Land Acquistion Bill

Land acquistion bill is next in line of the series of legislations and announcements made by the government with 2014 general elections in sight.

Land Acquistion Rehabilitation & Resettlement (LARR) Bill seeks to address the information as also power asymmetry that exists incase of land acquistions wherein power corporates and local landowners come face to face on a negotiating table and the issue of displacement of local population and provide appropriate compensation.


When : Land acquired by govt (for ultimate or immediate use) for ‘public purpose’ and land acquired by pvt corporates for PPP projects (In this case only the R&R provisions apply). Land acquired exceeds 50 acres in urban and 100 acres in rural areas.

How: Consent required of 80 % of the affected families to be sought before the government can acquire land for it. In the case of PPP, the entity has to secure consent of 70 % of affected families. And finally the pvt corporate should make payment of compensation and fulfil R&R requirements.

How much (Compensation): Compensation = 4x market value in rural areas and 2x market value in urban areas. When land is sold then 40% of the profits to be shared with the original land owners.

How much (Allowance): Subsistence allowance of rs 3000 / month per family for one month. Annuity of rs 2000 / month per family for a peiod of 20 years indexed to inflation.

Study: Social Impact Assessment (SIA) & Enviromenmental Impact Assessment (EIA) studies to be carried out.

Phew! Although in theory the need to address the information asymmetry is there, the bill seems to be going overboard wrt compensation to landowners. Even in cases where land purchase is privately negotiated. Compensation seems to be arbitary wrt to number of times market value. Clauses like conducting SIA seems unnecessary.

Swami Aiyar has this to say

Midnightbreakfast feels that adequately compensating the affected families is fair, however making land purchases prohibitively expensive and cumbersome is uncalled for especially when India is on the cusp on progress and development. As it is majority of farmers (~ 85%) in India have small holdings and wouldnt come under the ambit of this law and it is only the bigger ones that would be covered. Delays would be the norm incase of projects. Not desirable especially when the economic health of the country in doldrums.


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