Annual World Bank Conference on Land and Poverty

A private sector perspective on India's Land Acquisition Act

Mr. R V KanoriaPast President, FICCIChairman, FICCI Task Force on Land Reforms and Policy &Chairman and Managing Director, Kanoria Chemicals & Industries LtdMarch 26, 2014

Land Acquisition Act of 1894, enacted during British Rule Based on principle of Government Eminent Domain concept (Power of the sovereign to

take private property for public use) Purpose got diluted when government started engaging in commerce

New Land Acquisition Act: Why is it required?

LA Act, 1894 : Archaic Law

LA Act, 1894 was being used as a tool by the government to purchase land at a lower price than the regular market price

Rising protests by farmers, NGOs Increased litigation and disputes

Rising Public Concern

Thus, need for a new Land Acquisition Law that ensures: Non-discretionary and transparent land acquisition process

Just and fair compensation to land owners Rehabilitation and resettlement of affected families

Availability of land for developmental purpose

Noble objectives but are these being overplayed?

Some displacement inevitable but to be done in a balanced manner

Land ownership not necessarily the best way of livelihood security For a transition economy, gradual shift away from agriculture to industry and services is a natural

process But in India, while share of Agriculture in GDP has dropped from 29% to less than 14% over the

last two decades, nearly two-third of population is still dependent on agriculture Industrialization is important for large scale job creation and livelihood security

Land acquisition is bound to displace people; thus sensitivities of people and their livelihood concerns need to be adequately addressed

Land acquisition process should balance the interests of the acquirer and seller keeping in view the developmental requirements of the economy

The Act must look at the issue in totality giving due importance to fulfillment of development needs rather than overplay on sentiments which could potentially create ill-will, litigation and social tension

Land acquisition imperative for economic development Limited land resource Urbanization and industrial development require large tracts of land

RTFCTLARR Act, 2013 Land Acquisition (Amendment) Bill, 2009

Rehabilitation & Resettlement Bill, 2009

Key Challenges in Meeting Development Needs: Focus on Industry

Implementation concerns

Increased costs

Time

overrunNew Land

Acquisition Act poses numerous challenges in the

process of procuring land

for development purpose

Time Overrun

Tentative Time frame (months)

SIA

Pre-notification from SIA

Declaration of public purpose from preliminary notice

Declaration to Award

Possession after Award

Total (Minimum)

8

12

12

12

6

50

Timeframes not clearly specified

Minimum time to be taken for procedures: 50 months

Likely delays at each stage due to difficulty in implementation as per set procedures under the new Act

Delhi-Jaipur Expressway Costs have increased 3 times

post the enactment of legislation

Increased costs

100% Solatium over and above the Consented price

Multiplier (1-2) times for market value in rural areas

R&R applicable even for private purchase – willing buyer willing seller (no clear threshold prescribed for applicability)

Delays to increase overall cost burden

Implementation Challenges

Multiple Public Hearings

Finalization of PAPs/ PAFs

Modalities for SIA

After completing the SIA Hearing of objections After conducting Survey and Census of the

affected families

Poor land records Difficult to authenticate affected persons

that may include immigrated/ emigrated persons

Mandatory for all acquisitions Several procedures SIA team‘s inadequate experience Separate ToRs for each project

Implementation would be extremely difficult in cases of

linear projects

Major Suggestions from Industry

Critical Suggestions for Implementation of the Act

Set clear timeframes

Include ‘not-for-profit’ companies for public purpose

Include manufacturing projects

Set Minimum Threshold Guideline for applicability of R&R

Compensation

Need for timelines specifying beginning and ending period for all activities to avoid delays

Large projects (like steel, cement, etc) often face ‘last mile’ acquisition problem, thus require government facilitation for land acquisition

R&R should not be applicable for projects meeting any of the below criteriaNumber of affected families is less than or equal to 400Land to be acquired is less than or equal to 500 acresEmployment generated is more than or equal to 1,000 numbers

Consented price should not be included in the criteria for determining market value of land as former already takes into account the expectation of the land seller and is not the discounted price

Definition of private company should include even ‘not-for-profit’ companies for public purpose as these often contribute to wards social development (e.g. schools, hospitals)

Major Suggestions from Industry

Practical Suggestions for Easing Land Acquisition Process

Prior Zoning

Standardisation

EIA to be exempted

Accredited SIA agency

Public hearing process

Zoning should be done by the government and prior SIA be conducted in these zones. Industries set up in these zones need not further conduct SIA

Need for Model TORs as a new set of TORs may not be required every time

Only accredited agencies should conduct SIA and selection of agency for carrying out SIA amongst the empanelled ones should be based on competitive bidding

Multiple public hearing processes should be consolidated to the extent possible to expedite the process of land acquisition.

