India Seeks to Balance Growth, Landowners’ Rights

Aru Pande
August 06,2013

GURGAON, INDIA — Lawmakers in India are expected to begin debating changes to the country’s antiquated land acquisitions laws in an effort to better balance industrial growth and landowners’ rights.

The land acquisition measure, along with the food security bill, are two key initiatives of the ruling Congress Party, as Indians prepare to head to the polls next year for national elections.

One does not have to travel too far from India’s capital to see the need for land reform.

Amid the bustling chaos of the sprawling business center of Gurgaon, Rajpal Yadav owns a small oasis of quiet that is just meters from the concrete and cars. Here, trees and shrubs crowd around rays of sunlight under a train overpass.

The nursery owner used to have eight hectares [20 acres] of land here, but in two decades, Yadav has gradually lost his land to one transportation project or another. Now he must cultivate his plants on just four-tenths of a hectare [1 acre], which he is also at risk of losing to an expanding roadway.

“This is the only greenery left and this will also be gone. None of the surrounding companies are doing anything about it. They are cutting down all the trees for the sake of roads and buildings,” he said.

Fair Compensation

Landowners like Yadav have filed lawsuits to try to hold on to what little they have left.

Others have seen their property seized to make room for India’s industrialization while getting little or nothing in return under the country’s Land Acquisition act of 1894.

The fight has at times turned violent. Bloody protests have erupted in the eastern Indian state of Orissa, where residents have refused to give up their land for a $12-billion steel mill built by South Korean giant Posco. And just last month, Posco withdrew its plans to build a $5-billion plant in the southern state of Karnataka, citing delays in land acquisition and iron ore mining rights.

A proposed bill before parliament seeks to bridge the gap between landowners and developers by providing fairer compensation for land acquired for industrial projects.

The new legislation provides compensation at up to double the market prices in urban areas, and four times the market price in rural areas. The measure also gives resettlement and rehabilitation help for those who are displaced or those whose livelihoods are affected by the land acquisition.

Under the proposed measure, the government will not have to seek consent for public projects, but private companies will have to obtain the consent of 80 percent of those affected.

Cost of Growth

S. Gopalakrishnan, Confederation of Indian Industry president, welcomes the government’s efforts toward reform and making land acquisition less arbitrary and more predictable.

But he said the government should be mindful of not pushing property and subsequent project costs higher.

“We also need to make sure that the costs do not escalate too much. Then the investment required to set up a business will become unaffordable. So, we are requesting that the government make land available to businesses at reasonable prices,” he said.

Analysts say the same development that has uprooted farmers also has connected distant communities, created jobs and allowed for India’s once near double-digit economic growth.

Sakshi Balani, with the New Delhi-based PRS Legislative Research, said the government must navigate the complex issue carefully.

“The idea essentially is that you have to have legislation that not only covers the spur of development and growth taking place, but also provides a check on it in some ways. It’s that very delicate balance that this law is trying to bring about,” she said.

As for Yadav, he is holding out hope that his nursery and some of the last remaining greenery along this busy road eventually will prevail.

“I have faith in the court. We will keep fighting in the court. We will see what happens, but I have faith in justice,” the nursery owner said, standing over rows and rows of potted plants.

Yadav and many others are watching to see how lawmakers vote on land acquisition reform as parliament debates the highly contentious issue in the coming months.