The PM Modi has promised houses for all by 2022. Is there no government in the past that has not promised building homes for homeless? Every state and central governments be it headed by Congress or BJP or otherwise has promised this and the promise is far from reality. Every one knows it.
To build these houses one requires land. To build highways, expressways, bullet trains we need land. To kick start manufacturing we need land. The Land act that was being followed by the Govt until UPA's Land Acquisition Act of 2013 came in was the British version of 1894 Land Act. Even though this act was devilish in nature it is the one that has led to urbanization we have seen in 60 years. Had it been not for this act we would not have seen modern airports in Delhi, Mumbai, Bangalore and we would not have seen the beautiful Golden Quadrilateral national highway system. No one can argue that the benefits of these highways, ports and airports has reached different sects of life - laborers, real estate developers, construction companies, power companies, water companies, skilled labors involved and many more in the evolution and maintenance of such projects. Imagine if these projects had not taken place we would still be the land of the villages with only villages everywhere. There would not have been good roads and so the transportation boom would have never taken place. This sort of boom also enabled people to travel across country making life and communication easier. The farmers who are at the center of the storm called Land Acquistion Bill Amdendment of 2014 have also benefited. There are of course several projects where farmers did not benefit because land was taken forcibly both by private companies and the government gave inadequate or no compensation to all or most of them. This resulted in large violent protests in different parts of the country. Between 2004-2010 there were several cases of farmers losing their lands and not getting anything at all.
The UPA government in 2013 passed an act that all together changed the terms of compensation for the affected and restricted the usage of lands for several purposes. I had debated the pros and cons of this bill in the article listed here. The Act was Congress's only chance to capture power in 2014 and they went to market it to farmers telling them no land of theirs can be taken by anyone including the Government leave alone private companies. The clause added was that 80% of land owners must agree to give up their land; then there would be a SOCIAL IMPACT STUDY and then the land would be given to the buyer. The compensation fixed was 4 times the market value in rural and 2 times in urban areas. While the act itself was good in intent it was flawed. In the name of social impact assessment no project was allowed to start from 2013 till now. The bill is right in terms of compensation because that was what farmers wanted and the act does satisfy it.
Social Impact Assessment merely means government will study who would be impacted by the land if acquired and then compensate everyone accordingly. This is ridiculous since there is no impartial way of doing this and this simply delays the process to years. Several buyers who wanted to acquire the land lost interest and walked away. The real way farmers are going to get value of their own lands is when a) either technology is improved on their agricultural lands b) The land value increases which means they get a very high compensation in return for giving up their land so they can lead a different life. a) doesn't happen and b) will not happen unless there is a demand for that land and a transparent way of getting the land for the buyer. The existing act makes the whole process 4-5 years which makes any project unviable (Source)
Well known economist Amartya Sen once said right after passing the act - "Even though the land may be very fertile, industrial production could generate many times more than the value of the product produced by agriculture. The locations of great industry, be it Manchester or Lancashire, these were all on heavily fertile land. Industry has always competed against agriculture because the shared land was convenient for industry for trade and transportation," (source)
It is true that India cannot be an agrarian economy because it can never lift people out of poverty. The poverty that was more than 50% in 1947 drastically reduced to 30% because of economic reforms. If we continued to be agrarian we would have not come even this far. All educated Indians never even think of agriculture. Very few do. Rest all move to industries. Can one explain why this happens? Industries pay higher and returns is more predictable and secure. In the case of agriculture if land is not maintained or there are crop failures they are doomed. The sons and daughters of most farmers don't want their kids on the land but do something else. Take any fresh graduate. They will prefer hi tech companies, multi national companies, manufacturing companies, construction companies because these are the jobs that can give monetary satisfaction.
Several state governments have written detailed letters to the PM asking him to help in starting several projects that have been stalled because of this act. Congress states themselves have written such letters (another source). Several politicians love the fact that the land acquisition has become tougher because several rural politicians are land lords with vested interests. The middlemen involved in Social impact study will make the study harder to pass.
The total list of stalled projects is over 100 and they are worth 10 lakh crore. With these many stalled projects no state government has been able to start any industry. All the highway projects that were announced in 2014 and 2015 haven't even taken off. There are several companies who want to start their own manufacturing units so they can create jobs but the existing law makes it impossible to get the land. Just today the economictimes published that projects worth Rs.90,000 crore related to power projects haven't been started because of unavailability of land. It is this scary situation that the Government is seeking to change.