Once SIA has been done, the requirement of Environmental Impact Assessment (EIA) should be removed or the two processes be carried simultaneously to avoid duplication

Major Suggestions from Industry

Other Suggestions

Consent of Local Self Government at the Village Level

Change of purpose

Definition of unutilized land

So long as the ‘public purpose’ criterion is being met, industry should be free to use land for any other stated public purpose

Definition of ‘Unutilized land’ should be based on ‘intended use’. As long as the schedule of utilization as submitted at the time of application is being met, the physical utilization of land should not be necessary

Ambiguities in the consent seeking process from Gram Sabha (Local Self-Govt at Village level) need to be cleared; the process has to be made conclusive

Alternative Models for Alternative Land Uses

Community land consolidation and leasing

Collaborative Business Model (landowners being stakeholders in project)

Participative development

Land pooling/ Land readjustment policy

Land use needs differ across sectors and thus land procurement for each has to follow a different model (the model has to be different even for linear and non-linear projects)

Procurement of land through negotiations with stakeholders is an optimal solution over land acquisition

Alternative models need to be studied and explored by enterprises

Some alternative models

Real estate

Agro based industries

Manufacturing

Service sector like IT/ITeS

Land Pooling/ Land readjustment policy Attractive method for Urban Development by Local Municipalities

Involves assembly of small rural land parcels into a large land parcel, provide infrastructure and return part of reconstituted land to landowners

Successfully adopted by Municipalities in various countries

In India too, such scheme adopted in states like Andhra Pradesh, Maharashtra, Gujarat, Tamil Nadu, Punjab

Land consolidation and leasing

Land owners forming co-operative/ company and pooling their land which can be leased to industrial/ service enterprises, etc.

Land becomes source of income; landowners can engage in supplementary services for the new eco-system so evolved

Successful example: Magarpatta township project in Pune, Maharashtra

IT park

School

Residential apartmentsTransportation

services

Retail shopsTownship

built through land

consolidation

Other services

Private sector

Private sector

Private sector (Real estate developers)Land owners (contractors)

Land owners

Land owners

Land owners

Collaborative business models Useful Model for Agro based industries

Business engagement with farmers through JVs/ Franchisee , where businesses provide input, R&D and marketing support to farmers and source agro-produce from them

Ownership of JV company lies with the business, while land may be controlled by smallholders

Ownership status

• Company and plantation management: lies with Private sector

• Land: Owned by Panchayat (local govt.)

Benefits

• For Landless farmers: Means of earning livelihood

• For Panchayat: Rent (financial/ non-financial)

• For Private enterprise: Stable source of inputs with desired quality

Example: P4 model followed by Nandan Biomatrix in Uttar Pradesh

Key features

Basic model

P4: Public, Private,

Panchayat Partnership

Local govt provides land

Plantations managed by

Private firm and partners

Farming done by landless

labourers

Participative development

Framing policy to attract land-owners and village community to participate in development of industrial estate

Example: Participative policy of Gujarat Government

Compensation for the land at market price and also sharing with the landowners the proceeds of allotment of land to industries

land owners will be given developed commercial plot to the extent of 1% of their acquired land at a token rate of Rs 1 per sq.mt.

Interim relief: one time financial assistance equivalent of 750 days minimum agricultural wages

Spending a portion of the proceeds of allotment of land of the estate on development works for the village community such as schools, roads, etc.

Capacity building activities : GIDC at its own cost to sponsor one person from each affected family for training ; provide employment to one member of affected family in the units within industrial estate.

Thank You