HOW can we have fair and just, Land Acquisition?

How can we have

LAND ACQUISITION that is Fair and Just?

The Analysis

Feb

26, 2

014

Land AcquisitionThe Analysis

The key to prosperity is jobs!For larger numbers of Indians to prosper, !many more well paid jobs need to be created.!!

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Agriculture is already over-supplied with manpower, !so these jobs can only come from manufacturing and services. !

These are located in industrial zones and urban centres.


And to create jobs, !Manufacturing !and Services!need Land!!

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Land is required for urbanisation, for industrial zones and for infrastructure such as roads, ports, airports and power plants to support the economy and urban society.


Inhospitable!50%

Industry!1%

Agri!46%

Urban!2%

Source: Draft National Land Use Policy

How is land used in India?!!

Agriculture accounts for !152 mn hectares, !!

Industry and urban centres !utilise 11.6 mn hectares,!!

and the remaining land !is inhospitable.


How is land used in India?!Why can’t industry use non-fertile land and let agricultural land be?!!

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Because, Industry needs inputs like water, access to roads and proximity !to population centres - inputs usually important to agriculture too.!

So for more and more Indians to get well paid jobs and prosper, !Some Land has to be diverted from agriculture !

to industry and urbanisation.


Some Land has to be diverted from agriculture !to industry and !urbanisation. That is a

significant conclusion! Any other evidence

to support this?


AGRICULTURE uses 152 mn hectares of land and contributes 14% to India’s GDP

Source: Draft National Land Use Policy, CSO

Can Agriculture alone bring prosperity?


AGRICULTURE uses 152 mn hectares of land and contributes 14% to India’s GDP

Source: Draft National Land Use Policy, CSO

INDUSTRY and URBAN centres use 11.6 mn hectares to contribute 68%

Can Agriculture alone bring prosperity?


Can Agriculture alone bring prosperity!for more and more Indians?

A Hectare under AGRICULTURE !supports 5.5 people

Source: Census of India, 2011


A Hectare in INDUSTRY & URBAN use supports 32.3 people

A Hectare under AGRICULTURE !supports 5.5 people

Source: Census of India, 2011

Can Agriculture alone bring prosperity!for more and more Indians?


A combined look at these numbers …

If every hectare of !agricultural land is !producing Rs 100 …


… then every hectare of land under industrial and urban use produces Rs 6,400!!Clearly, agriculture cannot create prosperity for more and more Indians.

If every hectare of !agricultural land is !producing Rs 100 …

A combined look at these numbers …


But if more land is used by industry, will we

be able to grow food for everyone?


Source: AskHOW Analysis

Will we have land to grow enough food?!If India’s entire population was to be housed in urban areas, and if everyone was to work in industry and service sector, even then …!!

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The incremental land requirement for this seismic shift would be 25.5 million hectares or 17% of the present agricultural land.

17%

152 mn hctr26 mn hctr

11.6 mn hctr


Will we have land to grow enough food?!Food Production = Productivity / unit of land x Amount of LandAs an example, let us examine Rice yield numbers, across geographies …!!

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Clearly there is scope for improvement, and if land!for agriculture goes down, impact can be mitigated!by better productivity. !

Between 1950 and 2013, India has increased wheat yields 6-fold. Despite this, we are far below world standards. As per FAO, yields for wheat can be further improved by 56% without any significant investments. A similar story repeats across most other crops.

China

World

India 2.3

4.4

6.5


Another point of view possibly aiming to maximise Food Production, is that !

Multi crop land cannot be sold to Industry!

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However well intentioned this may be, !the result is that children of farmers!with multi crop land have no choice but to!pursue farming as a profession - when!even neighbours with one crop land!would be free to pursue other careers.


So for larger number of Indians to prosper: !Agricultural land needs to be made available for industry and urbanisation. !! ! ! ! ! ! ! ! ! ! ! ! ! Views echoed by …!!

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Prohibiting the use of agricultural land for industries is ultimately self-defeating.!- Amartya Sen

Source: http://www.telegraphindia.com/1070723/asp/nation/story_8094453.asp


So land is to be sold to industry for it’s use.

What’s the problem? !The system for buying !

and selling land to industry is convoluted.


