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From
Tehelka Magazine, Vol 9, Issue 47, Dated 24 Nov 2012 |
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| CURRENT AFFAIRS |
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MANDARIN JUICE |
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Politics and the Art of Land Grabs
The new Land Acquisition Bill is a step in the right direction. But agitations and court cases will not become a thing of the past
By Nitin Desai
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Photo: Vijay Pandey |
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OUR ECONOMY is weakening because major investments are stuck, one prominent reason being difficulties in land acquisition. At the same time, our politics is being roiled by a mass movement against corruption, where land transactions are a major source of the problem. Yet little has been done to address this issue of reforming the management of public-private land transactions.
A new Land Acquisition Bill to replace the colonial one is in the works. But it is stuck because the ministers concerned cannot agree on a crucial provision about the proportion of landowners who have to agree voluntarily before the land belonging to the holdouts can also be acquired.
The Bill that Union Rural Development Minister Jairam Ramesh has fashioned is not all that radical. It spells out the public purposes for which land can be acquired, a little more clearly than the existing law and jurisprudence. But the definition is broad enough to permit land acquisition for privatesector projects. It is more liberal in compensation than the existing arrangement and integrates the obligation for rehabilitation assistance into the law. But its baseline for compensation is still the value of land in pre-existing uses, leaving the capital gains from the conversion of land use with the acquirer. It includes innovative provisions for social impact analysis and community consultation, but stops short of leaving the decision to the community. Yet, it is being opposed by our industrialists and their supporters in the government because they still prefer the old and discredited colonial-era law that gave them large areas of low-cost land.
Landowners will resist compulsory acquisition under the present law with agitations and court cases, which will lead to continuing delays and difficulties in implementing projects. What should matter is the speed with which the process can be completed and that is likely to be lower with the new law.
I have described the proposed law as not all that radical. A more radical alternative would be to altogether avoid compulsory acquisition for private, for-profit purposes. Instead, there should be a law for large-scale land purchase, requiring direct negotiations between the acquirer and the community concerned, including not just landowners but all affected groups, with the government as a neutral umpire and facilitator rather than as a land purchase agent for the acquirer. The law and mechanism for collective bargaining in labour contracts can provide a structural model. Where whole villages are involved, the panchayat can speak for the community. For smaller tracts, the affected persons can be helped by the State to elect a negotiating committee.
One argument that the industry may give is the organisational effort involved in negotiating with hundreds of landowners. But that is where a collective bargaining framework helps, and it also takes care of individual holdouts. The possibility of monopoly power is absent when the activity (for example, a small car factory) is not location-specific and can always move to some other site. Even when there are locational specificities, as in a dam or a mining project, we should not begrudge the local communities wanting to cash in on the resource rent as we routinely accept with oil sheikhdoms.
A weightier argument is the confused state of land records so that industry may not always know with whom to negotiate. Of course, this has not stopped large-scale direct land acquisition by realty companies who, perhaps, can provide a service to those less adept at treading in the minefield of land rights. But industry will not do that because they would then have to share the increase in the value of the acquired land with the realty company.
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The area of urban land under public control runs into millions of hectares and there is a fortune hiding in it |
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That is, frankly, the rub. A well-designed industrial or infrastructure project does not require vast tracts of land and can readily absorb the increase in the cost of land under the new law or under the collective bargaining structure that I’m advocating. Land costs become a problem when the industrial or infrastructure project is also an excuse for land speculation and land-grabbing. The special economic zones touted as an export-promoting initiative were not much more than a programme for large-scale land acquisition at low cost for commercial and residential development. In other cases, areas vastly in excess of real need are sought, as when a proposed private university asked the state government to give it thousands of hectares. The power of eminent domain that the State has should not be used for assisting land speculators.
THIS BRINGS us to the core of the problem — the nexus between politicians and property developers. Our politicians and bureaucrats have discovered the cash value of their power to acquire land for private parties, sanction changes in land use and hand over public lands for private purposes. Developers who stand to make a fortune from land speculation are happy to be assisted by the State in depriving small holders of the full increase in the value of their land with a change in use and infrastructure development at public expense.
This corrupt nexus has to be broken for the health of our economy and our polity. Land transactions between the public and private sector, including the sanction of a change in use, must be made transparent and non-discriminatory. A change in land use should be automatically notified when master plans and town plans are approved and never after the properties have been acquired by speculators. The conversion should be accompanied by a provision for the sharing of gains with the State when the land is sold or developed for commercial or residential facilities. In fact, this sharing of gains must help to finance the infrastructure, which is the real reason for the increase in value.
Capturing the increase in land value for public purposes is particularly important for lands that are already under public control, both the private lands acquired by the State and public lands that it has in its control directly or through public sector entities like the railways. The area of urban and urbanisable land under public control runs into millions of hectares and there is a fortune hiding in it, which corrupt politicians, bureaucrats and realtors will appropriate at the cost of the general taxpayer if we don’t act soon. Maybe we need a Public Lands Disposal Law to enforce due process, transparency and non-discrimination in the handing over of public lands for private purposes. Beyond that, there is a massive task of preparing an inventory of these public lands and devising corporate or similar structures for their transparent management.
Profiteering from public-private land transactions has to stop if we are to clean up our politics and develop a rational market for urban land. It must move up in the government’s reform agenda.
The views expressed in this column are the writer’s own
An eminent economist, the author is a former Planning Commission member and has worked as Chief Economic Adviser in the
Finance Ministry. He was also the Under-Secretary-General for Economic and Social Affairs of the UN.
letters@tehelka.com
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