Independent regulator is needed on land acquisition

The Asian Age, December 08, 2015

By Pradeep S Mehta

The debate on the land acquisition law has turned full circle with the centre now asking states to make their own laws. It is important to understand that land is a hereditary asset and a means of livelihood not only for many owners but also those dependent on it. On the other hand, there are critical issues of jobs to be created for around 12 million people each year.

Land is essential for industrialisation and infrastructure. Leaving aside rhetoric and politics, it is critical now to understand the crux of the matter, and adopt the best way forward. If the current land acquisition law does not allow for effective implementation, then it may be time for states to go back to the drawing board.

Several solutions have been suggested, such as reforming land records; BJD’s suggestion of making losing land owners partners in the business; Maharashtra working towards digitisation of land records; holding land auctions or the Uttar Pradesh model of mutual agreement between buyer and seller; or the suggestion of the Niti Aayog to use lease agreements. In order to push ahead with reforms many states, such as Tamil Nadu and Rajasthan, are already framing their own land laws.

A universal solution that could be explored is the establishment of an independent regulator for land at the state level. Though government involvement may be essential to ensure a fair deal, their involvement should be kept to a minimum and acquisition should be the last resort. Faster acquisition and fair compensation (including rehabilitation and resettlement) are the basic tenets of an effective land acquisition mechanism and should be the objectives of the regulator. However, merely creating a regulator would not be sufficient. The regulator needs to be independent and operate at arm’s length from the legislative and executive bodies. Such a regulator would act as a facilitator between parties and ensure a balance of the interests of all stakeholders.

The government has recently brought in a bill to establish a regulator for the realty sector to bring in greater credibility and transparency, as well as to protect home buyers. A regulator for land acquisition can also bring in stability and trust, protecting the interests of land-owners and fostering confidence among investors.

The ideal solution would be a market based model with direct interaction between the buyers and sellers. However, unlike many other transactions, the actual market price cannot be known accurately as stamp duties never reflect real values. Then there are serious issues of lack of accurate land records, hugely fragmented land holding, emergence of the land mafia and hoarding, all of which can create further roadblocks.

Detailing waste-land, government owned land, land-use patterns and digitising accurate land records should be on the priority list of the regulator as this would be beneficial to ensure available land is used prior to acquisition and agricultural land is acquired as a last resort.

Several have suggested that many farmers do not want their children to continue in the same profession, thus logically they would welcome such an exit. However, we have seen countless issues arising during land acquisition which indicate some critical concern areas. The major issues seem to be the delay in providing compensation and its inadequacy. The regulator needs to critically examine why a farmer is unwilling to part with his land, when it appears to be in his and the country’s best interest to do so. This could be a good starting point to draft the necessary processes to overcome the hurdles.

The Andhra Pradesh government has managed to convince thousands of farmers to voluntarily give up their land to build the new capital Amaravati. The farmers there would have evaluated the costs and benefits of taking such a decision, which just goes to show that the benefits need to outweigh the costs for both parties.

The process of land acquisition can neither be pro-poor nor pro-industry unless the needs of all the stakeholders are addressed. It is often stated that the current government had approved LARR 2013 so as to not appear anti-poor before the elections and the Opposition is now protesting only for political mileage. This further strengthens the need for an independent regulator to implement its functions, take impartial decisions and operate with integrity. The process needs to be transparent and issues of conflict resolved in a fair and just manner.

Another issue that is often raised is the need to right some of the wrongs of the past. LARR 2013 seems to have gone too far to the other side, creating extensive requirements and procedures which seem fair on paper but can thereby potentially cause significant time and cost overruns, once again creating a business unfriendly environment.

In many cases, the major concern is the implementation of the provision rather than the provision itself, and once the problem is clear the solutions can be devised accordingly. For instance, social impact assessment has its benefits but the process is said to be both cumbersome and time consuming. Here we can draw lessons from the process of environmental impact assessment and apply it to reach the objective while incurring the minimum time and cost.

The regulator should work towards reducing the transaction cost of acquiring land without diluting the objectives of the provisions in place. The state governments have been working to ease doing business; simplifying the land acquisition process can further improve their image as a business-friendly nation.

The eventual objective and aim is a faster and fair land acquisition process at the lowest possible cost, where both parties believe they got the best deal. The answer is an independent and impartial system with clearly laid out functions and processes. Thus, it may be time to evaluate and assess the adoption of a regulator.

The author is secretary-general, CUTS International. Tunisha Kapoor of CUTS contributed to the article.

This article can also be viewed at: