Land Acquisition: Compensation and R&R Policy – I

The issue of compulsory land acquisition has been cropping up at regular intervals with decisive socio-economic and political consequences, acutely witnessed during the Nandigram episode. Despite the raucous noises made about the inequality of the process and outcome of land acquisition, successive Parliamentary sessions have failed to provide a coherent policy response addressing these concerns. 

Undoubtedly, growing urbanization, increasing infrastructure requirements and rapid economic development have imposed high pressure on land in India. Private land is regularly acquired for both state-sponsored development and private projects, which has increasingly become contentious. Compulsory acquisition of land is primarily governed by the Land Acquisition Act, 1894 (the “Act”), a century-old legislation enacted in a very different social, economic and political milieu. Post-Independence, the Indian government has not fundamentally changed the acquisition policy to reflect the values and needs of our times, which has resulted in legal, social, cultural, economic and political fallouts. Assembly of land is needed for public purpose and economic development, but the present land acquisition policy is deficient in many respects. Bills seeking to amend the Act have been introduced in the Parliament since 2007 but political consensus over the amendments has been elusive. In this context, the primary bone of contention in the present framework relates to issues around compensation and resettlement and rehabilitation (“R&R”), which I seek to address in the two parts to this piece.

Mechanism for Compensation Determination: The Act embodies the doctrine of “eminent domain”, which allows the government to compulsorily acquire private land for a “public purpose” provided it pays just compensation. Compulsory acquisition conflicts with the right to property of an individual, which is compromised every time a person is forced to give up his land against his will. However, the present land acquisition process provides for very minimal involvement of the land owner in determining the value of his land. Such abridgement of one’s rights over land coupled with government’s excessive intervention in compensation determination has led to great resentment and questioning of the State’s role in land assembly in a market-oriented economy.

Adequate and Appropriate Compensation: Compensation is calculated on the basis of prevailing market-value of the land derived primarily from past transactions. This approach is oblivious to the practical realities in India where the market is illiquid due to regulatory restrictions and values are underreported to evade tax implications. Also, the guiding principle in determining compensation is to restitute the landowner to the same position after the acquisition as he was before, neither worse nor better. While this was an acceptable solution a century ago when land prices were less volatile and subject to external conditions, today’s oustees lose out on the potential benefits of the developmental project, especially when there is a shift from agricultural to non-agricultural use. An adjacent land owner who does not lose his land stands to gain from the proposed project due to appreciation in land prices and other benefits of the project, but the person who has lost his land is alienated from the developmental process. These issues regarding compensation result in a highly inequitable outcome to the land owner, resulting in many controversies affecting the overall economic development of the country.    

Compensation for the Deserving: Compensation for the loss of assets is presently based on title, and therefore, only land owners and tenants are entitled to compensation. A vast number of people dependent on those assets for their livelihood and sustenance such as sharecroppers, wage-labourers and persons dependent on common property resources are left out as they do not have legal title to land.  Due to India’s high population density, such groups are inevitably the most affected when uprooted from their ecosystem due to land acquisition.

Beyond Monetary Compensation: For a vast number of Indians, land is not mere property but also serves as a source of identity and security. Forcible acquisition of land, therefore, not only dispossess a person from his land but also invariably wreaks social havoc by separating families, interfering with traditional livelihoods, and depriving whole communities of sites of religious and cultural significance. Clearly, these disruptions can in no measure be adequately indemnified by mere monetary compensation; hence, R&R has to be an integral part of and precondition for compulsory land assembly. Also, a one-size-fits-all approach cannot be adopted in R&R due to ethnic and cultural diversity in India. This is a limitation in the National Policy on Resettlement and Rehabilitation (NPRR) for Project Affected Families, 2003.

Even as I highlight these concerns in our land acquisition law, three farmers were killed and many injured on 14 August 2010 when police fired at a farmers’ protest in Aligarh. This lead to a furore in the Lok Sabha on 16-17 August 2010, and most MPs who spoke demanded that the government immediately look into the matter of compulsory land acquisition and introduce necessary changes. In the days to come we can probably look forward to the government’s response. As for myself, I will follow up with a framework for a just and fair compensation and R&R policy.