Jairam Ramesh

Land acquisition mess: Will the real Narendra Modi please stand up?

narendra_modiVivek Kaul

The Narendra Modi government seems to have agreed to drop the politically unpopular clauses in the Bhartiya Janata Party’s version of the land acquisition bill. This is not a move in the right direction.

One of the key planks of Narendra Modi’s electoral campaign for the 2014 Lok Sabha elections was economic development and job creation. In a country where most electoral rhetoric has been based around “garibi hatao”, this was like a breath of fresh air.

And given that 13 million Indians are entering the job market every year, creation of new jobs should be one of the top priorities of any government.
What also needs to kept in mind is the fact that the average holding size of agricultural land has come down over the years.  As per Agriculture Census 2010-11, small and marginal holdings of less than 2 hectare account for 85 per cent of the total operational holdings and 44 per cent of the total operated area. This could have only gotten worse since 2010-11. And what this means people need to be moved away from agriculture into other areas where they can make a living.
How does a country like India create jobs? As Cambridge University economist Ha-Joon Chang writes in Bad Samaritans—The Guilty Secrets of Rich Nations & the Threat to Global Prosperity: “History has repeatedly shown that the single most important thing that distinguishes rich countries from poor ones is basically their higher capabilities in manufacturing, where productivity is generally higher, and more importantly, where productivity tends to grow faster than agriculture and services.”

An important part of building a vibrant manufacturing sector is the ease with which land can be acquired. Over and above this, the quality of physical infrastructure (roads, railways, ports etc.) in India remain abysmal. If this infrastructure has to improve, the ease of land acquisition remains very important.
Narendra Modi became the prime minister of India on May 26, 2014. One of the things he did at the very beginning was to try and figure out what were the factors holding back investment in India. The answer that he got was the Land Acquisition Act of 2013 was one of the key reasons holding back investment.

In fact, the latest economic survey released in February earlier this year pointed out that “land acquisition” was a top reason for 161 stalled government projects. The Survey also pointed out: “India’s recent PPP [public-private partnership] experience has demonstrated that given weak institutions, the private sector taking on project implementation risks involves costs (delays in land acquisition, environmental clearances, and variability of input supplies, etc.).”

Arvind Panagarya the vice-chairman of the NITI Aayog in a recent speech said: “The Land Act, 2013 is an onerous Act under which by all calculations it will take up to five years for acquiring land assuming that all steps progress smoothly,” Panagariya said.

The question is what led to the Land Acquisition Act 2013? Before 2013, the process of land acquisition in India was governed by the Land Acquisition Act 1894. This was a law introduced during the time when the British ruled India and it managed to survive for more than 65 years after India attained independence from the British in 1947.

Given that the law was passed during British times it essentially ensured that the government could acquire land for almost any purpose and pay a pittance for it. As Jairam Ramesh and Muhammed Ali Khan write in Legislating for Justice—The Making of the 2013 Land Acquisition Law: “The 1894 Act was a comparatively short legislation that left much to the discretion of the acquiring authorities.”

The government basically acquires land from the public for what it calls “public purpose”. Given this, it is very important to define the term public purpose properly. But as Ramesh and Khan write: “‘Public Purpose’ which was the raison d’etre for any acquisition initiated was drafted in such wide terms that essentially any activity could be constituted as public purpose, as long as the Collector [of the district where the land was being acquired] felt it did…’Public

Purpose’ became what ever the Government or acquiring authority defined it to include.”
And if this wasn’t enough, a 1984 amendment to the 1894 Act allowed the government to “acquire lands for a public purpose ‘or for a private company’”. So, as per the 1894 Act the government could acquire land even for a private company. This clause was at the heart of the nexus that evolved between builders and politicians, over the years.

Given this, such a law had to be done away with it. This finally happened in 2013. The land acquisition law that was brought in was towards the other extreme, and seems to have made land acquisition almost next to impossible. (For those interested in the entire procedure, they should read Ramesh and Khan’s book, to realise how complicated and time taking the 2013 law is).