So, what does NDA amendment (source of the exact clauses) to the act do?
1) It has retained all clauses of the bill except that the process of acquisition has been made fast if it involves acquiring land for purposes of housing, rural electrification, defence, highways and industrial corridors. Which means there is no way the process can take 5 years, but instead the compensation will be made quick and fast.
2) Private educational institutes and private hospitals can be built by acquiring land but not private hotels.
3) The existing law states that if a project is not done within 5 years the unused land has to be given back to the owner. This existing clause has been now made been more specific - "a period specified for setting up of any project or for five
years, whichever is later."
4) Instead of applying different formula the existing law has one while evaluating compensation, but now 13 acts are included in the amendment which implies the compensation rates will vary and will be higher if the land is acquired for the larger causes such as electrification, highways and defense related purposes. The farmers tend to benefit from this.
5) It also does away with Social Impact study if the projects are small and involves rural electrification, highways, defense, housing for the poor. This is required because if government has to build houses it needs land. The other day Delhi CM Kejriwal met Mr. Modi and asked his help in fulfilling the dream of housing for all since land ownership is under Center in Delhi. Apparently, the PM informed him that the numbers are not in his favor to modify the existing land act and that makes it impossible for giving any land to Kejriwal for fulfilling the dream (Source of these details). All political parties including the BJP are hypocratic on many aspects. I wondered if Kejriwal can be different, but he too has proved he is the same. It is nothing but hypocrisy on the part of Kejriwal that he decided to join Anna Hazare's protest against this bill. He should have supported the PM instead. Anna Hazare is blinded by the fact that farmers will prosper only if they remain farmers and India will grow only if it continues to be a hopeless agrarian economy. How long can you stop preventing farmer suicides if you don't give them a happy path to their lives? Industrialization is not the answer to farmer suicides but will surely help them if they are quickly compensated with a huge amount instead of giving them loan waivers or keeping them in debt cycles one after another.
My Problems with the NDA Amendment:
The act has two problems according to me. First, it dilutes the act to the extent that even farm lands where agricultural output is very high can be taken for this purpose. If the existing land produces more output it should be allowed to do so. After all it is these tracts of fertile land that has made us self sufficient in our food production. This is a clause that must be amended. Second, it is very well known that in the name of Special Economic Zone (SEZ) huge tracts of land were misused and the unused land is left as is. This should not happen and the fact that on the pretext of industrial corridors land can be acquired must be amended.
Mr. Modi has a big problem on this legislation. He has no numbers in the Rajya Sabha and he is in no mood to bend. The entire opposition and the allies want his blood and they feel this can bring his downfall for sure as the farmers vote banks is the way of winning any elections. This fight for his blood has only made matters worse for him.
When China reached this cross road two decades ago it decided to make farmers part of any factory that would come up on their land. Labor and training was given so that they can benefit in the long run. Similar provisions must be made.
In my view the PM is committing two major blunders:
1) Allowing this act to be the center piece of the Parliament session when he can get several acts passed and then tackle this act later. He can use his majority in Lok Sabha to pass more legislations that every party and the people have dreamt of since 1984. Examples include acts to modernize education, health, police stations and other legal and social sector reforms. These acts are far more powerful and significant.
2) Not been communicating to the people like the way he communicates every day. He should get down to radio, TV, newspapers, media highlighting the good intent of this act. This has clearly not happened and the opposition has increased their voice of dissent and suppressed all the good intentions.
Mr. Modi is very right that he needs to tackle this problem. It is the foundation on which the economy can grow. With good changes or amendments that the government has done the opposition will simply will not co-operate. The PM now has a very tough walk to do. If he succeeds the economy will turn around like nothing, but if he fails it will be his downfall. The downfall is mainly because the themes -" Make in India", "Bullet trains","Smart cities","24 hour electricity promise" - all will fail as it requires land. He would have wasted a landslide opportunity and will never get elected back.
What do you think the PM must do? Should be bend and make amendments or give up the fight for now and concentrate on a lot more pressing issues?
