How feasible and fair is the new Land Acquisition Bill?

The new Land Acquisition and Rehabilitation and Resettlement Bill 2011 may change the lye of the land as far as the rural-urban equation is concerned, and also the dispensation of equity in independent India. Below are the key pointers of the bill:

1. The act will apply when the government acquires land for its own purpose or to transfer it to private companies for public purposes

2. The act will also apply when private companies acquire land more than 100 acres in rural areas and more than 50 acres in urban areas

3. The act will be enforced when a private company asks the government for partial land acquisition for a public purpose

4. Land owners will have to be paid four times the market value of the land in rural areas and twice the market value in urban areas

5. The affected land-owning family will have to be paid Rs 3,000 per family for 12 months and Rs 2,000 per month per family for 20 years as annuity

6. Similar allowances will also be have to be paid for landless labour living off the land acquired

6. For the next ten years, 20% of the appreciated value of the land will have to be shared with the landowners every time the land is sold or transferred

7. The government shall also provide infrastructure facilities in the resettlement area

The latest episode of Indianomics on CNBC-TV18 gets on board an eminent panel to discuss whether the act is fair, feasible and above all, balanced. The guests include: NC Saxena, member of the National Advisory Council, Adi Godrej, chairman, Godrej Group, Captain Gopinath, formerly of Deccan Airlines, but more importantly a former farmer, and Sanjay Ubale, head of Tata Realty and a former IAS officer of 25 years service in the Maharashtra Government.

Below is the edited transcript of the discussion. Also watch the accompanying videos.

Q: Would you say that this is a fair compensation - four times the land value in rural areas and twice in urban areas. You think at least equity part is handled?

Saxena: First of all, it is not market value. It is the value which is shown in the registers of the state government or the stamp value which is fixed by the state government. Secondly, four times the stamp or registered value is the minimum; it could be ten times, 20 times or even 100 times. Thirdly, it is not for all cases of land purchased by the industry or builder from farmers; it is only in those cases where these people who require land come to government for help. There is no upper or lower limit or no fixation of compensation when anyone wants to buy land directly from the farmers.

In fact, the whole idea of keeping high price for as compensation is to discourage builders and industry coming to government for small pieces of land and therefore, we want the market to be operative. They should go to the farmers and buy land at market price, 1.5 times market price, whatever is convenient to them. It is between the two buying and selling parties, government has nothing to do with it.

Q: What is your sense, is the act on the face of it, a fair deal for a person who has lost land?

Godrej: I suppose it is, and since earlier it was not properly defined, there was a lot of protest etc. One thing we must understand is that with this new law, the cost of acquisition of land will go up very considerably. Whilst it might be fair to the person who loses the land, it will add to cost of industrialization.

In industrialization, the extra cost may be reasonably absorbable because earlier, land cost use to be around 3-5% of a project cost. Now it may go up to 10-15% of a project cost.

However, for housing, this will lead to tremendous increases in cost. Typically, earlier, acquired land use to cost around 30-40% of a housing project