The 2013 law calls for consent from 70% of families in case of public private partnership projects and 80% if the land is being acquired for a private company. A social impact assessment also needs to be carried out. This assessment needs to answer questions like whether the “proposed acquisition serves public purpose” and “whether land acquisition at an alternate place has been considered and found not feasible”.

As mentioned earlier, after coming to power, the Modi government figured out that land acquisition law of 2013 was acting as a substantially barrier to investment. It brought in The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014, which made a few changes to the 2013 Act. The ordinance was signed by President Pranab Mukherjee on December 31, 2014.

In the ordinance the requirement of getting prior consent from those affected has been done away in certain cases. As Swaminathan Aiyar writes in a column in The Economic Times: “It substantially diluted the clauses relating to a social impact assessment and consent of 70-80% of people affected. It provided exemptions for 1 km on either side of railway and industrial corridors, rural infrastructure, affordable housing, and PPP infrastructure projects.”

This was a step in the right direction to get investment going again. Land required for the defence, electrification, affordable housing, and industrial corridors etc., also needed to be made available as soon as possible. Also, Ramesh and Khan write: “The law was drafted with the intention to discourage land acquisition.

It was drafted so that land acquisition would become a route of last resort.” Ramesh was a key player behind the Act.
A land acquisition Act which discourages land acquisition cannot be of much help to an economy which needs to create jobs for 13 million individuals entering the work force every year.

Now with the government planning to go back to the 2013 law the status quo will return. If Arvind Panagariya is right in estimating that it will take five years to acquire land then there is no way that the Narendra Modi government is going to get around to delivering its promise on creating jobs and economic development.

Also, Modi’s pet “Make in India” programme is unlikely to get anywhere. You can’t make in India without being able to get land to set up the necessary infrastructure.

Aiyar summarised it the best when he said: “[Modi] seems happier coining slogans than in implementing tough decisions.” Tough decisions on the economic front is what this country needed. Alas, it is not going to get them even under Modi, who for a while flattered to deceive. And by the time the 2019 Lok Sabha election is here, “garibi hatao” might be the order of the day again.

It is worth asking here, if the plank of economic development and jobs, was also an electoral jumla? From how things are going right now, that is how it seems like.

To conclude, the Narendra Modi that we saw in the run-up to the 2014 Lok Sabha elections was a different man, from the Narendra Modi we are seeing now. Will the real Narendra Modi please stand up?

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)
The column originally appeared on Firstpost on Aug 5, 2015

How the Congress party got corporates addicted to govts buying land for them


One of the main questions that has been asked in the current controversy surrounding the issue of land acquisition is—why does the government need to buy land? Jairam Ramesh and Muhammad Ali Khan try and answer this question in their new book Legislating for Justice—The Making of the 2013 Land Acquisition Law. 

As they write: “Acquisition of property is founded upon the universally recognized principle of ‘Eminent Domain’.” And what is Eminent Domain? “[It] is the power of the Government…to take over resources for the greater national good. At its most basic Eminent Domain refers to the inherent authority of the Government to acquire private property on the payment of fair compensation for a use that benefits public at large,” explain the authors.

Further, a lot of public infrastructure gets built because of Eminent Domain. As Ramesh and Khan write: “Without the power of Eminent Domain, the Government could not establish the infrastructure that we rely on—roads, hospitals, airports, public schools, common facilities such as warehouses for farmers, playgrounds for children all are made possible through the use of Eminent Domain.”

So far so good. But why does the government have to acquire land for private companies? Before I get to answering this question, it is important to realize that the land acquisitions carried out by the government in India can essentially be divided into two eras—those carried out before 1991, the year of the economic reforms, and those carried out after.

