Policy Of Land Acquisition In India Economics Essay

Land Acquisition has been a burning issue in the domain of public policy of independent India. though it never left the realm of public attention and academic discussions, it enjoyed increased public attention in the last few years. It is in this context that government made a decision to introduce Land Acquisition Rehabilitation and Resettlement Bill 2011(LARR 2011) instead of Land Acquisition Act of 1894.

Land acquisition by the state of hawaii rides on the principle or doctrine of eminent domain. The doctrine of eminent domain is not new to the annals of mankind; one of the earliest examples comes from bible when king Ahab of Samaria offered compensation to Naboth for Naboth's vineyard. Arriving at contemporary times, as need for land as a factor of production increased exponentially, states began to increasingly employ eminent domain to handle its goals. It equips the state to take over private property without owners consent for a public purpose. By this state is given yet another power that's not open to private parties. It can forcefully purchase the private property for public use. This ability to undertake condemnation with payment forms the backbone of policy of land acquisitions across the globe.

When their state occupies land based on eminent domain the major economic problem that arises is the fact that it contradicts the idea of property as a way to obtain individual autonomy with the energy of state to modify use and disposition of property. To overcome this the federal government acquire and dominate land when it feels there's a 'public purpose' which is of higher priority than the lands present use for the general good of public. This is actually the same logic that drives the policy of public purpose in India. The removal of 'the right to property' which was originally part of constitution under article 19 by 44th amendment act should be viewed in this context. This re ascertained the state's ability to employ eminent domain efficiently.

Land Acquisition Act of 1894 was very much in colonial in nature. Though tailor made to serve the colonial interests, this has remained the primary tool for land acquisition in India even after independence. This act has been amended in years 1919, 1921, 1923 and 1933 before independence and in the years 1962, 1967 and 1984 after independence. It's been argued that ' the annals of eminent domain in India is a saga of un mitigated abuses of the law, which is the archaic and ambiguous LAA. the states have repeatedly exploited ambiguities in the act to obtain land for companies and the powerful. ' Post independence Indian economy, in spirit with the Nehruvian vision of development, witnessed a number of developmental projects. Many of these projects undertaken to construct the so called 'modern temples of India' resulted in huge mass displacements. The premise of 'public purpose' was extensively utilized by the federal government to justify these displacements. 'Mass displacement posed an early on threat to the legitimacy of project of development. This phenomenon defied the logic of eminent domain in demonstrating that the hyperlink between acquisition was not capable of acknowledging the thousands and thousands who would stand to lose their land. ' In the last three decades state appeared more as an agent to facilitate to transfer land to companies. In 1984, when the act was elaborately amended to deal with the short coming, it was seen as an attempt to reinforce states role in acquiring land for companies. Allegations of similar kind were reinforced by the neo liberal reforms which raised the demand for spaces substantially. Land acquisition became a burning issue. Projects of multinationals in a variety of areas met with protests which received wide attention. Singur, Nandigram, Jaitapur, Bhatta-Parsaul, Kalinganagar. the list of conflict zones continues on. A national policy on rehabilitation was notified only in 2004 and was replaced by National Rehabilitation policy in 2007. It really is in this background that the Land Acquisition Rehabilitation and Resettlement Bill were introduced by the federal government. 'It is quite evident that the Bill is an try to gain control over the conflict and violence associated with land acquisition and react to the resistance movements against land acquisition across India. '

Policy of Land Acquisition in India: A Peep into the LARR 2011 & LAA 1894.

To know how the policy has evolved over the period we will undertake a comparative analysis. We'd be looking at the main element top features of LARR 2011 Bill and contrast it with LAA 1894 or its subsequent amendments.

LARR 2011 is a combined law. It deals with not only land acquisition but also rehabilitation and resettlement(R&R). Currently R&R is undertaken as per the 'National Rehabilitation and Resettlement Policy, 2007'.

According to the LARR, when the correct government intends to obtain land for a public purpose a social impact assessment(SIA) study should be undertaken. SIA is done in consultation with gram sabha in the rural area or an equivalent body in the urban area. This SIA is then evaluated by an 'independent -multidisciplinary group' and is passed to a C S committee who examine the legitimacy of 'public purpose' and SIA. Once the required surveys and public hearing is performed, government makes the declaration to obtain the land. This process varies substantially with the 1894 act, which is more unilinear and collector centric. In crude terms, whenever it appears to the federal government that the land in virtually any locality is necessary for any public purpose, the district collector studies the proposal and notifies acquisition. Objections are invited from the concerned parties and a report is submitted to government who'll finally declare the land for acquisition. The land is then measured, compensations are calculated and awarded.

