The Right to Fair Compensation and Transparency in LARR Ordinance, 2014

History of land acquisition laws in India

Colonial period: History of Land acquisition laws even precede the year 1894, most notable was Bengal Regulation I of 1824. The colonial administration of Presidency towns made such land acquisition laws which later spread across the country to facilitate the easy acquisition of land and other immovable properties for  roads, canals and other public purposes with compensation to be determined by specifically appointed arbitrators. After 1857 strategic interests of the colonial administration expanded to cantonment areas, garrisons, telegraph, railways etc. None of those legislations provided any opportunity to object to the acquisition of land itself, however allowed the opportunity to raise issues regarding compensation. The debate on compensation was never settled. Even then the market value and public purpose wasn’t properly defined. The allegations of inadequacy, corruption and misconduct related to land acquisition were common.

The Land Acquisition Act of 1894, meant to bring some uniformity to the acquisition decisions of the Empire. It meant to amend the law for the acquisition of land for public purposes and for companies and to determine the amount of compensation to be made on account of such acquisition. This meant a single law to regulate all land acquisition across the country. In a predominantly agricultural landscape, such a law was aimed at generating revenue from the productive uses of land.

Post Independence India: Even after adoption of the Indian Constitution, the 1894 Land Acquisition Law continued to be in force, albeit with periodic amendments. The new cities of Jamshedpur, Chandigarh, Bhilai and others were made as a part of the Nehruvian vision of modernity. The State also expanded its economic reach by focusing on heavy industries and linked infrastructure, for which availability of land was a pre-requisite.

In light of the State’s predominant role in national development the land acquisition in the constitutional scheme was put in Concurrent list, with power to both Centre and States to make laws on acquisition of land. The right to property was initially considered a fundamental right. It was inevitable that this right and laws related to land acquisition will collide. The Constitution was ultimately amended with insertion of Article 300A in the Constitution, which states that ‘no person shall be deprived of his property save by authority of law’ and hence the right to property was made a constitutional right only and not a fundamental right. The protection was given only against actions of executive not the legislature. So legislature of both states and center could make laws to take away the land from the land owners.

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Present Day Land Acquisition Laws: The act of 1894 survived till 2013 and finally paved way for the new law namely the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 (LARR).

The preamble of LARR is as follows: It aims to “ ensure a humane, participatory, informed consultative and transparent process for land acquisition for industrialization, development of essential infrastructural facilities and urbanization with the least disturbance to the owners of the land and other affected families and provide just and fair compensation to the affected families whose land has been acquired or proposed to be acquired or are affected by such acquisition and make adequate provisions for such affected persons for their rehabilitation and resettlement thereof, and for ensuring that the cumulative outcome of compulsory acquisition should be that affected persons become partners in development leading to an improvement in their post acquisition social and economic status and for matters connected therewith or incidental thereto”.

The preamble itself declares the intent for bringing the new land acquisition law to fore. For the first time the land acquisition law and laws related to compensation, rehabilitation and resettlement was combined together. Salient features of LARR are:

A comprehensive R&R package is given in Schedule II of the act.

R&R is applicable to both land owners as well as people dependent on the land acquired:

  1. Subsistence allowance at Rs. 3000 per month per family for 12 months;
  2. The affected families shall be entitled to one of the following based on choice of the project affected family:
  1. If a house is lost in rural areas, a constructed house shall be provided as per the Indira Awas Yojana specifications.If a house is lost in urban areas, a constructed house shall be provided, which will be not less than 50 sq mts in plinth area. In either case the equivalent cost of the house may also be provided in lieu of the house as per the preference of the project affected family;
  2. One acre of land to each family in the command area, if land is acquired for an irrigation project;
  3. Rs 50,000 for transportation.

 

Background for bringing the ordinance

LARR was meant to make the acquisition process just. It was designed in the mode of the previous government’s other landmark laws on information, education, and food — using a rights-based approach — where the primary objective was to deliver “fairness” to the people affected by land acquisition. LARR expanded the definition of project-affected people and expanded the rights, protections and compensations for people who lose land or livelihood as a result of acquisition. All these were laudable and necessary. But LARR was also a purely political and fundamentally bureaucratic approach based on little or no recognition of some simple economic principles — on land markets and on transaction and opportunity costs. The underlying presumption was that the price of land matters to the land-loser but not to the land-acquirer; as a result, LARR raised the price of land acquisition to unsustainable levels.

This price is not simply the money paid for acquisition and rehabilitation and resettlement. That is just one component of price, its direct component. There is a second component, an indirect price. This includes (a) transaction costs, which include the cost of doing social impact assessments, conducting referenda, running the massive new multilayered acquisition bureaucracy, etc. and (b) opportunity costs, which arise from the time taken to conclude an acquisition — doing social impact assessments, conducting referenda, etc. — time during which capital is not invested, infrastructure is not created, and production does not take place. If all the steps defined in LARR were accomplished in the allotted time, each acquisition would require about five years; in practice, it could take a lot longer. Longer period of time means longer gestation period for projects which will render them unviable. LARR had placed an impossible double-burden on land acquirers: pay double or quadruple the highest prices in the world, and wait for several years to begin work on the ground. The first burden remains and its consequences are grave. What those consequences may be must be carefully worked out by people competent to do so. But the second burden has been mitigated by this ordinance. It should make life easier for the land-acquirer. The stringent consent requirement makes it very difficult to acquire land even for public purposes. The punishment provision for the bureaucrats also makes acquisition difficult as many fears any mistake will make them liable for punishments. The current government seeks to speed up the development process which needs the balance between interests of people affected by the land acquisition and the needs of the industry. The ordinance is also expected to remove the difficulties faced by bureaucrats approving the land acquisition.

The salient features of the ordinance are as follows:

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