Does the government – which is grappling with an already swollen fiscal deficit – have the capacity to pump in $1 trillion in the infrastructure sector at public expense in the next five years? At least that seems to be the suggestion of the Parliamentary Standing Committee on Rural Development that has recommended the exclusion of all public-private partnership (PPP) and private infrastructure projects from the definition of “public purpose”. This proposed amendment to the Land Acquisition and Resettlement and Rehabilitation (LARR) Bill, 2011, would require private sector participants to acquire large tracts of land for infrastructure development by themselves. This will clearly be impossible. The Committee’s suggestion, if accepted, could sound the death knell for infrastructure projects in our country.
PPP is the primary mode of infrastructure development and the Planning Commission has estimated that the sector requires $1 trillion during 12th Five-Year Plan. Out of this at least 50 per cent has to come from the private sector against 36 per cent in 11th Plan. In the absence of any land acquisition by the government for PPP projects, the 12th Plan infrastructure target is most unlikely to be achieved.
We welcome the Committee’s suggestion to make the definition of “public purpose” specific and not give it unlimited scope that is very often misused. But to leave out infrastructure projects developed on a PPP-basis or by the private sector from the scope of “public purpose” and consider only those projects being developed by the state is retrogressive. This will affect overall development, especially in backward areas. In the current situation, discriminating infrastructure projects on the basis of ownership is not a balanced approach since all these projects are built in the larger public interest. Since these projects require large tracts of land, they often get stuck owing to difficulties in acquiring marginal holdings. Hence, the definition of public purpose should include all infrastructure projects, large industrial zones like national manufacturing and investment zones (spread over 5,000 hectares), industrial corridors (like the Delhi-Mumbai Industrial Corridor) and industry or manufacturing for the limited purpose of facilitating acquisition of marginal holdings.
Not just acquisition, but even availability of land is going to be a major issue since the Committee has suggested restrictions on acquiring a variety of land areas. Earlier, the Bill had suggested that no irrigated multi-cropped land shall be acquired under the Act except as a last resort and that too only five per cent of the total irrigated multi-crop area in a district. Now, the Committee has gone a step ahead. First, it has suggested to replace “irrigated multi-cropped land” with “any land under agriculture cultivation” to ensure food security. This would effectively render 142 million hectares (or 43 per cent of the total land area of the country) out of the purview of acquisition for industry or infrastructure.
Second, the Committee has also suggested that, as far as possible, there should be no alienation of land or any land acquisition in Scheduled Areas covered under Schedules V and VI of the Constitution.
This issue needs to be re-examined since most of the fertile land falls in the Indo-Gangetic plains that encompasses areas of Punjab, Haryana, Uttar Pradesh, Bihar and West Bengal — the most densely populated regions of the country. Lack of land availability will further slow down the pace of job creation in industrial and manufacturing sectors in these provinces. And areas that are currently backward will remain in the same poor state. Therefore, it should be left to states to evaluate the need for usage of agricultural land for the overall and balanced economic development. The Committee has also recommended that states be allowed to have their own approach and we agree with this.
The Federation of Indian Chambers of Commerce and Industry (Ficci) has said industry is willing to provide appropriate price and rehabilitation and resettlement (R&R) to land owners and affected parties. In fact, we have demanded that land use changes should be notified much in advance, before the possession, so that land owners can get a better price since they would then be aware of the development that will be carried out on their land. This would help in taking the land price to its actual market value and enable a fair compensation for affected families. This would not only minimise problems arising out of the land acquisition process for industry, but also help in faster execution of projects.
The Bill allows the purchase of land for private purpose on a willing buyer, willing seller basis if a private company acquires land less than 100 acres in rural areas and 50 acres in urban areas. However, for acquisition above these levels, R&R provisions given in the Bill would apply. The argument given for the applicability of R&R provisions in private transactions is that there are many families, and not just land owners, whose livelihoods are dependent on the land and they need to be compensated for their loss of livelihood. This argument is fallacious since the root of the problem is lack of records of the affected people and this is the responsibility of the government, not the private sector. If records of the affected people are available, then any market transaction will be able to capture the cost associated with project affected families also. We think the way in which R&R provisions are designed in the Bill would only increase litigation and would hardly result in project completion.
The Parliamentary Standing Committee has itself noted in its report that the government hardly gave any time to stakeholders to submit their views and to consider these. We only hope that such a Bill, which will stifle the growth of manufacturing and infrastructure in the country, is not passed by Parliament. If passed, it will be disastrous for employment generation.
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Kumar is Secretary General and Bijesure is Additional Director at Ficci