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Re-visit Land Acquisition Bill

By Avinash Menon

Acquisition of land in India is currently regulated by the Land Acquisition Act, 1894.  It has been apparent for a long time that the Act has outlived its purpose and that there is an urgent need for a new land acquisition law. There have been multiple amendments to the Act, both by the Central Government as well as State Governments.  In 2007, the Central Government had proposed to amend the Act and had introduced the Land Acquisition Bill, 2007 and the Rehabilitation and Resettlement Bill, 2007.  The bills were passed by the Lok Sabha, but they lapsed with the dissolution of the 14th Lok Sabha.  The Land Acquisition, Rehabilitation and Resettlement Bill, 2011 was introduced on 7-9-2011 and referred to a standing committee which was to originally submit its report within three months.  However, the committee has been given an extension upto March, 2012 to submit its report.        

Given its socio-economic context, land acquisition in India has always been a very controversial subject. The Bill has once again stirred up the issue of striking a balance between the rights of land owners/users and the urgent requirement of land viz., urbanisation and industrialisation. To achieve this end, one concern that has been addressed by this Bill is the integration of land acquisition and rehabilitation and resettlement into one law as some stakeholders felt that land acquisition and rehabilitation and resettlement are two sides of the same coin and therefore, there should be one law instead of having two separate laws. However, apart from this clarity, the instant Bill does little to strike that balance, as if it were elusive. Despite repeated references in the statement of objects and reasons, about achieving a seamless balance, in actuality, the Bill is tilted in favour of land owners/users and may actually result in stifling industrial growth. The reasons for such a conclusion are discussed in the following paragraphs.

Power of company to directly negotiate with landowners, reduced         

Under the Bill, a private company will have to provide rehabilitation and resettlement benefits to the landowners if it purchases more than 100 acres in rural areas or more than 50 acres in urban areas.  These benefits have to be provided over and above the amount of compensation paid to the land owners. At the time of negotiating compensation package, the cost of rehabilitation would have already been taken into account and providing additional benefits may not be feasible for private players. This might deter them from entering into private negotiations which may lead to far more government interference than necessary.

Consent of “project affected people” is required          

In the event of land being acquired by the government for use by private companies, consent of 80% of the project affected people is required.  It is interesting to note that this consent is not required in case of acquisition of land by the government for its own purpose. Further, in the 2007 Bill, consent was required from landowners only. Additionally, the term ‘project affected people’ has not been defined and it remains unclear as to who all will fall within this category, making it very wide and vast in scope. Resultantly, the term may cause implementation issues to arise and be considered impracticable, unfeasible and/or burdensome for the industry, raising the cost of acquisition.

High compensation costs            

The compensation mechanism provided in the Bill may lead to major increase in cost of land.  In case of acquisition of rural land, four times the market value is to be provided and in case of urban areas, twice the market value has to be provided (this includes the solatium cost).  Such a high cost may deter private players from acquiring land.  Also, the rationale in the case of rural land remains unclear, as the value shown in registered sale deeds is not uniform across the country. There is under-reporting in some parts and over-reporting in others. The provisions of the Bill relating to computation of compensation for land acquired and rehabilitation and resettlement of affected persons do not consider the impact such compensation and rehabilitation measures may have on the total cost of acquisition and its cascading effect on industry, offering goods and services to the ultimate consumer market.

Miscellaneous issues              

There are a number of miscellaneous issues with the Bill, including the clause stipulating transfer of 20% of appreciated land value in the event of ownership being transferred without any development being done on the land. However, it has not considered that it may be impractical to do so, as keeping track of the original land owners may be difficult.  Secondly, the requirement of Social Impact Assessment (SIA) for every acquisition may make acquisition of small parcels of land impractical and impossible.  Further, no time period has been given for completion of SIA and this may result in the project being delayed indefinitely which can result in huge costs to private companies.


In conclusion, the above issues clearly suggest that the Bill is not well thought through and remains impractical and non-feasible vis-a-vis, industry, to say the least. The Bill must tread further and iron out these irksome issues and not stifle industrial growth. Merely, stating in the statement of objects and reasons, that the Bill aims to achieve balance or synergy between the rights of owners/users of land and industrialisation, is not even half the battle won. Synergy must come out on a holistic reading of all the provisions – a factor which is conspicuously absent in the present Bill.
[The author is Principal Associate, Corporate Division, Lakshmikumaran & Sridharan, New Delhi]
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