New land ordinance may help fast-track projects

The Union government on October 21, 2013, sanctioned acquisition of 35 acres of land at Karuvadikuppam in Puducherry at a cost of Rs 54.15 crore for setting up a Coast Guard Air Enclave. Though 14 months have passed since then, the land is yet to be acquired and construction of the facility, which is of much importance to the maritime and coastal security of the nation, is yet to start. The Ministry of Defence blames the new legal regime for land acquisition for the delay, as it required a social impact assessment to be conducted before acquiring the plot.

This is just one of the countless projects which were stalled across the country after the new Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, came into effect on January 1, 2014.

Apart from the delay in setting up key defence establishment, a large number of road, railway and power projects, including the ones on public-private partnership (PPP) mode, could not take off, as the procedures set by the 2013 law made acquisition of land not only an expensive, but also a time-consuming process.

A meeting of the Cabinet chaired by Prime Minister Narendra Modi on December 29 finally cleared an ordinance to amend the law, which India Inc has been complaining about, and which the BJP argued was not in sync with the fast-paced development agenda of the new government. The President signed the ordinance on December 31.

The ordinance primarily did away with the requirement of carrying out social impact assessment for acquiring land for setting up facilities for “defence and defence production, rural infrastructure, including electrification, housing for the poor, including affordable housing, industrial corridors and infrastructure projects including projects taken up under public-private- partnership mode, where ownership of the land continues to be vested with the Government.” It also empowers the Centre or State government to acquire land for a private company for any of those specified purposes without seeking the prior consent of the people to be affected by the project.

The 2013 Act had stipulated that the government could acquire land for a private company only if 80 per cent of people to be displaced or affected otherwise by the project gave their consent. The government argued that it had dispensed with the requirement of carrying out a social impact assessment and seeking prior consent of affected people in order to fast-track land acquisition for expediting the process of acquiring land for developmental and national security-related projects.

“In the process of prolonged procedure for land acquisition, neither the farmer is able to get benefit, nor is the project completed in time for the benefit of society at large,” the government said in a press release, in an apparent bid to blunt the criticism that the ordinance in fact took away the safeguards the 2013 Act provided to farmers against coercions they might be subjected to by nexuses of politicians, officials and private companies eyeing their land for acquisitions.

The changes make it easier for the government to acquire land for private firms to set up facility for manufacturing defence equipment. Modi government, of late, raised the FDI cap to 49 per cent and seems keen to encourage private defence industries to come up with foreign investments. Exemptions granted to acquisition of land for setting up industrial corridors and infrastructure projects in PPP modes also appear to be in keeping with the development priorities of the new government.

The 2013 law mandated that acquired land had to be returned to its owners if it was not utilised for the purpose it had been acquired for within five years after acquisition. The ordinance replaced “a period of five years” with “a period specified for setting up of any project or for five years, whichever is later”, thus significantly reducing the possibility of return of the land. Finance Minister Arun Jaitley said it was necessary as projects like building smart cities, industrial corridors, defence establishments, nuclear installations and dams had “long gestation periods” and could not be completed in five years. “If the earlier provision (of 2013 Act) is to be effected, we would be a nation of incomplete projects on account of defective legislative drafting,” he said.

The original law had provision for strict action against head of the government department or any official committing offence under the Act. The ordinance, however,  safeguards officers, saying no action would be taken without government sanction.

Removing hindrances
If most of the amendments seek to remove hindrances and fast-track the process of acquiring land for development purposes, the government repeatedly highlighted one of them as a move to benefit the farmers or land-owners. It brings land acquisitions under 13 other laws under the purview of the 2013 Act for compensation, rehabilitation and resettlement to the owners. These laws were earlier kept out of purview of the Act.

India Inc hailed the ordinance, but noted that it expected more. “It will give a kick-start to a large number of stalled projects, thus re-invigorating investment and growth cycle,” Jyotsna Suri, president of the Federation of Indian Chambers of Commerce and Industry, said, adding: “We do hope that easing of procedural difficulties will be extended to all projects.”

After the Act was passed in 2013, the then Congress-led government claimed credit for providing farmers with safeguards against coercive acquisitions of their land. No wonder, the party – now in Opposition – strongly opposed the ordinance promulgated by the new government. “The removal of requirement of prior consent of land owners and carrying out social impact assessment will actually open doors for forcible acquisition and acquisition of excess land and even diversion of acquired land... to private builders,” said Jairam Ramesh, who, as Rural Development Minister in the erstwhile government, played the key role in drafting the 2013 Act.

Ramesh’s successor Birender Singh argued that the ordinance could not be termed “anti-farmer”, as it had not made any change to the provisions on compensations, rehabilitation and resettlement of farmers and other land-owners. The critics of the ordinance, however, pointed out that by doing away with the requirement of carrying out social impact assessment before acquisition for certain category of projects, the government might have also narrowed the scope of rehabilitation and resettlement benefits guaranteed by the 2013 Act to others, who may not own the land to be acquired, but were dependent on it for livelihood.