In his book The Price of Land: Acquisition, Conflict, Consequence, Sanjoy Chakravorty does a painstaking analysis of the reasons behind disquiet over land acquisition
The learning curve for Indian political parties on land begins post-2005. All other issues that pepper the manifestos of parties have been around for a much longer time.
From there to the UPA-BJP meeting on Thursday for a bipartisan consensus to bring in the Land Acquisition, Relief and Rehabilitation (LARR) Bill could be described as a swift journey of experience. It is possibly more than a coincidence that on the same day, the government halved the requirements of land to set up a special economic zone. The journey had begun with the plan to roll out these zones on large tracts of land by the UPA-I government, which had ensnared all projects with any element of acquisition into a fiery ball of public ire.
The LARR Bill emerged slowly from this confrontation. Industry, public and private sector companies till then had used (as they still do) the Land Acquisition Act of 1894. The new Bill is a response by the state to transfer power to those who were selling land. It was meant to address what the government felt was an asymmetry between those who were buying the land and those who were selling it.
It is rather interesting to observe the current stand of the government, mostly of the rural development ministry, to position the Bill as a means to help the industry instead. To that extent, the objection from Ficci to even the latest version is at least consistent; they never thought the new Bill will make life any easier for them.
In a country with a land-to-population density of 418 per square kilometres as per World Bank data, it is curious why the stalemate on land did not occur earlier. According to Sanjoy Chakravorty, while land was scarce, the ability to buy it was scarcer still till the watershed of the Noughties. ?The combination of scarcity and widespread poverty kept land prices low for decades. Widespread poverty ensured that despite the high status and asset value of land?which suggests that some people should have been interested in buying even with income loss?few could afford to buy land.?
?I suggest the punctuation or tipping point was the expansion of money supply in India,? which Chakravorty claims happened towards the beginning of this century. According to him, ?the rise in income and wealth inequality created extraordinary price peaks in selected settings with ripple effects in surrounding regions?.
It is great as a proximate estimator of why the protests found a ready home of discontent to pound on. It, however, does not explain the immediate reasons for why land trouble emerged in areas where it did, since those were not at price peaks or even close either. Neither West Bengal at Singur, nor Orissa at Kalinga Nagar, which set off the chain of land protests, could be classified as such. It is true, however, of the protests in the subsequent rounds like those around Delhi and in Karnataka. In the case of West Bengal, it also cannot be put down to a lack of trust among the citizens about state governments that could have been a precipitating factor, at least initially.
In the two decades since the mid-Eighties, the Indian manufacturing sector had hardly moved for fresh buys of land, except in pockets like Andhra Pradesh. Post the SEZ Act of 2005 vintage, when the manufacturing and real estate companies moved in big time to buy mega land parcels while the simmering discontent of unequal purchasing power was ready to be exploited, it was the growing aspiration of the wider population, irrespective of where they were located, who saw in the expansion a chance to improve their life chances. Where their interests were co-opted, as in Haryana, the acquisition proceeded well. It exploded where they were not.
Political parties did not have a clue about this change. Which is why they misread the agitation completely. Mamata Banerjee rode it best, but interpreted it as a de-industrialisation hypothesis. Even the Congress read the agitation around Yamuna Expressway as a farmers? revolt against land acquisition, instead of what it truly was?a demand for better prices for their property.
This is where the disquiet among industrial leaders lies. And this is where Chakravorty has done a painstaking analysis to show the reasons for it. He starts off by assessing productivity levels in Indian farms and makes a case for how much should be the price of a farm based on these levels. Tracking sales figures across India, he shows the current prices are far in excess, warranted by productivity. In many cases, the prices are far ahead of farmland prices in western Europe and most of the US.
As he explained in a chat, since the land is being bought for purposes other than farming, there is no good reason to base the price of the plots around productivity. ?Productivity is not the primary determinant of the price of agricultural land in India,? he notes.
But if it is not, there has to be some other basis for the transactions. The Temple University professor argues that the LARR Bill, too, is not the right one to work on. The one-size-fits-all multiplication formula of the Bill will penalise states that have the most fragmented land holdings. Chakravorty uses the calculator to show that Singur land, for which the West Bengal government fought a battle for R7 lakh per acre, will now cost more than R75 lakh per acre. One doesn?t have the space to run his math here, but this is worth referring to the book for. He shows clearly the punitive effect the Bill will create on all development plans, especially for the densely populated states. ?This outcome of the LARR Bill demonstrates that its framers have either little knowledge of or little interest in the land market or in market principles. One suspects this is a political bill, designed to serve a purely political purpose.?
The Price of Land: Acquisition, Conflict, Consequence
Sanjoy Chakravorty
Oxford University Press
Rs825
Pp 273
