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LATEST NEWS UPDATES | New Land Law: Riddled with loopholes by Ram Singh

New Land Law: Riddled with loopholes by Ram Singh

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published Published on Sep 23, 2011   modified Modified on Sep 23, 2011

The government has introduced the Land Acquisition, Rehabilitation & Resettlement Bill, 2011, in Parliament. The Bill fails to address fundamental causes behind disputes and litigation over compensation. Moreover, like the existing law, it has provisions that can be misused by states to favour companies at the expense of the rights of farmers and forest dwellers.

An excessive use of the emergency clause is not the only abuse of the current law by states. Often, land is acquired, ostensibly for government use, but is eventually transferred to companies. Property owned by powerful people is exempted from acquisition. Indeed, the recent controversies over land acquisitions in the Uttar Pradesh, Haryana and Karnataka are due to such misuse.

The proposed law allows states to continue with these practices. For example, Section 87 allows for midway denotification. Section 96 gives states unbridled power to transfer acquired land to private companies and individuals, if 20% of the resulting profit is shared with the owners. Such transfers are consistent with Section 93 that governs postacquisition changes in land use, as long as the land is used for the same or a 'related' purpose. For instance, land acquired for industrial development can be transferred to a special economic zone (SEZ).

Similarly, land acquired for urban development can be transferred to builders for housing projects, without violating the proposed law. The initial purpose can be defined strategically to justify several other uses as related purposes. It is crucial to prohibit postacquisition transfers of land to private entities. If acquired land remains unutilised, it should be returned to the owners.

As for direct acquisition for companies or large-scale purchases by them, the Bill mandates rehabilitation and resettlement for affected families. At the same time, it dilutes the crucial public-versus-private distinction. The all-inclusive definitions of 'infrastructure' and 'public-purpose' permit state intervention in acquisition and transfer of land to companies for all sorts of commercial activities.

State intervention is advocated to protect the interests of small and ill-informed owners, and to overcome hold-up of useful projects by owners. These arguments assume a benevolent state. The history of land acquisition in India shows that the decision-making of the state is highly susceptible to capture by the rich and powerful. The risk of hold-up is overplayed. Compulsory acquisition is justified for projects that are location specific and face land assembly problems like roads, railways and port projects. For real estate, hotel and entertainment projects, there is no justification for forcing people to part with their land.

The Bill is seriously deficient on the issue of compensation and litigation. The compensation is determined on the basis of circle rates or the average price of saledeeds of similar land, whichever is higher. The present law is identical in this regard. But land acquisition collectors (LACs) invariably award compensation on the basis of circlerates, which are perpetually well below the market rate as well as sale-deed rates. There is no reason to believe that in future, LACs will behave differently. Indeed, an extensive litigation under the current law is due to the fact that the LACs and courts use different basis for determining compensation.

While the LACs use circle rates, courts tend to use relatively high-value sale deeds. Consequently, the court awards are substantially higher, inducing the affected parties to litigate. However, the burden to prove the market value is on the owner, notwithstanding the fact that all the relevant information, like records of sale deeds, land type and so on, is solely possessed by the government. The owners have to extract the relevant information from uncooperative babus. Clearly, such a system favours only the resourceful; the poor can't afford to litigate.

There is nothing substantial in the Bill to change this socially-wasteful and regressive scenario. All it does is replace the ADJ court with a Land Acquisition, Rehabilitation and Resettlement Authority, to adjudicate compensation disputes. This can't reduce litigation. If anything, due to the higher multipliers provided by the Bill, effectively four for rural and two for urban areas, litigation is likely to grow.

The basis, circle rate versus sale deeds, one sale deed versus another becomes increasingly more crucial for compensation and worth litigating, as the land size and the difference among sale deeds and circle rates increases. In fact, those privy to official decisions can profit by buying up land before its acquisition by the government.

The frequency and intensity of the problems can be reduced by minimising compulsory acquisition. This will encourage companies to work out acceptable lease arrangements with sellers. So far, they have had no incentives to do so. The state has been eager to get them land at a throwaway price. When acquisition is inevitable, the compensation should be awarded by an independent authority based on all of the information available.

(The author is Associate Professor, Delhi School of Economics)

The Economic Times, 23 September, 2011, http://economictimes.indiatimes.com/opinion/comments-analysis/new-land-law-riddled-with-loopholes/articleshow/10073434.cms


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