Land acquisition

Modi’s mann ki baat on land acquisition is the first attempt to explain reform in 25 years

narendra_modi
In a column I wrote on February 27, 2015, I had said that prime minister Narendra Modi should talk to the people of this country directly through his mann ki baat programme on All India Radio. Modi spoke to the people of India directly yesterday on mann ki baat and addressed the contentious issue of land acquisition.
Among other things he criticized the Congress party which has been protesting against The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014.
Modi said that “those projecting themselves as sympathisers of farmers and undertaking protests,” had been using the Land Acquisition Act 1894, a 120 year-old law for 60-65 years after independence. In the process he exposed the hypocrisy of the Congress party, which has been in power in every decade after independence, and had the opportunity to set things right on the land acquisition front. But it never went around to doing this.
The Land Acquisition Act 1894, had been the law of the land until 2013. This Act gave unparalleled powers to the government to acquire land. A 1985 version of this Act stated: “Whenever it appears to the [appropriate Government] the land in any locality [is needed or] is likely to be needed for any public purpose [or for a company], a notification to that effect shall be published in the Official Gazette [and in two daily newspapers circulating in that locality of which at least one shall be in the regional language], and the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality.”
This was not surprising given that the law came into being when the British ruled India. This allowed governments all over India to acquire land from the public. Many governments passed on this land to corporates, and in the process both the government and the corporates made money. The only one who did not make money was the individual whose land was being acquired. Of course, this did not go unnoticed. People saw politicians and corporates making a killing in the process. And the trust that is required for any system to work completely broke down. In 2013, the Congress led United Progressive Alliance (UPA) brought in The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013.
One of the major provisions of the Act was that private companies acquiring land would require the prior consent of at least eighty percent of the affected families. In case of public-private partnerships(PPP) the prior consent was required from at least seventy percent of the affected families.
The ordinance brought in the Modi government is essentially the same as the 2013 Act, except for a few changes. The ordinance does away with the requirement of prior consent for land being acquired for affordable housing, defence, defence production, rural infrastructure including electrification, industrial corridors etc. There is nothing wrong with this change.
Also, the 2013 Act stipulated that the land acquisition carried out under 13 Acts of Parliament which dealt with land acquired for the purpose of atomic energy, highways, national highways, mining, railways, metro etc., were exempted from the Act. The 2014 ordinance did away with this distinction, which meant that land being acquired under these Acts will also be compensated at the same rate as promised in the 2013 Act. Doing away with this distinction is a step in the right direction.
Prime minister Modi in his address pointed out that maximum land is acquired under these 13 acts. “If we hadn’t approved this amendment, then the farmer would have continued losing land to projects with low compensation,” he said. He also put a rhetorical question to the people of this country: “Tell me if what we did was wrong?…Can someone tell me if this improvement goes against farmers?”
As per the 2013 Act, for rural areas the minimum compensation promised is anywhere between two to four times the market value of land along with the value of the assets on that land. For urban areas the minimum compensation promised is two times the market value of land along with the value of the assets on that land. So, land acquired under the 13 Acts of Parliament will also be compensated at the same rate as the land acquired for other projects.
Modi in his address clarified that the “ordinance does not change the compensation legislated in the 2013 Act one bit.” He also addressed the genuine concern of people that more than the land that is required for a project is typically taken on. He assured them that in the days to come there would be a proper assessment of how much land will be required for a project and this will ensure that excess land is not acquired.
Indian corporates over the years have acquired land through the government and become lazy in the process. Also, many of them started to see themselves as landlords and wanted land just for the heck of it. This can be said from the inefficient use of industrial land in India. If Modi follows what he has said that will be another step in the right direction. It will also do a lot to rebuilt the trust required for the process of land acquisition to work efficiently.
Agriculture, forestry and fishing form around 18% of the total economic output of the country. Data from the India Brand Equity Foundation, a trust established by the ministry of commerce and industry, points out that agriculture “employs just a little less than 50 per cent of the country’s workforce”.
If nearly 50% of country’s workforce is engaged in an activity which produces only 18% of its economic output, there is something that is not quite right about the entire scenario. What this clearly tells us is that too many Indians are dependent on agriculture and this number needs to come down. The situation gets even worse once you take into account the fact that most people who work on farms don’t totally depend on income from the farm. Only 17 percent of them survive entirely on money from their farm.
Modi addressed this issue as well by saying: “In every household, the farmer wants only one son to stay in farming. But he wants other children to get out there and work because he knows that in order to run a household in this day and age different endeavours need to be made.” He then went to say that given this scenario what is wrong with the government acquiring land for building an industrial corridor and ensuring that jobs are created in the vicinity of where farmers live. This was another important issue that Modi addressed in the programme.
To conclude, economic reforms in this country have also been carried out through stealth. No government in this country has ever made an effort to explain economic reform to people. This was the first time since the process of economic reform started in 1991, when someone has made an effort to explain it in simple layman terms to the people of this country. In fact, what Modi has started needs to continue. Other leaders of the Bhartiya Janata Party now need to take this forward by talking to the people of this country directly.