The Players in the Convoluted System

Industry Landowners

GovernmentMiddlemen


Land Owners !think they do not get complete financial value, !and are unhappy with rehabilitation



Industry !feels fettered as process takes too long!

and the process is very bureaucratic







The Middlemen !exploit insider knowledge, and buy out !

land early to make windfall gains






The Middlemen !exploit insider knowledge, and buy out !

land early to make windfall gains

The Government !has to interfere because !of the broken system



In a normal sale like buying a used car … !we have a willing seller, a willing buyer !and price is determined by the market.!!

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For Land too, as far as possible, acquisition should !be on a willing buyer - willing seller basis. !

Also in typical Land deals, sellers are small farmers with low bargaining !power compared to the larger, more organised and resourceful buyers - !

so mechanisms should be put in place to protect sellers in such instances.

The Ideal System


But willing seller - willing buyer is often not !the case in land deals with Industry, and …!

the Government buys land from sellers - often compulsorily - and uses or sells this land for !

industrial, urban or infrastructure development.

The Actual System


The Government! WHY? !

There are 2 types of !reasons for the Government

to get involved.


WHY GOVERNMENT BUYS LAND FOR INDUSTRY!

A.1) Land records in India are unreliable.!In the absence of accurate and updated land records, being taken to court by ’n’ individuals with conflicting claims as true land owners would become a common occurrence. !So, Industry insists on dealing with the Government.!!

SOLUTION!Digitisation of land records for an irrefutable proof of true land owner, so that a sale can be legally complete.

A) India specific Problems


WHY GOVERNMENT BUYS LAND FOR INDUSTRY!

A.2) Different process and agency for zoning, and for conversion of agricultural land use!This opacity ensures that existing land owners cannot take advantage of the reallocation of land and capture the value appreciation through land use change. !!

SOLUTION!Transparent, rule based guidelines would ensure that politically connected individuals do not make windfall guides.

A) India specific Problems


Specific projects like roads, railways, city expansion and airports need specific linear or contiguous land. But few land owners could block the project if they refuse to sell.!!

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In such cases across the world, Government’s act in the larger interest of citizens and resort to Compulsory Land Acquisition.

Why Government buys land for Industry


B.1) Compensation to land owners from whom land has been compulsorily acquired is often delayed, as is their rehabilitation.!!

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SOLUTION!• Mandate timelines for delivery compensation

and for rehabilitation and resettlement!• An independent regulator for monitoring

B) Problems with Compulsory Acquisition


B.2) Land sales have a very high cash component so official records do not reflect accurate prices.!!

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SOLUTION!• The multiplier used to calculate compensation

has to be different across different regions



B.3) Land owners often do not have financial skills and often end up wasting their money.!!

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SOLUTION!• Financial training should be provided for land

owners to conserve and invest savings for regular income



B.4) Land owners are economically stranded and unable to get employment or new professions!!

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SOLUTION!• Vocational training should be given for land

owners to contribute and integrate with society



B) Problems with Compulsory AcquisitionB.5) The wider community of indirect dependents like landless labourers, potters, ironsmiths, repairmen and shopkeepers may not be rehabilitated.!!

SOLUTION!• The government’s new ordinance mandates a

Social Impact Assessment to identify and ameliorate the wider community, but for 5 sectors like defence and affordable housing this step has been relaxed. This temporary solution has to be quickly plugged.


B.6) Insiders with access to upcoming developments buy land in advance from land owners and capture the greatest value appreciation!!

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SOLUTION!• By having long term zoning and guidelines for

conversion of agricultural land use, the insiders advantages can be minimised!

• Insider trading laws need to be put in place



B.7) Government officials are often slow to act as moving fast could be perceived as favouring one constituency over the other, possibly for unfair personal gain.!!

SOLUTION!• Trained on broader Urban planning principals,

Government officials need a Policy framework to transparently guide their acquisition actions!

• In cases where land ‘choice’ is possible, reverse auction tendering can reduce the incentives for ‘front-runners’



Where possible, land should be diverted !on ‘willing seller - willing buyer’ basis,!

with mechanisms to ensure fair process for sellers. !When Land is compulsorily acquired, conflict is

inevitable and the process can only ! be made more fair and just.

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How will !you speed up !Social Impact Assessments?

When will you start !the process of Land Record Digitisation?

IN CONCLUSION, !Please ask your Political Representatives

How do you plan to train government officials on broad Urban Planning

principals?

HOW can we have fair and just, Land Acquisition?

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