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LATEST NEWS UPDATES | Loopholes in the Land Bill by Manoj Pant

Loopholes in the Land Bill by Manoj Pant

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published Published on Aug 18, 2011   modified Modified on Aug 18, 2011

• Without a clear definition of ‘public purpose’, the land acquisition bill is meaningless

• The bill’s definition of ‘fertile land’ can potentially harm the agriculture sector

• Government’s role in defining land will create economic and political problems in future

As Parliament debates this month it will, hopefully, move beyond issues of corruption in high places to important economic legislation. Two such pieces of legislation are the land acquisition bill and the bill for a new regulatory body for higher education. In this month’s column I will take up the first leaving a discussion of the latter issue to subsequent columns.

But first to clear up some misconceptions. The general discussion in the media seems to indicate that what is in contention is the ‘colonial’ Land Acquisition Act of 1894. Trashing it then seems a natural thing to do. However, the Act in consideration was modified in 1985 and it is this modified Act which is to be considered. In fact, right through the 1920s and later till about 1985, the original Act went through different modifications by state governments. Second, a careful reading of the Act indicates that in no case was the current land acquisition in areas like Greater Noida permitted. Section 17(2) of the Act clearly indicates the areas under which the “urgency clause” could be applied and by no stretch of the imagination did any of these cover the above acquisition. So, it is hardly the case that the current chaos was caused by the lack of a (new) central bill. Corruption too has clear regional dimensions. In any case, in drafting the new bill, two contentious issues will need to be discussed: the definition of “public purpose” (for which the “urgent acquisition” is necessary) and the new issue of agricultural lands on which acquisition is possible. Consider the issue of “public purpose”. Without a proper definition of this a land acquisition bill is meaningless. Surprisingly, economic theory at least has a clear definition though lawyers (and governments) would prefer a hazy one. In economics, public purpose is served by ‘public goods”. Theory tells us that such goods would not be provided by the normal working of a free market and the state needs to step in. The market is not defined for two reasons. One, these goods cannot be targeted to individuals as exclusion for use in not possible. Second, use by one individual does not diminish the availability of the commodity for another person. Clean air is one example. Hence, it is not possible to price such goods in the market. This is well recognised in the 1894 Act, Section 17(2) where the examples where “urgency” may be applied in acquisition are railways, irrigation, water supply, road communications and electricity. What about land for private companies? The Act considers the possibility of land for companies needed under the “urgency clause” for “public purpose” but links this to Section 17(2) via Sections 38A, 40, 44A and 44B. Here Section 44B clearly states “no land shall be acquired … for a private company which is not a government company”. This is what makes the Greater Noida acquisition illegal by any reading of the Act. The acquisition of land in Jaitapur for the nuclear plant is, however, permissible. Opposition here could, of course, come under issues like threat to environment, etc. The second issue sought to be included in the bill is more problematic. It is being argued that no acquisition would be permissible on “fertile land” defined as “double cropped” land. Now economic theory clearly states that demand for land is derived from the use to which it is put. Therein lies the problem. Current high prices of land near urban areas is driven by the demand for urbanisation and residential/infrastructure purposes. On the other hand, today returns to agricultural activities are about the lowest relative to most other uses. What the new land acquisition policy will do is penalise farmers who have worked hard in raising the fertility of their soil: their land cannot be acquired. If this new provision becomes law, and given the force of urbanisation, farmers will turn their lands away from double cropping, thus further reducing the productivity of agriculture in general. This is most likely to observed in states like Punjab which are considered the country’s food bowl. While this new provision may be in the county’s national interest it militates against the private interests of farmers. This contradiction may be detrimental to the long-term interests of the agricultural sector.
 
Apart from economics, land ownership has an “emotional” aspect. However, it is not clear why the emotional aspect is important in agriculture but not in the case of those who cherish their land for whatever reason and yet will have to give it up if they fall in the 20% of people unwilling to put up land for acquisition in any notified area. Barring acquisition of land for public purposes, it is not clear why the government must step in to define lands which can or cannot be sold. Such stipulations may well create serious long-term economic and political problems. In fact, contrary to perceived intentions the result may well be a further alienation of agricultural and urban interests.

(The author is faculty at JNU)


The Economic Times, 12 August, 2011, http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=ETNEW&BaseHref=ETD/2011/08/12&PageLabel=16&EntityId=Ar01602&ViewMode=


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