As Michael Levien of the Johns Hopkins University writes in a recent research paper titled From Primitive Accumulation to Regimes of Dispossession: Six Theses on India’s Land Question: “Since 1991, India has passed from a regime that dispossessed land for state-led industrial and infrastructural expansion to one that dispossesses land for private—and increasingly financial—capital. Between 1947 and 1991, the Indian state largely dispossessed land for public-sector projects to expand the industrial and agricultural productivity of the country. The main forms of this dispossession were public sector dams, steel towns, industrial areas, and mining.”

But that changed after the economic reforms of 1991, when the private sector began to play a more active and larger role in the Indian economy. The economic reforms unleashed the Indian IT and BPO industry. These sectors had an unending appetite for land and the government helped them by acquiring land for them.

Gradually, public-private partnerships became the preferred method for building physical infrastructure. And this led to the government acquiring more land for private firms. In fact, as Levien points out: “Crucially, compensating private infrastructure investors with excess land and/or development rights became an increasingly popular method of cost recovery in these arrangements—whether for roads, airports, or affordable housing (Ahluwalia 1998; IDFC 2008, 2009). Infrastructure investment thus became a vehicle for private real estate accumulation, culminating with Special Economic Zones in the mid-2000s.”

Hence, land became a sort of a currency for the government. Also, given that the government could acquire land for private firms, it is obvious that a lot of politicians must have made a lot of money as well.

Nevertheless, the question is how did the government get around to acquiring land for the private sector? Before the 2013 land acquisition law was passed, land acquisition in India was governed by the Land Acquisition Act 1894—a law from the time when the British ruled India.

In fact, an amendment made in 1984 to the 1894 Act expanded the government’s ability to “acquire lands for a public purpose ‘or for a private company’”. This amendment allowed the government to acquire land for private companies. And it is worth reminding the readers, those were the days when the Congress party ruled the country.
It was this amendment which was abused by the various state governments around the country to acquire land for private companies. This amendment allowed the government to acquire land from farmers at cheap rates and then sell it on to private companies at a significantly higher price.

The ‘Yamuna Expressway’ is a very good example of this, where the land was acquired by the Uttar Pradesh from farmers and then sold on to private parties at multiple times the price the farmers had been paid for it.

As Ramesh and Khan point out: “In 2009, the Uttar Pradesh Government had indeed acquired land as part of a concession agreement and then resold it to Jaypee associates group as part of a bundling project for the construction of the Yamuna Expressway. There was no legal bar on doing so under the old law [i.e. the 1894 Act].” Further, the purpose for which the land was acquired could be changed as well.

The corporates preferred the government acquiring land for them and then selling it to them at a higher price because of several reasons. Land records in India are poorly maintained and purchase of land can easily be challenged in court at a later date.

As Nitin Desai writes in a recent column in Business Standard: “Many companies want the government to acquire land for them…as to have the assurance that their right of ownership cannot be challenged by some new claimant.”

Further, as Ramesh and Khan point out: “After the initial round of consultations in July-August 2011, it was also acknowledged that land values are, on an average, a sixth of their represented or book value as drawn out in the circle rate. As one moved away from urban centres the disparity became more striking with land records not having been updated for decades in some parts of the country.”

As per the 1894 Land Acquisition Act the government had to compensate the owner of the land at market value. But given that the government land records were infrequently updated, the government on many occasions got away with paying a pittance in comparison to the ‘real’ market value.

Even if the government were to then sell on the land to a corporate firm at a higher price, the firm would still get a good deal because of the huge differential between the price as per the government land record and the real market price.

Another reason corporates liked to outsource the land acquisition process to the government lay in the fact that the 1894 Act had an ‘urgency’ clause. As Ramesh and Khan write: “Section 17 of the Land Acquisition Act, 1894 was used to forcibly disposes people of their land in a frequent and brutal fashion by suspending the requirement for due process…Section 5A…allowed for a hearing of objections to be made but put no responsibility on the Collector to take those claims into consideration.”