Compensation to the damaged is another part of marked difference. Within the LAA, the compensation was based on the market price based on the sale deeds. The damages sustained (if any) by the land owner are also taken into account. If the person interested has protest with the compensation, the problem is settled in court (section 23, LAA 1894). Within the LARR, First, the market value of the acquired land is computed as the bigger of (1) minimum land value specified in the Indian Stamp Act, 1899 for the registration of sale deeds for the reason that area; or (2) the average of the sale price of similar type of land in the adjoining areas calculated from top 5o percent sales in last three years. Once the market value is calculated, it is doubled for land in rural areas. Then your value of most assets attached to the land (trees, buildings, etc) is put into this amount for total compensation.

About this is of 'public purpose' both remain broadly same. The one marked difference is that the requirement of 80% people afflicted by the project in certain cases. This is required when Land acquired by the federal government for purposes other than specified or for public sector companies or for PPP projects for the production of public goods or the provision of public services. This is also applicable for private companies acquiring land for the production of public goods or provision of public services.

Another crucial change in today's bill is the incorporation of Rehabilitation and Resettlement package to the afflicted families. The collector shall pass the entitlements to the afflicted families according to the second schedule of the act. the term afflicted as defined in the bill includes not simply land owners but also those who are reliant on the damaged area for livelihood. This brings several individuals under the ambit of law. Along with land owners who would lose their land, others like right holders under forest rights act 2006, agricultural labourers and tenants whose livelihood depends primarily on the land being acquired(over the last three years), forest gathers, fisher folk etc dependent on this particular bodies or forests when they are acquired.

Following is a table comparing some key features between 1894 ACT and LARR Bill.


1894 ACT


Public Purpose

Includes several uses such as infrastructure, development and housing projects. Also contains use by companies under certain conditions.

No significant change.

Consent from damaged people

No requirement

Consent of 80 % of displaced people required in case of acquisition for private companies and public-private partnerships.


No Provision

SIA should be undertaken in case of every acquisition.


Based on Market Value

Market value doubled in rural areas and not in urban area.

Market Value

Based on the current use of land. Explicitly prohibits using the intended use of land while computing market value.

Higher of: (a) value specified for stamp duty, and (b) average of the most notable 50% by recorded price of sale of land in the vicinity.




Resale of Land

No provision

Prior permission of the federal government required.

Sharing of Profits

No Provision

If the acquired land is unused and is transferred, 20% of the gains shall be distributed to the original owners.


No Provision

R&R necessary for all affected families. Minimum R&R entitlements to be provided to each damaged family specified.

Source- http://www. prsindia. org.


As evident from our discussion so far LARR is a amazing move from the inefficiencies of LAA. While it has been lauded for its comprehensive approach by many, some called it 'well-intentioned but seriously flawed. ' An in depth consider it will give a better picture of the nature of public policy of Land Acquisition in India.

One of the numerous issues suggested is that of compensation. The bill tries to solve the situation within the logic of market. This is difficult due to various reasons. 'The use of selling price for voluntary transaction as a proxy for owner's value in forced acquisition is fundamentally flowed. ' Proponents of this argument maintain that valuation of land is a subjective matter and not a tangible attribute that may be objectively measured. Dispossessed owners valuation could vary from what market seems to be fit. The issue aggravates when there the land market is imperfect. Generally in most areas the transactions are few rather than transparent leaving enough space for bureaucratic manipulation. The price reflected may not be in agreement with the actual value. To overcome this shortfall, LARR proposes an arbitrary markup over selling price. While selling price itself is not a good indicator for compensation, arbitrarily increasing it will generate more inefficiency. Counter argument for this maintains that this is acceptable as scientific calculation of value is cumbersome and frequently not practical. But almost everyone seems to concur that the signals distributed by market price are highly flawed because of the previously listed reasons.

Another issue connected with the problems of compensation is usually that the bill is that it's susceptible to excessive litigation. Litigation over compensation is definitely an attribute of compulsory land acquisition which continues here also. There may be almost nothing proposed in the bill to avoid this vicious cycle that causes huge wastage of resources. A solution for this may not be easy as it is an inherent shortcoming of using eminent domain doctrine.

