Land Bill a mortal blow to India’s modernisation

Sep 05 2013, 09:10 IST
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SummaryThe proposed law would significantly push up land costs in the country, leading investors to choose competing countries

The Land Acquisition, Rehabilitation and Resettlement Bill, 2011 (LARR) is set to become law. Clearly, Indian farmers who pay zero taxes and contribute a mere 12% of the GDP command unquestioned loyalty of the political class. All other interests and national objectives are subservient to them. Our apprehension, shared by many others like Sanjoy Chakravorty’s “On Land, No Lessons Learnt” (IE, August 30), is that LARR, if made a law, will pretty much sound the death knell of industrialisation in India. With LARR in operation, the commerce and industry minister has lost his battle and can just as well officially abandon the new manufacturing policy with its objective of increasing the manufacturing sector’s share in GDP to 18%. LARR will stop in its track the ambitious DMIC project and bring to a standstill the process of planned urbanisation in the country. In their populist frenzy, the political class, chasing electoral prospects, could be putting an end to all prospects of generating jobs in the industrial sector and permanently condemning the poor to live in slums. Let us explain.

The most damaging features of LARR are the extremely complicated procedures and provisions for any future land acquisition by the government for its own needs or for infrastructure projects to be undertaken via the PPP route. These procedures include: an open ended and complex social impact analysis for every acquisition; identifying those whose livelihoods will be affected and compensating them; sharing of capital gains with the original owner over the next 10 years; providing 25 different types of infrastructure services as part of the resettlement and rehabilitation (R&R) provisions; prohibiting land acquisition beyond 5% in districts with multi-crop agriculture and beyond 10% in all single-crop districts; requiring the approval of 80% of the land owners before acquisition can be completed; and authorising the district collector to arbitrarily determine the price of land rather than use a more objective basis for doing so. These complex procedures, put in place ostensibly to protect farmers’ interests, will end up hurting them as the Bill will unleash a tsunami of red tape, litigation and administrative discretion rather than diminishing them as should have been its real objective. The industry and real estate sectors’ demand for land will surely decline as PPP projects, which will face complete uncertainty in land acquisition, come to a standstill. This is bound to result in decline in land prices that will hurt

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