The column originally appeared on www.firstpost.com on Mar 23, 2015

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

Express your ‘mann ki baat’ Modiji: BJP needs to go all out on land acquisition act debate

narendra_modiThe spin-doctors of the Bhartiya Janata Party(BJP) are normally very good at spinning things. Nevertheless, the entire debate on land acquisition seems to have gone out of their hands.
No government in this country has ever made an effort to explain economic reform to people. Economic reform has always happened by stealth. This is something that needs to stop.
Prime Minister Narendra Modi has asked his party MPs to go to the people and explain to them that the new land acquisition law is in their interest. This, if executed well will be a great move. The BJP can also use the prowess of its back-room boys to explain to its MPs in a very simple way what the issue is all about and how it should be communicated to the people. The trick is to make things simple but not simplistic (as often happens when politicians take over).
Prime Minister Modi should also explain the entire issue to the people of this country directly on his radio programme mann ki baat. If required there is no harm in speaking to the people directly on Doordarshan as well.
It is important that the BJP does not back down on the The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014. It needs to go directly to the people and explain why this legislation is in the interest of the nation. If the party backs down here, it will become more and more difficult to push any economic reform in the days to come.
Before we go any further, it is important to go back a little. Until 2013, land acquisition in India was governed by the Land Acquisition Act, 1894. This Act survived all the years of socialism as well as socialists that governed the country. A 1985 version of this Act stated: “Whenever it appears to the [appropriate Government] the land in any locality [is needed or] is likely to be needed for any public purpose [or for a company], a notification to that effect shall be published in the Official Gazette [and in two daily newspapers circulating in that locality of which at least one shall be in the regional language], and the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality.”
In simple English, this British legislation allowed the government to seize any land that it wanted to. It survived for close 66 years in independent India. Governments often used this Act to acquire land and then sell it on to crony capitalists who made a killing in the process (and so did the politicians). Farmers lost out.
This has led to a scenario where people are skeptical about selling their land. The trust required for such a transaction to take place has totally broken down and will not be easy to repair. The Congress party ruled India for a large part of this period and they are basically responsible for the mess that prevails. The 1894 Act was eventually replaced by The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013, which went to the other extreme and bought all land acquisition to a standstill.
One of the major provisions of the Act was that private companies acquiring land would require the prior consent of at least eighty percent of the affected families. In case of public-private partnerships(PPP) the prior consent was required from at least seventy percent of the affected families.
This has brought all land acquisition to a standstill. Companies have till date been used to governments arranging land and handing it over to them on a platter. They are still trying to get used to this new way of doing things. The BJP government 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. Anand Ranganathan in a brilliant column on www.newslaundry.com writes that: “Projects relating to national security or defence, including preparation for defence, defence production; rural infrastructure including electrification; affordable housing and housing for the poor people; industrial corridors; infrastructure, social infrastructure and PPP projects where government holds the land, there is no longer any need to obtain prior consent of 80% (for private projects) or 70% (for PPP projects).”
This is clearly a step in the right direction. Land required for the defence, electrification, affordable housing, industrial corridors etc., needs to be made available as soon as possible.
The trouble here is with the phrase “social infrastructure,” which wasn’t there in the original 2013 Act and has been inserted only in the ordinance. This phrase needs to be clearly defined to tell the people  that it hasn’t been introduced to provide a back-door entry for corporates.
Further, the 2013 Act had clearly stated that “no irrigated multi-cropped land shall be acquired under this Act.” Such land could only be acquired “subject to the condition” that it was “being done under exceptional circumstances, as a demonstrable last resort.”The 2014 ordinance does away with this. This is another thing that the BJP needs to explain to the people of this country. In a country where half of the land area is arable, it is very difficult to get hold of non-agricultural land, close to the cities, most of the time. Further, there is no shortage of land for agriculture in India, even if some of it goes towards urbanization and industrialization. (As I explain in this piece).
Further, the general impression that has been communicated about the 2013 Act (as well as the 2014 ordinance, given that there has been no change on this front) is that those affected will be paid a compensation by the appropriate government of four times the market value of the land that is being acquired. This is not actually true. This was first done by the Congress when it was in power. And is now being done by the BJP over the social media.
The 2013 law(as well as the 2014 ordinance) is slightly more complicated than that. For rural areas the minimum compensation promised is anywhere between two to four times the market value of land along with the value of the assets on that land. For urban areas the minimum compensation promised is two times the market value of land along with the value of the assets on that land.
This is to be determined by state governments. Hence, state governments are in a position to pay only twice the market value of the land that is being acquired in rural areas. In fact, this has already happened.
As a report on NDTV.com points out: “at least two BJP led states – Haryana and Madhya Pradesh – have fixed as compensation of two times the market value of the land for both rural and urban areas.” But there are other states which are paying more. Nevertheless, this is an anomaly that needs to be set right. If land is being acquired for a certain purpose, the government should be following a similar ratio throughout the country.
The BJP is on a strong wicket in this case. It needs to bat accordingly. It needs to tell the people of this country that it was the Congress party which forcefully took over their land over the years. It also needs to tell the people that more than a million Indians are entering the workforce every year. Jobs need to be created for them—and how will jobs be created without the creation of more physical infrastructure and new industry.
In fact, Arun Jaitley made a fantastic speech in the Rajya Sabha yesterday defending the land acquisition ordinance. “Don’t create an environment where infrastructure and industry become bad words,” he said.
More such performances are required for the BJP.

