Tuesday, August 12, 2014

Today's Editorial 09 August 2014

Draft a new Land Acquisition Act

Source: By R V Kanoria: The Financial Express
Our country desperately needs to get back to accelerating growth and employment. It is ironical that a well-intended legislation meant to correct age-old draconian provisions does exactly the opposite. The recently enacted Land Acquisition Act, 2014, formulated with an objective of balancing the aspirations of land owners and land buyers, has introduced unnecessary complexity, which is not only likely to hurt the development goals but also completely fail in mitigating the problems of farmers and land owners.

It appears that what started out as a well-intentioned exercise lost its way in the process. Ever since the commencement of this Act, no fresh land acquisition has taken place. The dream of building modern cities, world-class infrastructure and a vibrant industry will have to be put in abeyance unless there is a comprehensive review of the Land Acquisition Act.

It is encouraging that the new government is inclined to address concerns pertaining to the Act. The fundamental objective should be towards ensuring greater certainty, both to the seller and the buyer, in terms of cost, time, possession and land use. The Act obfuscates this objective and the buyer and the seller are likely to be left hanging on all these counts.

First, private transactions should be kept out of the purview of the Land Acquisition Act. Ficci is of the firm view that no provisions of the Act should be applicable to land transactions involving private purchase between willing buyer and willing seller. A willing buyer and a willing seller transaction implies fair compensation. The existing conditions stipulating mandatory Rehabilitation and Resettlement (R&R) provisions for private land purchase need to be removed in entirety.

Second, the procedures under the Act are complex, making the land acquisition process untenably lengthy and uncertain. As per the Act, it will take at least 50 months to acquire any land. Needless to say, this will completely jeopardise investments and development as estimates and viability will be subjected to uncertainty. A comprehensive review of the procedures, elimination of those that are unnecessary, clear time-frames and sufficient checks and balances to ensure adherence to those time-lines is imperative if justice is to be done, both to the person selling the land as well as to the buyer of the land.

Third, a Social Impact Assessment (SIA) study should be confined only to substantially large public/PPP projects. Ficci has suggested that the minimum threshold for non-applicability of SIA should be set at either of the following:

(a) Number of affected families is less than or equal to 400 affected families; or

(b) Land to be acquired is less than or equal to 500 acres; or

(c) Employment generated is more than or equal to 1,000 numbers. Projects which meet any of the above condition(s) need not conduct SIA study.

Ficci also suggests absolute clarity in definition of ‘affected family’ for the purpose of consent.

Fourth, the government should initiate zoning across the country and undertake prior SIA study in such zones. Thereafter, the need for seeking change in land use should be eliminated.

Fifth, some of the provisions for compensation under the Act seem absurd. By including ‘consented amount’ as one of the criteria for determining market value of land, the Act fails to recognise that ‘consented amount’ is not a discounted price and already takes into account the expectation of the land seller. Offering a multiplier over and above this price is a contradiction, and ‘consented amount’ has to be excluded from the said criteria.

Sixth, some definitions in the Act are ambiguous. For instance, the definition of urban and rural areas. This is a key parameter for determining compensation. In the absence of clear demarcation of urban and rural areas and uncertainty with respect to factor value to be assigned for determining compensation, the Act leaves open potential for litigation. Ficci has suggested use of a pro rata formula to ascertain the factor value for determining compensation.

Seventh, clarity is required as to what constitutes ‘unutilised land’. The definition of ‘unutilised land’ should be based on ‘intended use’. As long as the schedule of utilisation as submitted at the time of application is being met, physical utilisation of land should not be necessary.

Also, it is not specified under the Act in which case the return of land shall be to the original land owners and under what situation will it be returned to the land bank of the government. Ficci strongly suggests that the return of unutilised land should be made only to the land bank of the appropriate government and not to the individual original land owners as the latter is not practically possible.

Eighth, the Act provides that “no change from the purpose or related purposes for which the land is originally sought to be acquired shall be allowed.” This provision needs to be reviewed to provide adequate flexibility to businesses operating in a dynamic environment. Given the evolving business environment, an investment decision in due course may become economically unviable. So long as the ‘public purpose’ criterion is being met, the industry should be free to use land for any other stated public purpose.

Other basic reform measures which the government needs to take in order to ease the process of land acquisition includes setting up of land bank corporations, undertaking digitisation of land records, and mapping of urban and rural areas through satellite technology. These can bring transparency, reduce uncertainties, and avoid litigation and delays in land acquisition.

Ficci believes that a reconsidered Land Acquisition Act should primarily confine itself to broad intentions. Details should be provided in rules, which should be made through mutual consultations between the central and state governments. We urge the policymakers to critically review the present Act with urgency and make it practical and equitable, upholding the principles of fairness and certainty for all stakeholders.

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