Speculative transactions which drive up the land prices are also a vexing problem. Though the LARR tries to prevent it by freezing land transaction after notification, this alone might achieve the target. There is a possibility that the time gap between SIA notification and the land acquisition might drive up compensation amounts. Notification of SIA could fuel the transactions in the land market raising the prices.

LARR allows compensation by using shares and debentures as part of compensation. It stipulates that such compensation shouldn't exceed 25% of market value of land. That is as opposed to the view held by parliament standing committee which maintained that it's not practical and should be over and above admissible compensation. This triggers the debate of how efficient is cash transfers to people who lack investment expertise or usage of financial instruments. LARR has rightly increased farmer choices in design of R&R. The web that the bill will not make it explicit the nature of land for land compensation. In a nutshell, the word arable which includes huge connotations for an Indian farmer is missing in the bill.

The definition of public purpose was always been a vexing issue in the history of land acquisitions. The good point about the LARR is that it restricted the scope of emergency clause which includes been widely misused by state governments. Unlike the LAA bill, LARR restricts it "to the minimum area required for the defense of India or national security or for just about any emergencies arising out of natural calamities' (LARR 2011). the bill also allows land acquisition land acquisition by government on behalf of private companies only when it serves a public purpose. This is a marked deviation from the LAA, where government could acquire land for private use provided 70% of total area was already purchased through market. Regardless of all these as stated earlier almost all encompassing definition of public purpose still retains the criticisms it's been carrying historically.

The bill makes it mandatory for all private purchases through private negotiation to attempt R & R if land purchased has ended 100 acres in rural areas and 50 acres in urban areas. This raises two issues (1) the jurisdiction of parliament to make laws on the purchased land and (2) possible circumvention of the R&R provisions. The ambiguity in regards to to parliament arises as the 'the transfer and alienation of agricultural land' falls in the state of hawaii list while capacity to make laws on 'acquisition and requisition of property' is under concurrent list. So that it highly depends on the interpretation of the type of transfer. The companies likewise have many loopholes available to override R&R duties through multiple purchases, binami deals etc which is not dealt with seriously.

Another argument rallied against LARR is the fact that it causes differential treatment between PSU's and private companies. When land is acquiesced for projects like port, highway, power irrigation etc, requirement of consent from project affected people is applicable and then private companies and not PSU's. That is seen as an anomaly as it gives undue advantage to a PSU over a private company.

States commitment to industry is definitely a hot topic as it pertains to debates related to land. Examining the merit and demerit of this would be beyond the scope of the paper. From resent experience it appears that the state can no longer be viewed as a neutral party to the conflicts arising out of land acquisition by private players. Policy reforms and governance seems to move in several directions. Informal tactics, coercion, violence etc is still a problem.

The most glorified feature of LARR2011 is without a doubt the provision for SIA. There may be agreement on the actual fact that something is preferable to nothing, the question remains whether that something is powerful enough to deliver. Currently an integral part of environment impact assessment, SIA is no more than a formality fulfilled in Indian contexts. Kuntala Lahiri-Dutt and team who studied land acquisition and dispossession by private coal companies in Jharkhand doubts the ability of SIA to provide. 'As in comparison to other mining countries, where detailed ethnographic, cultural and social home elevators the village gathered by SIA experts, the SIA sections of Indian EIA's do not offer much more than names of influenced villages and some census data on the socio monetary characteristics of damaged villages. ' While these problems have been partly looked into in the LARR, there's a need for better guidelines. At present most of the decisions pertaining to SIA and other related matters has been left to convey level officials whose previous performance leaves much to be desired (Ram Singh, 2011).

It is quite clear that India cannot get rid of land acquisition. The demand for land in the path of capitalist expansion is bound to increase. LARR2011 is a major policy framework regardless of its short coming. Its amazing departure from the ambiguity and inefficiencies of LAA 1894 is undisputed. However the picture is not yet clear. Numerous doubts rose regarding the ability of bill to address the wide array of problems in the Indian context is yet to be observed. Utilitarian bias that is predominant in the present policy paradigm should be reworked so as make it more efficient and simply.

Also We Can Offer!

Other services that we offer

If you don’t see the necessary subject, paper type, or topic in our list of available services and examples, don’t worry! We have a number of other academic disciplines to suit the needs of anyone who visits this website looking for help.

How to ...

We made your life easier with putting together a big number of articles and guidelines on how to plan and write different types of assignments (Essay, Research Paper, Dissertation etc)