company gets to own the acquired land. However, sections 38-44 of this part impose several restrictions. For instance, there is no provision for emergency acquisition. Besides, the company and the state government are required to sign an agreement stating the purpose of acquisition. The agreement must specify the terms on which general public will be entitled to use the company-provided services.

The objective behind these riders is to restrict the compulsory acquisition to limited activities of companies from which public can benefit directly, such as school, hospitals, etc. These stringent requirements notwithstanding, the states have acquired land for all sorts of activities of companies, including ones that cannot even remotely serve any public purpose. Moreover, in numerous instances, acquisition has been done using the emergency clause. How have these blatant violations of the law been possible?

Generally, acquisitions for companies have been undertaken under Part II of the Act. This part concerns acquisitions by government entities for public purpose. It does not impose the above restrictions on acquisition for companies, but requires the compensation to be paid out of public funds. In order to justify acquisition for companies under this part, states have been contributing nominal amounts toward the cost of acquisition. Some governments have gone to the extent of contributing just. 100! Due to such legal ambiguities, states have been able to violate the law with impunity.

Companies clearly find it profitable to use the state machinery to acquire land at subsidised rates; direct purchases from the owners, in contrast, are costlier and time consuming. Indeed, the acquisition process stands captured by private interests of companies and the decision-makers.

Even if the compensation rate is increased and acquisition for companies is restricted to less than 30%, the law will remain vulnerable to several abuses. For instance, a state will still be able to justify acquisition for company simply by declaring the project at hand to be its joint venture with the company. Moreover, it can subsidise the company by acquiring parcels that are costlier to buy through voluntary transactions.

Public-private partnerships have emerged as a new tool for misusing the law. Under these partnerships, the government acquires land and retains de jure ownership rights over it. The cost of acquisition is also borne out of the state exchequer. Nonetheless, de facto control rights over land are passed on to the project company on the basis of long-term and renewable lease.

Ostensibly, partnerships are formed to provide infrastructure and public services such as education and health. In reality, however, excess land is acquired and the company is allowed to use a part of it for real estate projects — partnerships for Delhi airport, and Yamuna and Ganga expressways are a few of the many cases in point. So, the company gets the land it needs and that too without any cost!

Since the legal ownership of the land rests with the state, the acquisition, technically speaking, is not for the company. Therefore, the above-mentioned limit on acquisition for private companies, howsoever small, is irrelevant. An increase in compensation rate is also of no avail here, since the cost of acquisition is borne not by the beneficiary company, but by the taxpayer!

The new law must create strong incentives for companies to buy land directly from owners. The following measures will be helpful. First, apart from enhancing compensation, wherever possible, the affected people should be made stakeholders in the project. Depending on the context, there are several ways of doing it.

Second, whenever a company is going to use the acquired land, the acquisition should be treated as ‘acquisition for company’, regardless of whether ownership of the land is to be transferred to the company or not; whether the cost of acquisition is to be paid partly or fully using public funds or not.

Third, before acquiring land for a company, the government should be required to publish project details such as details of total area to be acquired, who will bear the cost of acquisition, how public will benefit from the project, etc.

Finally, there is a need to set up an independent and representative land acquisition regulatory authority. Approval from this authority should be a prerequisite for acquisitions for companies as defined above. Any change in land use after acquisition should also require its permission. Bestowed with suitable powers, along with checks and balances, the authority should be able to enforce the letter and intent of the law.

(The author teaches at the Delhi School of Economics)