Unfortunately, the proposed amendment of The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act (2013) has triggered a political battle of moustaches. The compulsions for changes in land acquisition processes are being sidetracked by drama.
The need for reviewing land acquisition is obvious. India has terrible infrastructure and inadequate capacity in power, roads, urban services, telecom, airports, etc. To create better infrastructural capacity of higher quality will require land.
Other constraints like slow clearances, highly leveraged financing, over-optimistic projections and poor contractual mechanisms do impede projects. But land is a prerequisite and the single-largest cost. Timelines for acquisition are rarely met. A viable project can be ruined by a few hold outs refusing to sell, causing endless delay.
The removal of consent for projects "in the public purpose" is tempting. Unfortunately, it leads to other problems. People resent being forcibly dispossessed. The compensation is decided by the same entity (the government) that grabs the land. The land may often be handed over to for-profit enterprises, causing yet more resentment.
There are usually people earning their livelihoods from land without owning it. In tribal areas, land is often traditionally not "owned" by individuals. These people may not be liable for conventional compensation. They also lack the skills for employment in other sectors, even assuming they are offered change of employment.
As a result, forcible acquisition often triggers violent protests. Sometimes the dispossessed, or the unemployed, pick up the gun. The state may pay less for the land as such. But it ends up spending much more in policing costs, and in opportunity costs caused by delays.
The 2013 Act catered for the rehabilitation and resettlement of those depending on land, in addition to owners. It had mandatory social impact assessments, public hearings and dispute resolution. The amendment proposes removing consent and social impact assessment in five specific instances.
Assuming the Amendment is passed into law, it may still be unworkable. The trigger point for consent (to reduce holdouts) could be debated. But consent and social impact assessments cannot be totally removed without leading to ballooning protests and attendant delays. In effect, the BJP has already spent a year without much movement on the ground. It could end up eventually amending the law, in ways that don't work.
There is too much visible conflict of interest for the government to act as a real estate broker. Land is consistently under-valued. Every project will have peculiarities requiring negotiations. Change in use after acquisition also means value multiplication.
This issue is surely important enough to warrant setting up a statutory body. An independent body or indeed, multiple state-level bodies, could judge fair compensation, case by case. These bodies include could co-opt representatives of multilateral lenders and "anti-national" NGOs if necessary. Such bodies should have the flexibility to offer stakeholders equity or annuity payments, if desired.
There are World Bank case studies indicating that such negotiations can be very successful. Such changes in acquisition methods and in valuation and compensation processes may not seem ideal. But a change in tack along these lines may be the best resolution possible. In effect, paying apparently higher compensation may actually result in far lower net costs to the exchequer.
Finally, assuming politicians care in the least about abstractions, they may want to take a look at India's Constitutional history. Article 19 (1) (f) and Article 31 (1) and 31 (2) defined the Right to Property as Fundamental. Those clauses were deleted by the 44th Amendment (1978). Principles of natural justice and the original Constitution suggest that the right to property should be strengthened, not weakened. Especially so, if the government claims to be right-wing and business-friendly.
Twitter: @devangshudatta