February 01, 2015

Government, or Real Estate Agent for Big Business?

Smita Gupta

IN India, there are no systematic official records of the total extent of land acquisition or displacement. Non-official studies quoted by the now wound up Planning Commission suggest that the total number of persons displaced/affected by projects for the period 1947 to 2004 is around 60 million, involving 25 million hectares of land, including 7 million hectares of forest and 6 million hectares other common property. The adivasis constitute 40 per cent of the total displaced/affected persons by projects, while dalits are 20 per cent. According to a rare and painstaking study of a single state, Gujarat, based on the perusal of Gazette notifications over 57 years, the state has acquired roughly 3.2 millions hectares of land for development projects and displaced around 25 lakh people, between 1947-2004. Thus around 5 per cent of the state’s total population has been displaced and 16 per cent of its geographical area acquired. The reason I mention Gujarat is because the same model is now being thrust upon the nation.

In keeping with this, late last year, the Modi led NDA government issued an ordinance amending the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013, prior to its actual implementation. Though there was some amount of outrage in the corporate media on the undemocratic and unconstitutional route of using ordinances, as the current government is inclined to do in its short existence, it received overwhelming support from industry. This is no surprise since after the amendments, the inadequacies in the UPA Act from the perspective of the peasantry, tenants and land-dependent persons were further compounded and all provisions to instill transparency, fairness, and accountability (such as they were) weakened or dropped.



A little digression into history is useful at this point. The origin of eminent domain in India can be traced to English common law, which is statutory rather than constitutional. The objection which radical movements have, does not of course lie in the exercise of eminent domain per se, but in the purpose for which it is used. Under pressure from movements of the poor peasantry and small tenants to end landlordism and exploitation, eminent domain was meant to be used by the dirigisme in post-independence India to retrain the right to property by land reform legislation intended for the expropriation and redistribution of ceiling surplus land. It was intended to provide housing, schools, and other such development infrastructure for the masses across the country. That this was not implemented except by the Left Front governments is too well known to bear repetition.

Land continued to be acquired for mega projects and private industry using the archaic and colonial Act whose aim was quick, cheap and unchallenged takeover with little concern for livelihoods and rehabilitation of those affected adversely. One of the biggest weaknesses of the 1894 Act was that “public purpose” was the sole and absolute prerogative of the executive, through opaque and authoritarian procedures not subject to democratic and judicial scrutiny. Land was often acquired in the guise of a more plausible purpose and then transferred to some other use. The LAA kept acquisition costs low by an unfair and arbitrary method of evaluating the price of land and restrictive coverage of persons and assets resulting in very low compensation. The procurer (the government) decided the price, and refused to transfer any part of the gains of the higher values accruing from the proposed change in land use to the affected persons, and the payment of depreciated value for assets made it impossible to replace them. The same State which could not use eminent domain for radical redistribution of land to the tiller displayed great zeal and efficiency when it came to the forcible takeover of the lands of the small peasants and tenants. It must be said though that even the colonial law did justify acquisition only for public purpose in the larger public interest. Today, as we shall see, the ordinance reduces the State to a real estate agent for capitalists, where every activity for private profit can be justified as public purpose.



Increasingly, the dominance of neo-liberal policies in the last quarter century and the imperative to incentivise private investment in “infrastructure, urbanisation and industry” through tax and price concessions and handover of land and other natural resources to unleash “animal spirits” meant a far more ruthless application of the law, at the time when the agrarian distress peaked. Priority given to attracting foreign investment and the lifting of restrictions on private corporate investment generated an extraordinary ‘race to the bottom’ among the state governments, competing to offer more and more attractive concessions to woo private capital. The 1894 Act was proving to be procedurally cumbersome and the distinction it drew between acquisition for private companies and acquisition for the State (and State owned companies) by placing them on a separate footing in terms of procedure, conditions and purpose was seen as being out of sync with the prevailing policy regime. State governments and industry bodies demanded more investor-friendly provisions.

At the same time, growing agrarian distress and forcible acquisition saw huge conflict in several places with a demand from below for a more democratic and just law.

