Overdue reform

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Passage of the Land Acquisition Bill by the Lok Sabha on Thursday will be welcomed at least by those small farmers and tribal people who have so far been covered by a 19th century law governing acquisition of land for industrial units, a law that almost left them helpless in the face of official decisions to acquire their lands for a pittance so that industries might come up on them. However, it is no less true that not many industries came up on such lands as had been allotted for the purpose. For instance, farmers in Odisha resisted semi-government efforts to acquire their lands which could easily be used for cultivation, so much so that the company abandoned the project.

Passage of the Land Acquisition Bill by the Lok Sabha on Thursday will be welcomed at least by those small farmers and tribal people who have so far been covered by a 19th century law governing acquisition of land for industrial units, a law that almost left them helpless in the face of official decisions to acquire their lands for a pittance so that industries might come up on them. However, it is no less true that not many industries came up on such lands as had been allotted for the purpose. For instance, farmers in Odisha resisted semi-government efforts to acquire their lands which could easily be used for cultivation, so much so that the company abandoned the project.

Meanwhile, off and on reports have been appearing in the media of industries having converted such allotted land for construction of apartments to be let out or sold! Who, other than the poor farmer, lost out in the bargain? Against this background, the provision in the Bill mandating payment to farmers of up to four times the market rate for their land bought for industry and infrastructure is unexceptionable. "We believe that the land Bill strikes a fair balance," Finance Minister P. Chidambaram told reporters, and he is right. Farmers protesting against what they see as unfair land acquisitions have stalled projects in recent years.

The Bill's pricing rules would oblige developers to pay up to four times the market rate for land in rural areas and twice the rate in urban areas. Displaced people must also be given homes and jobs, under the Bill. "This Bill will protect farmers and the rights of farmers," said Dushyant Naagar, the head of a farmers' lobby group in Uttar Pradesh. Other farmers' groups, however, say the Bill does not provide adequate compensation.

However, businesses say the new rules will raise costs and could even slow down acquisitions because of a requirement that four-fifths of all landholders concerned in a sale should give their consent before any land is acquired for a private project. For joint public-private projects, 70 percent of landowners must consent. "In the present scenario of economic crisis, this Bill will further hit investment and growth of industrialisation, employment and infrastructure," said Vikash Sharan, the director of the Indian branch of Posco, a South Korean steelmaker. Posco has faced years of protests from farmers opposed to a steel mill in Odisha that would be the country's largest single foreign investment project.

In a statement, business lobby group, the Associated Chambers of Commerce and Industry of India (Assocham), said getting consent from 80 percent of land-holders "will be very difficult, if not impossible." India's economic growth slowed to a decade-low of 5 percent in 2012-13. That growth should be accelerated is not in dispute. But if growth can be achieved only by impoverishment of marginal sections of society, it is an overrated virtue. Successive governments have talked of the need for growth coupled with social, economic and redistributive justice.

Meanwhile, the argument that if industries are asked to pay more than they have done so far for acquiring rural and urban land they would be put off is not convincing. All along they had got such land cheap because small farmers had no protection. All that they are being asked to do is to part with a part of the huge profits they have made so far through buying land at throwaway prices arbitrarily fixed. That may only reduce the margin of their profit in initial years. But what will the poor farmer do if his only asset, land, is taken away from him?

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