Reform of the land acquisition regime

By Saurabh Bhasin and Chandni Chawla, Trilegal

Land acquisition has been a controversial issue, with several projects stalled due to an archaic and outdated legal regime. The primary legislation – the Land Acquisition Act, 1894 – gives the government wide powers to acquire private land for public purpose. Over the years, the government has (mis)applied the act for acquiring land for private companies on the grounds that it would lead to development resulting in public good.

To redress various anomalies in the act and check its misuse, the government introduced an amendment to the act in 2007 and the Rehabilitation and Resettlement Bill in 2007. However, possibly due to a lack of political will, both these bills lapsed in 2009. Following the recent (and much publicized) unrest by farmers in Greater Noida in Uttar Pradesh, the government issued a draft National Land Acquisition and Rehabilitation & Resettlement Bill, 2011, to overhaul the existing regime for land acquisition.

Saurabh Bhasin Partner Trilegal
Saurabh Bhasin

Scope of new bill

The new bill applies to any land acquisition by the government for its own use or for transfer to private companies for a stated public purpose.

The definition of public purpose has been changed under the new bill. It includes, among other aspects, acquisition of land for strategic (i.e. national security and defence) purposes and provision of land for railways, highways, ports, power and irrigation purposes use by the government or any public sector undertaking, acquisition of land for project affected people, etc. It also includes acquisition of land in the public interest for public-private partnership (PPP) projects or for private companies for production of public goods or provision of public services provided at least 80% of the project affected people have consented to the acquisition after an informed process. The new bill does not clearly define who constitute project affected people. This, coupled with the 80% consent requirement, could significantly affect development of PPP projects.

More than money

The new bill proposes a substantial increase in compensation to displaced land owners. Compensation will be based on the market value of the land being acquired and will be calculated on the basis of four times the market value of the land for rural areas and twice the value in urban areas along with, in both cases, the value of assets attached to the land. If the acquisition is for a company, 25% of the compensation amount can be offered through shares or debentures of the company.

Chandni Chawla Associate Trilegal
Chandni Chawla

However, unlike the existing regime (which provides only for monetary compensation to land owners where land is compulsorily acquired), the new bill also looks to combine compensation for land acquisition with resettlement and rehabilitation. The resettlement and rehabilitation scheme applies even where a private company acquires either more than 100 acres in rural areas or 50 acres in urban areas or where a private company approaches the government for partial acquisition of an area identified for public purpose.

According to the rehabilitation and resettlement provisions of the new bill, affected families (which include not only land owners but also others such as agricultural labourers, artisans and forest dwellers whose primary source of livelihood for the last three years is dependent on the land being acquired) will receive, among other benefits, housing and employment.

To ensure that the process is not misused, the government is required to undertake a social impact assessment before acquiring any land for public purpose.

Among other things, this is to confirm that there is a legitimate and bona fide public purpose behind the proposed acquisition and to verify that the bare minimum land required for the project is being acquired. A summary of the assessment is to be made available publicly along with the preliminary notification for acquisition of the land.

A positive step?

The new bill looks to make land acquisition time bound and more transparent. It aims to be socially more inclusive than the existing regime and takes into account the interests of not only displaced land owners but also other project affected persons.

There are, however, some significant issues which need to be addressed under the new bill – particularly the requirement of getting consent from 80% of the project affected people for acquisition of land for PPP projects, which could have debilitating impact on development of such projects.

Saurabh Bhasin is a partner at the Delhi office of Trilegal where Chandni Chawla is an associate. Trilegal is a full-service law firm with offices in Delhi, Mumbai, Bangalore and Hyderabad and has over 140 lawyers, some of whom have experience with law firms in the United States, the UK and Japan.


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