The column originally appeared on www.firstpost.com on Feb 27, 2015

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

India has enough land for farming but there are other bigger issues to worry about

agricultureVivek Kaul

One of the fears that has been raised in the aftermath of the government promulgating an ordinance to amend the land acquisition act is that land will be taken away for other purposes and given that, the amount of land used for farming will come down dramatically.
This is a very specious argument that is being made. Data from World Bank shows that around 60.3% of India’s land area is agricultural land. The bank defines agricultural land as “share of land area that is arable, under permanent crops, and under permanent pastures.”
In fact India has the second largest agricultural land in the world. As India Brand Equity Foundation, a trust established by the Ministry of Commerce and Industry points out: “At 157.35 million hectares, India holds the second largest agricultural land globally.” Only, the United States has more agricultural land than India.
What this means is that India has enough land dedicated to agriculture and even if some of it is taken away for other purposes there will still be enough land left for agriculture. Nevertheless, there are bigger problems when it comes to Indian agriculture.
Take the case of China. India has more arable land than China. This, despite the fact its total area is only a little over 34% that of China. However, China produces more rice and wheat than India does. As a report in The Wall Street Journal points out: “India is the second largest producer of rice and wheat after China, with China producing about 40% more rice and wheat than India. India is also the second largest producer of fruits and vegetables in the world after China, but China’s fruit production is three times India’s production.”
What this tells us is that India’s agricultural productivity is low compared to that of China and many other countries in the world. A report in Mint using 2013 data from the Food and Agricultural Organization points out: “India produces 106.19 million tonnes of rice a year from 44 million hectares of land. That’s a yield rate of 2.4 tonnes per hectare, placing India at 27th place out of 47 countries. China and Brazil have yield rates of 4.7 tonnes per hectare and 3.6 tonnes per hectare, respectively.”
In case of wheat the productivity is better than that of rice. “With 93.51 million tonnes of wheat from 29.65 million hectares, India’s yield rate of 3.15 tonnes per hectare places it 19th out of 41 countries. Here, we do better than Brazil’s yield rate of 2.73 tonnes per hectare, but lag behind South Africa (3.4 t/ha) and China (4.9 t/ha),” the report points out.
There are multiple reasons for this low productivity. The average holding size of land has come down over the decades. The State of the Indian Agricultural Report for 2012-2013 points out that: “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. The average size of holdings for all operational classes (small & marginal, medium and large) have declined over the years and for all classes put together it has come down to 1.16 hectare in 2010-11 from 2.82 hectare in 1970-71.”
The shrinking size of the average land holding of an Indian farmer has held back agricultural productivity. There is not much that can be done about this. But there are other areas which can be worked upon. As the State of the Indian Agricultural Report points out: “To enhance productivity, easy and reliable access to inputs such as quality seeds, fertilizers, pesticides, access to suitable technology tailored for specific needs, the presence of support infrastructure and innovative marketing systems to aggregate and market the output from large number of small holdings efficiently.”
Ensuring that quality seeds are available is very important. “The efficacy of other agricultural inputs such as fertilizers, pesticides and irrigation is largely determined by the quality of the seed used. It is estimated that quality of seed accounts for 20-25% of productivity. Hence timely availability of quality seeds at affordable prices to farmers is necessary for achieving higher

agricultural productivity and production,” the report further points out.
Another issue which adds to the problem is that “substantial chunks of scarce land remain untilled because of landowners’ reluctance to lease out land for fear of losing its ownership.”
What these details tell us clearly is that India has enough land for farming. The problem is that it is not productive enough. The other huge issue is that for nearly 58% of India’s population (as per India Brand Equity Foundation) agriculture is a primary source of livelihood. But agriculture accounts only 14% of nation’s GDP.
Hence, there is a huge requirement to move people away from agriculture into other areas. This can be done if enough industry and jobs are created. For that land is required and farmers have that land.
The worrying point is that in the past when governments have taken away land from farmers, they have not been adequately compensated. Neither have they been re-skilled so that they can take on other professions. And too many times in the past, the government has taken land from farmers at cheap prices and sold it on too industrialists at a higher price. The industrialists have then sold it on further and made a killing. Hence, the trust system that is required for acquiring land for public purposes and building industry has broken down completely. Building this trust will not be easy.
Further, the industry has had a totally lackadaisical attitude towards the entire issue. They seem to be just interested in getting the land and profiting from it. Take the recent comment made by Sunil Kant Munjal, joint MD, Hero MotoCorp, to the Financial Express. “We can pay but don’t make us responsible for resettlement. That should be left to a government agency,” he said. The question to ask is why can’t the industry be responsible for resettlement?
The issue of land acquisition is a complicated one. If India has to develop, land is required. There should be no doubt on that front. But the entire system of compensating and re-skilling farmers so that they can move away from agriculture needs to be thought through as well.

The article originally appeared on www.firstpost.com on January 6, 2015
(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)