The UPA government negotiated what it considered a compromise between these two demands – to give farmers and other land-dependents a voice and due share as well as meet the needs of industry. For this reason, the Act has several lacunae and weaknesses. UPA’s Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, title notwithstanding, essentially replaced a colonial Act with a neo-liberal one.

The price for compensation is now linked to the stamp duty and circle rates rather than the highest actual market price as ordered by the Supreme Court, which are notoriously under-reported. The acquirer namely the State continues to determine compensation, which is a conflict of interest. It did not clearly mandate the drawing up land use plans to safeguard food and livelihood security for what continues to be a large rural workforce.

However, the most defining neo-liberal characteristic is the use of the State’s eminent domain and expropriatory powers for private companies by bringing private companies into the very definition of public purpose and effectively abandoning the distinction between acquisition for private companies and acquisition for the State (and State owned companies), putting it on the same footing.

Farmers’ organiSations had demanded that public purpose – the justification for forcible expropriation - should be based on sound democratic principles and procedures, tightly defined, objectively established and democratically approved. While the Act has a highly inclusive definition of public purpose allowing almost everything as before, it did put in three mechanisms (albeit with problems) for democratic scrutiny – social impact assessment, prior informed consent and time limit on utilisation of the acquired land.



The ordinance overturns all progressive gains in the 2013 law. Section 5 through Chapter 3A exempts industrial corridors, national security, rural infrastructure, housing and related infrastructure, and other infrastructure including projects under  PPP from determination of public purpose and social impact assessment as well as special provision to safeguard food security through protection to multi-crop irrigated land (Chapter 2&3). Worst, these projects are also exempt from the requirement of obtaining any consent at all from landowners (70 per cent for public and 80 per cent for private projects), being exempt under 3(ii) of the Amendments. This long list of exemptions practically permits forcible land acquisition for everything. 3(i) brings private hospitals and private educational institutions in the definition of ‘public purpose’ while 2 and 4(yy) replaces the term. Therefore, in place of the term ‘private company’ we have ‘private entity’ to include all non-governmental entities like proprietorship, partnership, corporation, non-profit organisation, etc.

In order to prevent acquisition without use, Section 101 required the return of land to the original owner or a land bank if the land remains unutilised for a period of five years from the date of taking over the possession. Amendment 9 increases this to “a period specified for setting up any project or five years, whichever is later,” making it vague and non-binding. Furthermore, it encourages speculative squatting since all that private companies and real estate sharks have to do is sit on the land till its value shoots up and then make a windfall profit by simply selling the land without any value addition or investment.

By amending Section 113 through Amendment 11, the central government has given itself upto 2018 to issue orders amending any part of the Act in the name of removing difficulties.

Even the small effort to hold government servants accountable is gone with Section 87 of the earlier law which stated that in case of breach of law by a central or state official, the head of the concerned department would also be held responsible, has been replaced by the tired and failed Section 197 of the general criminal procedure code of the court.

Section 113 also gave a time limit of two years for implementing various provisions (compensation, relief, and rehabilitation and other similar provisions), which has now been increased to five years.

There would be cases where acquisition process under Land Acquisition Act, 1894 was initiated and the Award was passed, but either possession of land was not taken or compensation was not paid, and under the retrospective provision Section 24 correctly declared these to lapse after five years of passing of Award and required fresh proceedings. The period during which the proceedings were held up on account of any stay or injunction issued by any court is now excluded by Amendment 6, which means that many ongoing acquisitions would still be governed by the old law even though procedures are in the preliminary stage.



The amendment to the Land Acquisition Act must be seen as part of a more vigorous attack on people’s resources in order to dispossess the direct producers and amend all progressive and protective laws which were hard won gains of the people. The growth model itself is predicated upon transfer of monetary and natural resources to the private sector. The UPA constituted a Project Monitoring Group in June 2013 and cleared 152 of the 437 projects (each worth >Rs 1,000 crores) totaling about Rs 5.3 lakh crores of a total pendency of Rs 15 lakh crores. NDA has reduced the bar on projects to Rs 500 crore. It has also introduced deemed clearances, and a project would be considered approved if no objections are raised within a specified time period (six weeks in some cases). All progressive sections of society have to come together to resist and fight against these anti-people moves to corner and handover the resources of the nation and her people.