Amendments to the Land Acquisition Law – The Real Picture

–      Arun Jaitley –

On December 31, 2014, the Government promulgated the ordinance to amend some provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Resettlement and Rehabilitation (Amendment) Act, 2013.  What was the need to amend the 2013 law and what is the effect of these amendments?

          It has been repeatedly mentioned that the Land Acquisition Act, 1894 had become obsolete and needed amendment.  It indeed had.  The compensation provisions in the 1894 Act were highly inadequate and, therefore, it was desirable that higher compensation coupled with a rehabilitation and resettlement package be provided.  The 2013 Act did that.  I support the 2013 Act on that ground.  However, thirteen Acts of Parliament, which provided for land acquisition, were put in the Fourth Schedule of the Act. Section 105 of the 2013 Act made the provisions of the Act inapplicable to these exempted Acts.  The said Section provided that the Government could issue a notification and direct ‘any’ provision of the Act relating to compensation or R&R would be made applicable to the exempted acts.  The “Proposed” notification had to be placed before Parliament for a period of 30 days and Parliament was expected to approve, disapprove or modify the said proposed notification.  The need for an ordinance arose because such a notification would have to be put before Parliament in the Budget session itself in July-August, 2014 and the approval or disapproval taken accordingly.  31^st December, 2014 being the last day for such a notification, the Government decided to amend the Section 105 and apply all the compensation and R&R provisions of the 2013 Act to the thirteen exempted laws.  Through this provision the present ordinance provides that the farmers’ would get higher compensation if land is acquired under any of the exempted laws.  It goes a step further than the 2013 Act itself.  This also explains the urgency of issuing the ordinance on the last day of the year since otherwise the Government would have been in default of the complicated approval provisions outlined in the 2013 Act.

          The 2013 Act provided for consent of the land owner in varying percentages in a number of cases.  It is only when the land owner’s give consent that their land be acquired and the Government can initiate the acquisition process.  Thereafter, the Act provided for a detailed social impact study.  It further provided for special provisions with regard to food security.

          Historically the power to acquire the land is a sovereign power.  The State needs land for any form of development.  Land is required for housing, townships, urbanization, sub-urbanisation, industrialization, infrastructure, both urban and rural, irrigation and defence of India.  This list would be endless.  A larger public interest always prevails over private interest.  However, the land owner who loses the land has to be more than adequately compensated.  A highly complicated process of acquisition which renders it difficult or almost impossible to acquire land can hurt India’s development.    When the 1894 law is amended in the 21^st century, it must provide for a 21^st century compensation and cater to the developmental needs of the 21^st century.  It cannot completely ignore the developmental needs of the society and mandate that India does not grow.

          The present amendment carves out five exceptions for which this complicated process of acquisition will not apply.  However, the compensation provisions remain untouched.  The five exempted purposes are discussed herein below:

Ø  The defence and security of India has been made an exempted purpose.  The 2013 Act completely ignored it.

Ø  Rural infrastructure, including electrification, is an exempted purpose.  Roads, highways, flyover, electrification and irrigation will all add to the value of the farmer’s lands.  This exemption is entirely in the interest of rural India.

Ø  Affordable housing and housing for poor is an exempted purpose.  Migration from rural areas to urban and sub-urban centers where employment opportunities are available, is a reality.  It is the migrants from rural areas who would benefit from this exception.

Ø  Industrial corridors which run for a narrow distance alongwith various highways, give a fillip to the entire development of those rural areas.  A Delhi-Mumbai industrial corridor would benefit thousand of villages while running alongwith national highway.  There could not be a greater opportunity for the rural areas than an industrial corridor running close to agricultural lands.  This would generate employment opportunities and enhance the value of the land itself.

Ø  Infrastructure and social infrastructure projects, including those under public private partnership, where ownership of the land vests with the Governments.  This is bound to benefit the entire country, particularly the people in rural areas where infrastructure and social infrastructure is inadequate.

Almost all the exempted purposes benefit rural India.  They would enhance the value of land, create employment and provide rural areas with better infrastructure and social infrastructure.  This is in addition to the enhanced compensation and R&R provisions being expanded to the thirteen  exempted acts.

The amendment, therefore, balances the developmental needs of India, particularly rural India, while still providing enhanced compensation to the land owners.  Will the State Governments ruled by political parties, which are opposed to this ordinance, publically declare that they will not use the law which provides for enhanced compensation in the case of exempted acts and acquisition process which balances the developmental needs of society, particularly those of poor, weaker sections, rural India alongwith defence requirements of the country?

This 2013 Act had over 50 drafting errors.  The provision with regard to the rectification of errors will be used to cure most of them.  Some are being cured through this ordinance which alters the earlier mandate of the 2013 law that unused land has to be returned five years after the acquisition.  The earlier provision was clearly defective.  Creation of smart cities, townships, industrial corridors, business centers, defence projects, cantonments, ports, nuclear installations, building of highways, irrigation projects, dams have a long gestations period.  They cannot be completed in five years.  If the earlier provision is to be effected, we would be a nation of incomplete projects on account of defective legislative drafting.

The draft provisions of the 2013 Act enthusiastically provide that no part of an acquired land could be used for a private educational institution or a hospital.  How will new smart cities and townships come up?  Will they only have a civil hospital and a Government school/ college and no other healthcare and educational institutions will be allowed to be established there?  The ordinance permits hospitals and educational institutions to be established on an acquired land.  That is the purpose of acquisition for townships.  A township without a social infrastructure would be inherently incomplete.

The needs of a modern growing and developing India need a balanced approach.  Development and justice to the land owner must coexist.  One cannot be done at the cost of the other.  The amendment ordinance is based on extensive consultations where State Government of most political parties supported these changes.  Those who are opposed to it can certainly mandate their party’s State Governments not to use the provisions of the ordinance.  History will judge how these States will lose out in the era of competitive federalism.

Arun Jaitley