So people could complain, but it was up to the Collector whether he wanted to listen to them or not. Further, the definition of urgency was also left “to the authority carrying out the acquisition.”  This clause allowed the collector to “take possession of the land within fifteen days of giving notice”. He could take possession of a building within 48 hours of giving notice. No private company could hope to acquire land at such a quick pace.

The irony is that the 1894 Land Acquisition Act was allowed to run for almost 66 years after independence. The Congress party ruled the country in each of the decade after independence and chose to do nothing about it. Under the 1894 Act the government could acquire land in a jiffy, without adequately compensating the land-holder. When the Act was finally replaced, what came in its place has made it next to impossible to acquire land.

In fact, Ramesh and Khan,rather ironically admit to that in their book, when they write: “The law was drafted with the intention to discourage land acquisition. It was drafted so that land acquisition would become a route of last resort.”

To conclude, as far as the land acquisition process is concerned, it is safe to say that we have jumped from the frying pan into fire.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

The column originally appeared on Firstpost on May 28,2015 

Why Jairam Ramesh’s new book on land acquisition is a must read for Rahul Gandhi

Jairam_ramesh

Jairam Ramesh was the minister of rural development between July 2011 and May 2014. He was instrumental in getting the new land acquisition law drafted and passed in 2013. And now he has written a book documenting this experience.
The book is titled Legislating for Justice—The Making of the 2013 Land Acquisition Law. Ramesh has co-authored this book along with Muhammad Ali Khan, who worked with Ramesh as an officer on special duty in the rural development ministry.
The book goes into great detail on why India needed a new land acquisition law. And given this, it is a must read for Rahul Gandhi, the vice-president of the Congress party, who has recently been ranting against the changes that the Narendra Modi government is trying to bring to the land acquisition law passed in 2013.
Before the 2013 land acquisition law was passed, land acquisition in India was governed by the Land Acquisition Act 1894—a law from the time when the British ruled India. And rather surprisingly it survived for close to 66 years after India achieved independence from the British in 1947.
The 1894 Act was loaded totally in favour of the government and made it very easy for the government to acquire land as and when it wanted to. This wasn’t surprising given that it was drafted in 1894, when the British ruled India and the rights of Indians were not really top of the British agenda. As Ramesh and Khan write: “The 1894 Act was a comparatively short legislation that left much to the discretion of the acquiring authorities.”
Take the case of the phrase “public purpose,” which is the basic reason why any government acquires (or at least should acquire) land from its citizens. It is very important to define the term properly. Nevertheless, as Ramesh and Khan write: “’Public Purpose’ which was the raison d’etre for any acquisition initiated was drafted in such wide terms that essentially any activity could be constituted as public purpose, as long as the Collector [of the district where the land was being acquired] felt it did…’Public Purpose’ became what ever the Government or acquiring authority defined it to include.”
In fact, in a 1984 amendment expanded the government’s ability to “acquire lands for a public purpose ‘or for a private company’”. Yes, you read that right. And which party was in power in 1984? The Congress party. This amendment allowed the government to acquire land from farmers at cheap rates and then sell it on to private companies at a significantly higher price.
The ‘Yamuna Expressway’ is a very good example of this, where the land was acquired by the Uttar Pradesh from farmers and then sold on to private parties at multiple times the price the farmers had been paid for it.
