“Amendments to the Land Acquisition Law – The Real Picture” by Minister of Finance, Information & Broadcasting and Corporate Affairs, Shri Arun Jaitley

On December 31, 2014, the Government promulgated the ordinance to amend

some provisions of the Right to Fair Compensation and Transparency in Land

Acquisition, Resettlement and Rehabilitation (Amendment) Act, 2013.  What was the

need to amend the 2013 law and what is the effect of these amendments?

It has been repeatedly mentioned that the Land Acquisition Act, 1894 had

become obsolete and needed amendment.  It indeed had.  The compensation

provisions in the 1894 Act were highly inadequate and, therefore, it was desirable that

higher compensation coupled with a rehabilitation and resettlement package be

provided.  The 2013 Act did that.  I support the 2013 Act on that ground.  However,

thirteen Acts of Parliament, which provided for land acquisition, were put in the

Fourth Schedule of the Act. Section 105 of the 2013 Act made the provisions of the

Act inapplicable to these exempted Acts.  The said Section provided that the

Government could issue a notification and direct ‘any’ provision of the Act relating to

compensation or R&R would be made applicable to the exempted acts.  The

“Proposed” notification had to be placed before Parliament for a period of 30 days and

Parliament was expected to approve, disapprove or modify the said proposed

notification.  The need for an ordinance arose because such a notification would have

to be put before Parliament in the Budget session itself in July-August, 2014 and the

approval or disapproval taken accordingly.  31st December, 2014 being the last day for

such a notification, the Government decided to amend the Section 105 and apply all

the compensation and R&R provisions of the 2013 Act to the thirteen exempted laws.

Through this provision the present ordinance provides that the farmers’ would get

higher compensation if land is acquired under any of the exempted laws.  It goes a

step further than the 2013 Act itself.  This also explains the urgency of issuing the

ordinance on the last day of the year since otherwise the Government would have

been in default of the complicated approval provisions outlined in the 2013 Act.

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The 2013 Act provided for consent of the land owner in varying percentages in

a number of cases.  It is only when the land owner’s give consent that their land be

acquired and the Government can initiate the acquisition process.  Thereafter, the Act

provided for a detailed social impact study.  It further provided for special provisions

with regard to food security.

Historically the power to acquire the land is a sovereign power.  The State

needs land for any form of development.  Land is required for housing, townships,

urbanization, sub-urbanisation, industrialization, infrastructure, both urban and rural,

irrigation and defence of India.  This list would be endless.  A larger public interest

always prevails over private interest.  However, the land owner who loses the land has

to be more than adequately compensated.  A highly complicated process of

acquisition which renders it difficult or almost impossible to acquire land can hurt

India’s development.    When the 1894 law is amended in the 21st century, it must

provide for a 21st century compensation and cater to the developmental needs of the

21st century.  It cannot completely ignore the developmental needs of the society and

mandate that India does not grow.

The present amendment carves out five exceptions for which this complicated

process of acquisition will not apply.  However, the compensation provisions remain

untouched.  The five exempted purposes are discussed herein below:

  The defence and security of India has been made an exempted purpose.  The 2013

Act completely ignored it.

  Rural infrastructure, including electrification, is an exempted purpose.  Roads,

highways, flyover, electrification and irrigation will all add to the value of the

farmer’s lands.  This exemption is entirely in the interest of rural India.

  Affordable housing and housing for poor is an exempted purpose.  Migration from

rural areas to urban and sub-urban centers where employment opportunities are

available, is a reality.  It is the migrants from rural areas who would benefit from this

exception.

  Industrial corridors which run for a narrow distance alongwith various highways,

give a fillip to the entire development of those rural areas.  A Delhi-Mumbai industrial

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corridor would benefit thousand of villages while running alongwith national

highway.  There could not be a greater opportunity for the rural areas than an

industrial corridor running close to agricultural lands.  This would generate

employment opportunities and enhance the value of the land itself.

  Infrastructure and social infrastructure projects, including those under public

private partnership, where ownership of the land vests with the Governments.  This is

bound to benefit the entire country, particularly the people in rural areas where

infrastructure and social infrastructure is inadequate.

Almost all the exempted purposes benefit rural India.  They would enhance the

value of land, create employment and provide rural areas with better infrastructure

and social infrastructure.  This is in addition to the enhanced compensation and R&R

provisions being expanded to the thirteen  exempted acts.

The amendment, therefore, balances the developmental needs of India,

particularly rural India, while still providing enhanced compensation to the land

owners.  Will the State Governments ruled by political parties, which are opposed to

this ordinance, publically declare that they will not use the law which provides for

enhanced compensation in the case of exempted acts and acquisition process which

balances the developmental needs of society, particularly those of poor, weaker

sections, rural India alongwith defence requirements of the country?

This 2013 Act had over 50 drafting errors.  The provision with regard to the

rectification of errors will be used to cure most of them.  Some are being cured

through this ordinance which alters the earlier mandate of the 2013 law that unused

land has to be returned five years after the acquisition.  The earlier provision was

clearly defective.  Creation of smart cities, townships, industrial corridors, business

centers, defence projects, cantonments, ports, nuclear installations, building of

highways, irrigation projects, dams have a long gestations period.  They cannot be

completed in five years.  If the earlier provision is to be effected, we would be a

nation of incomplete projects on account of defective legislative drafting.

The draft provisions of the 2013 Act enthusiastically provide that no part of an

acquired land could be used for a private educational institution or a hospital.  How

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will new smart cities and townships come up?  Will they only have a civil hospital and

a Government school/ college and no other healthcare and educational institutions will

be allowed to be established there?  The ordinance permits hospitals and educational

institutions to be established on an acquired land.  That is the purpose of acquisition

for townships.  A township without a social infrastructure would be inherently

incomplete.

The needs of a modern growing and developing India need a balanced

approach.  Development and justice to the land owner must coexist.  One cannot be

done at the cost of the other.  The amendment ordinance is based on extensive

consultations where State Government of most political parties supported these

changes.  Those who are opposed to it can certainly mandate their party’s State

Governments not to use the provisions of the ordinance.  History will judge how these

States will lose out in the era of competitive federalism.

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