Business

Arvind Panagariya: Win-win on land

Critics of the proposed amendments to the land acquisition Act of 2013 have conveniently sought to frame the debate in terms of a win-lose proposition. They contend that any benefits to non-farming entities – whether they be school-going children, patients seeking hospital care, households looking for affordable housing, small businesses or large corporations – would be at the expense of the farmers whose land is acquired. But they neglect the fact that the amendments are a win-win proposition.

Underlying the critics’ view is the assumption that regardless of the compensation offered, farmers do not want to part with their land. Ergo, any change that simplifies or speeds up land acquisition hurts them.

But is this assumption right? A recent survey published by the non-governmental organisation (NGO) Lokniti offers some answers. According to it, when asked whether they like farming, 28 per cent of the farmers reply outright in the negative. Among the 72 per cent who reply in the affirmative, a whopping 60 per cent say that they like farming because it is their “traditional occupation”. Only 10 per cent of them say that farming gives them good income. Most revealingly, 62 per cent of all farmers say that they would quit farming if they could get a good job in a city.

The responses of women and children in farmer households reinforce this picture. When asked if agricultural income is sufficient to fulfil livelihood needs, 67 per cent of the women reply in the negative. And a solid 76 per cent of the children of farmers say that they would prefer to take a profession other than farming. With the spread of education and enhanced access to information on the developments around the world, the young in farmer households have the same aspirations as their counterparts elsewhere in the world.

Therefore, in assessing the proposed amendments, the question we must ask is whether they are consistent with the ambitions and aspirations of the young, including those from farmer families; with the promotion of social goals underlying the projects for which land is to be acquired; and with the interests of the farmers whose land would be acquired.

Under the 2013 Act, all land acquisition for public-private-partnership (PPP) projects requires the prior consent of at least 70 per cent of the affected families. Similarly, all land acquisition for private companies for public purpose requires prior consent of 80 per cent of the affected families. In both instances, the 2013 Act also requires a lengthy, time-consuming social impact assessment.

Experts calculate that even if an acquisition under these provisions proceeds flawlessly with no legal challenges, NGO agitation or bureaucratic delays, it would take close to five years to complete. Since few land acquisitions have such a smooth ride, the actual time taken would be much longer. Such a long-drawn-out process is likely to deter even the most determined governments from undertaking a project that requires a private entity to play a role whether solely or in partnership with a public entity. Unsurprisingly, by all available accounts, land acquisition for PPP projects and for private companies for public purpose has come to a standstill since January 1, 2014, when the 2013 Act came into force. After coming to power, when the present central government conducted a consultation with state governments, chief ministers from the Bharatiya Janata Party (BJP) as well as non-BJP states overwhelmingly complained about the obstacles posed by the consent and social impact assessment provisions of the law.

Delays of this magnitude in every PPP project and private project for public purpose can be scarcely good for anyone. On the one hand, they render many otherwise viable public-purpose projects unviable, thereby undermining economic development in such critical areas as infrastructure, housing, education and health. On the other hand, they eliminate or substantially displace the government as a buyer of land, thus, leaving for-profit buyers as the only major players in the market. For farmers wishing to sell their land – and there are many of them who wish to do so – this is hardly good news. For, the price the private buyers offer under such circumstances is bound to fall well below the handsome compensation that the 2013 Act prescribes. Thus, under the current law, socially desirable projects suffer, as do aspirant children of the very farmers whom the law is designed to help – and with no benefit to the farmers themselves.

It is this major shortcoming that the proposed amendment Act aims to correct. It provides that the appropriate government authority be empowered to exempt PPP and private projects for public purpose from the consent and social impact assessment provisions in five socially critical areas. The areas proposed are eminently defensible: national security and defence; rural infrastructure, including electrification; affordable housing; industrial corridors; and infrastructure and social infrastructure under PPP projects in which the ownership of land remains with the government.

The other major amendment proposes to extend the high compensation and resettlement and rehabilitation provisions under the 2013 Act to areas currently outside its purview. In its current form, the 2013 Act exempts land acquisition under 13 statutes listed in the Fourth Schedule from all of its key provisions. The amendment Act provides for the elimination of the exemption as it relates to compensation and resettlement and rehabilitation of families. The amendment, thus, extends the higher compensation and resettlement and rehabilitation measures under the 2013 Act to a large percentage of farmers and affected families not currently covered.

Some critics have rhetorically asked how the present government, which only a year ago unanimously supported the 2013 Act, could propose to alter some of its provisions. This line of reasoning against the amendments invites two comments. First, when a well-intentioned law reveals itself to be against the national interest, a sensible government shows the courage to amend it rather than fear being called out for having made a mistake and impose the misery on its citizens that the law inflicts.

Second, a government considering a populist legislation must think twice about possible unintended negative consequences of the latter. For, in a democracy, once such legislation is tabled, it is extremely difficult for even the most vocal opponents of the government to oppose it. Who, for example, would dare oppose a legislation termed National Food Security Act no matter what flaws it might carry?


The writer is vice-chair of the NITI Aayog