The 1894 Act also had an ‘urgency’ clause. As Ramesh and Khan write: “Section 17 of the Land Acquisition Act, 1894 was used to forcibly disposes people of their land in a frequent and brutal fashion by suspending the requirement for due process…Section 5A…allowed for a hearing of objections to be made but put no responsibility on the Collector to take those claims into consideration.”
So people could complain, but it was up to the Collector whether he wanted to listen to them or not. Further, like was the case with the definition of public purpose, the definition of urgency was also left “to the authority carrying out the acquisition.”
This clause allowed the collector to “take possession of the land within fifteen days of giving notice”. He could take possession of a building within 48 hours of giving notice. “The Outer Ring Road Project of Hyderabad and the Expressway in Uttar Pradesh are both striking(and recent) examples of acquisitions where large tracts fell pray to the urgency clause,” write Ramesh and Khan.
Further, land acquisition displaced many people over the decades and most of them were not resettled and left to fend for themselves. “While there is no comprehensive record of how many individuals have actually been displaced by land acquisition post-independence, estimates put forth by credible studies find that close to 60 million individuals have been displaced since independence. Worse still, only about a third of these have actually seen some measure of resettlement and rehabilitation,” write Ramesh and Khan. Further, the studies that Ramesh and Khan refer to are more than a decade old. Hence, the number of displaced is likely to be higher than 60 million.
The question is who is to be blamed for this? The Congress party, which ruled the country in every decade after independence. Why did it take them more than 60 years to wake up to this and do something about it. The only possible explanation is that the Congress politicians ‘privately’ gained from the law as it was.
And given this, Rahul Gandhi’s recent holier than thou attitude on “land acquisition,” doesn’t cut any ice. The Congress party is responsible for the land acquisition mess that prevails in this country as of today.
Getting back to the land acquisition law of 2013, it is only fair to say that India needed a proper land acquisition law which wasn’t loaded totally in favour of the government. The trouble is now we have a law which makes land acquisition extremely complicated and next to impossible. A reading of Ramesh and Khan’s book makes that extremely clear.
In fact, the authors even write: “The law was drafted with the intention to discourage land acquisition. It was drafted so that land acquisition would become a route of last resort.”
For a country which has nearly 13 million people entering the workforce every year and which has aspirations of “making things,” a law which discourages acquisition of land really cannot hold. No country has gone from being developing to being developed without the expansion and success of its manufacturing sector.
As Cambridge University economist Ha-Joon Chang writes in Bad Samaritans—The Guilty Secrets of Rich Nations & the Threat to Global Prosperity: “History has repeatedly shown that the single most important thing that distinguishes rich countries from poor ones is basically their higher capabilities in manufacturing, where productivity is generally higher, and more importantly, where productivity tends to grow faster than agriculture and services.”
And in the long run the ease of land acquisition remains an important input for the manufacturing sector to take off. It also remains a very important area if the physical infrastructure in this country needs to improve. Having said that, it does not mean that land should be taken over on a platter.
In fact, as the Economic Survey points out “land acquisition” was a top reason for 161 stalled government projects. The Survey also pointed out: “India’s recent PPP[public-private partnership] experience has demonstrated that given weak institutions, the private sector taking on project implementation risks involves costs (delays in land acquisition, environmental clearances, and variability of input supplies, etc.).”
Hence, we need to take a middle path on land acquisition.

