As India struggles to break out of poverty and accelerate growth, it faces numerous challenges. Among these, one of the biggest pain points is the complexity in acquiring land for projects of any kind – be it infrastructure or industry.
Land is a fundamental resource. You can live on it, farm it, mine it, build a factory on it, lay a road on it, build a school on it; almost every economic activity is dependent on the supply of land. But the availability of this valuable resource is stymied by political whim and vested interest. As a result, today almost every large investment is stuck due to problems in land acquisition.
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In Aligarh (UP), several farmers died in police firing while agitating against unfair compensation for land acquired for the Yamuna expressway between Delhi and Agra.
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In Tiruvannamalai and Kancheepuram districts (TN), farmers allege irregularities in the procurement process by the State Industries Promotion Corp. of Tamil Nadu Ltd (Sipcot).
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In Nandigram (West Bengal), more than 4,000 armed policemen attacked those protesting the acquisition of 10,000 acres for a SEZ. At least 14 people died. Many more were injured.
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Tata Motors was forced out of Singur, when protests snowballed into a major political controversy, fueled by Ms. Mamata Banerjee.
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Reliance Industries’ plan to build India’s largest port at Rewas in Maharashtra is running two years late behind schedule due to delays in land acquisition.
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Fifteen years after the proposed highway between Bangalore and Mysore was cleared, it is still mired in land acquisition delays.
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According to a report by Infrastructure Development Finance Co. Ltd (IDFC), around 70% of Indian infrastructure projects are delayed by land acquisition problems. These include railway, road, and power projects.
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The resentment that has strengthened Maoists in Eastern India has much to do with forced land acquisition for mining, industry and infrastructure. Poor tribals have been cheated, making them sympathetic to the Maoists, who promise to protect their rights.
While there are many explanations for all this chaos, including democracy, unfair compensation, political interference, land grab by industrialists, and so on; the blame lies with outdated and perverse legislation. Believe it or not, we still follow a British-era law, the The Land Acquisition Act, 1894 !! This law enables the government to acquire land for any “public purpose”. Our original constitution protected private property (clause 31), but several amendments initiated by Jawaharlal Nehru and subsequent governments diluted this right. Ostensibly, this was done to facilitate agrarian reforms, but effectively allows the state to acquire any land for any reason, and without just compensation. Ironically, the amendments meant to to give land to the poor, are now being used to grab their land!
And the state’s stranglehold over large land transactions has positioned the government as monopolistic real estate agents with the right to transfer land from one individual to another, at whim. This is nothing less than a Super License Raj – with politicians and bureaucrats having the power to decide whose land to acquire, and who to favour. So we have poor farmers getting unfair compensation, even as businesses pay too much. The difference is pocketed by the “real estate agents”, i.e. those in power. And when any politician is left out of the gravy train, they will do everything to derail the project – just as Mr. Deve Gowda has done with the Bangalore Mysore highway.
The solution is clear, but not simple. First of all, we have to re-instate our rights to private property and get rid of Articles 31A, 31B and 31C, so as to reduce the power of governments to grab land. Accompanying this, reforms in land titling are a must, so each individual’s ownership is recorded. There must be the freedom to sell (or not), without arbitrary government intervention.
Crony capitalists might decry this as likely to worsen the situation. However, while the creation of a free market (underpinned by the fundamental right to private property) may result in higher payments to landowners, total costs will fall – as every project will not consume huge amounts of political, judicial and police attention, not to mention the graft and black money generated at every stage of the process.
Unfortunately, this does not appear likely. The Land Acquisition Bill (2007) is stuck in Parliament (thanks to Mamata Banerjee), but even if it passes, it will not address the core issue of the right to private property. Transparency in land transactions will take away the ability of politicians, their buddies and corrupt government officials to make enormous amounts of money. And if we expect lawmakers to enact laws that reduce their earning capacity, we’re living in a fool’s paradise!