The missing link

Remarkably, the question of land acquisition keeps coming back. Each time it does, no lessons seem to have been learnt by the government from past experience.
The missing link

The Parliamentary Standing Committee on Rural Development’s 31st report on land acquisition released this May does not want the state-led “dominant domain” principle extended to public-private partnerships and private sector projects. It displays faith in eminent domain, land use and district planning, where the market is supposed to play a role — that’s what the land record business was all about.

However, there are two problems with this. Involving the market is fine, but there could be the old person who will not let her land go when everybody else has agreed and that may stall a school or a road. So the state may need to play a role after all, in a classic public policy expenditure sense. Second, when land prices go up as development takes place, what market will remain? It was suggested that local groups be consulted or, better still, form cooperatives or producer companies of small landholders who could be part of the negotiation. That way, there would be an opportunity for landholders to share in future benefits.

The standing committee is silent on the 80 per cent affected clause in the bill, which says that if a company gets 80 per cent of its land needs from the bazaar, the state may intervene to help it acquire the balance. But that is hardly an argument for the draconian powers for the state that some ministers have been quoted as demanding. That state did not aid growth, the poor or the adivasis. The market is reliable, and those who would misuse it can be punished by law. In the special cases of eminent domain as defined above, the state must have some power.  Giving the state all the power it wants is inconsistent with the main thrust of the report, however, and there is an implied rebuff to the concept of equity-sharing between sellers and buyers. One senior bureaucrat attempted to implement this for land purchased for industrial estates. The farmers were to get a first price, but their producer company could get contract work later and, perhaps, equity in future price increases of the estate’s assets. He was transferred out. The standing committee, though, would make him irrelevant.

The company affairs ministry has essentially killed the producer company legislation. It has argued that the second amendment to the Companies Bill 2002 will only be an addendum until the government changes its mind. The consultations proposed for local bodies and farmers groups whitewash the issues. A googly can be ruled out. If everybody can make money from scarcity, then the farmer getting his first chance should not be grudged his share. Moralising on that is hypocritical.

It is remarkable, moreover, that the question of land acquisition keeps coming back. Each time it does, no lessons seem to have been learnt from experience. Over the last 20 years, at least four issues I thought resolved have cropped up again. First, tenancy has increased in a big way but in many areas, the middle farmer was leasing land through reverse tenancy. This was mostly unrecorded, since tenancy is officially frowned upon and the state keeps up the mirage that it provides land to the tiller who, therefore, cannot be a tenant. Two corollaries were known. Some states issued pattas and some set up ICT-based systems for instantaneous service. In tribal areas, land rights were primarily historical and unrecorded, which meant that the poor adivasi could be exploited (Paradoxically, the term “adivasi” means original settler). B.N. Yugandhar and B.K. Sinha, among others, have left supporting evidence.

Second, in the 1990s, we saw real pressure on agricultural land. Earlier, 2 per cent or less of the land would be appropriated for non-agricultural use in a decade. Now, some states reach that figure in a year. The Urban Land Ceiling Act was one of the worst pieces of legislation we have had, and the poor got little from it, although babus and land racketeers made fortunes in implementing this “socialist” policy. With the “reform” of the 1990s, we actually gave up the concept of land use planning. Land use boards and high level committees never met. As Kirit Parikh wrote in his excellent history of plan modelling, the government and the planners do not believe in perspective planning anymore. The last three documents from Planning Commission stayed scrupulously away from a perspective chapter. Now both the Planning Commission and the Union budget, while suggesting plan schemes, also want the concept of plan schemes — and the resources allocated to them — to be examined. That doesn’t provide the ideal background for the state to play a dominant role in the land market.

Third, earlier concepts of unearned incomes or renter surpluses have been given up. In the global bazaar, the border price is the mantra. Fourth, policymakers are ignoring the population movements taking place. The farmer was going to the bazaar in small and big towns, and there were calls for action to improve small towns, not least by calling them towns when the Census deemed them as such. But the government, in its wisdom, ignored such calls, despite 40 million people moving to these Census towns. So much for land use and dominant domain.

(The writer is the Chairman of Institute of Rural Management, Anand)

The Changing Face of Rural India