(The column appeared originally on Firstpost on May 26, 2015)

Will Rahul say “Mere Paas Ma Hai”? Or will Manmohan say “Mogambo Khush Hua”?


Vivek Kaul

I remember reading an interview with Shekhar Kapur years back in which he described his experience with Javed Akhtar during the making of Mr India.
When Akhtar first recited the line “Mogambo Khush Hua” to Kapur, he wasn’t impressed. This was the main line of Mogambo, the villain of the movie. As Kapur recounts on his blog “Hmmm, I thought – there must be more to that.”
But Akhtar was convinced about the line. “Shekhar Sahib, when Kapil Dev hits a six over the grounds, people will shout Mogambo Khush Hua, and when people play three card brag (teen patti) and if they get three aces, they will shout “Mogambo Khush Hua.” “You trust me on that,” Javed Akhtar assured me,” writes Kapur on his blog.
Kapur ran with what Akhtar told him and the rest as we all know is history. Mr India was a huge hit. Such was the power of the line that people started to use it during the course of regular conversation, whenever they felt happy about something. As Kapoor writes “And some time later as I was watching Kapail Dev hit a six over the Sharjah grounds I saw a huge banner go up in the Indian supporters. It said : “Mogambo Khush Hua.””
“Mogambo Khush Hua” became one of the most famous one-liners that Hindi cinema had produced. But this wasn’t the best one-liner that Akhtar ever wrote. His best one liner clearly has to be “Mere Paas Ma Hai” from the movie Deewar. The line is simple yet so powerful.
Deewar was released on January 1, 1975. Around six months later on June 25, 1975, Indira Gandhi, the then Prime Minister of India declared a state of emergency. During the 21 month period of emergency Indira’s younger son Sanjay almost ran a parallel government along with his cronies. One of his major areas of concern was overpopulation and the government under his instructions forcefully carried vasectomies all over the country. This phenomenon got Atal Behari Vajpayee all worked up to write a poem titled “aao mardon na mard bano”. Those were the days.
Sanjay Gandhi wouldn’t have been able to force vasectomies on thousands of Indian men without the “love” and the “backing” of his mother Indira Gandhi, who is said to have had a soft corner for her ill-tempered son. “Mere Paas Ma Hai” was a line written for Sanjay Gandhi rather than Ravi, the character played by Shashi Kapoor in Deewar , who speaks the line in the movie. Chances are that if Deewar had been released six months later during the emergency, the line wouldn’t have made it past the censor board.
India is at the same stage again. The love of a mother for her only son is holding the country back. The moves are already being made. Pranab Mukjerhee has been packed off to the Rashtrapati Bhavan. The next decision that is to be made is who will replace him at the Finance Ministry?
Manmohan Singh, the Prime Minister, wants to run the ministry with his team of economists: Montek Singh Ahulwalia, the deputy chairman of the planning commission, C Rangarajan the Chairman of the Prime Minister’s Economic Advisory Council and Kaushik Basu, the Chief Economic Adviser to the government of India. He is also hoping that Raghuham Rajan from the University of Chicago, a former Chief Economist at the IMF, to join the team.
But will this be allowed to happen? The answer is no. Sonia Gandhi needs a politician as the minister of Finance. A politician who can like, P Chidambaram did, come up with schemes like the Rs 71,000 crore of farmers loans being waived off. A politician who can get the right to food act up and running.
A politician who can get onto a helicopter and drop bucket loads of money from it. Okay, not quite that. But a politician who can ensure that voters of this country have been bribed enough in the name of poverty and economic development, so that when Lok Sabha elections happen in 2014, they vote for the United Progressive Alliance (UPA) and the Congress. All this to ensure that Rahul baba takes over the reins of the world’s biggest democracy.
This means that the fiscal deficit of the government of India will continue to go up. The government will continue to borrow more and more. And interest rates are likely to remain high. Economic sense be dammed.
And in the next few months you might hear of an A K Antony or a Digvijay Singh or a Jairam Ramesh or a Kamal Nath or a Sushil Kumar Shinde or even the all guns blazing all the time, Kapil Sibbal, taking over as the finance minister of this country. The name doesn’t really matter because none of them have voices or ideas of their own. Even if they did they have long been put on the backburner because all that matters now is that “Rahul Gandhi has to be made the PM”.
Manmohan Singh is the only person who can stop a seasoned Congress politician from taking over as the finance minister of India and limiting the serious damage to the Indian economy that would come with it. The good “doctor” has got more and “much” more, than he would have ever bargained for. He can resist moves to appoint a politician as a finance minister by threatening to resign. That is one thing that the Congress won’t be able to handle. It would set the cat among the pigeons.
It’s time for Singh to payback to the country for all that the country has given to him. But the question is will he be as docile as he has been and allow a mother’s love for her son to takeover? Will Rahul Gandhi say “Mere Paas Ma Hai”? Or will Manmohan Singh by resisting a full time politician taking over the ministry of finance, give us, you, me and everybody else, an opportunity to say “Mogambo Khush Hua”.
(The article originally appeared on www.firstpost.com on July 2,2012. http://www.firstpost.com/politics/babalog-prophecy-why-akhilesh-wont-ever-transcend-mulayam-368232.html)
(Vivek Kaul is a writer and can be reached at [email protected])