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some glimpses

Symposium on

Land Acquisition and Development

Monday, November 09, 2009

Concept Note

Land acquisition for developmental purposes, i.e., for making roads, constructing dams and irrigation canals, establishing manufacturing industries and for urban development has been going on since long, and has also generated debates around the fallouts of such developments for the poor people and for the environment.  But in the last 5-6 years the debate has not only become intense, but has also acquired new dimensions. 

The process of economic growth requires the growth in productivities. The primary sector consisting of agriculture, fishing and forestry involves relatively low productivity economic activities when compared with more modern industrial and service sectors. The process of economic growth thus involves a change in the structure of the economy away from primary agriculture based activities towards industry and services.  This structural change of the economy not only involves the movement of persons (workers) from these primary sectors to modern sectors, but also involves an important change in the pattern of land use. This process of structural change in the economy is historically seen to be associated with urbanisation. The growth of urbanisation requires change of agricultural and forest land into urban use.  Further, to modernise the primary sector there is need to develop infrastructure like -- irrigation projects, roads, warehouses, etc. These infrastructure developments and mining activities also require substantial agricultural and forest land.

In the attempt for industrialisation, large factories, industrial parks of various kind, large electricity generation projects and large mines, etc., have been assigned very substantial space in our country. Also to modernise the agriculture sector, the major portion of government investment in agriculture has gone into developing large dams. This kind of growth framework has created the need for acquisition of large pieces of agricultural and forest land. Though this framework of development is unchanged, the agency which will bring these changes has changed. In pre 90s era, the government was directly involved and was the main actor in this economic process. From early 90s the private corporate sector has become an important actor in the economic process and government’s role has changed to become larger -- as a facilitator of this private corporate led economic development process. This change in the role of the government has created a situation where in all state government is competing with each other to attract private capital into their states.

There are two ways through which agricultural land in India has been acquired ─ first, government has acquired land by using Land Acquisition Act (1894), and second, through the land market where everyone can participate.

Land markets function reasonably well when the requirement of land is of small and the speculative motive behind the land transaction is substantially weak. But even then, in these transactions, if the buyer is a powerful one there is always a fear of abuse of this power to set the price of transaction. For the requirement of a large piece of land with monopsony market structure, it is difficult to acquire the land. Because of this monopsonic structure in the land market the big industrialists and developers are seeking state’s help to acquire land. There are instances where state is helping the industrialist to acquire land by invoking the land acquisition act and then leasing it out to industrialists, sometimes at a subsidised rate. The states are doing it for three reasons ─ first, to compete with each other to attract private capital, second, to prevent the emergence of land mafias, and third, a nexus between the state and the industrialists.

A speculative demand for land from the industrialists is also being observed. They are trying to acquire more land, maybe for real estate business interest, than their need for setting up industries. The market price of land is generally low before any new industrial or urban development projects come up in a rural area. But thereafter, once the project comes up, the land price shoots up. So, to take the speculative advantages of this land price hike, industrialists are trying to acquire more land than their need to set up factories. And often states are helping them (primarily in the case of Special Economic Zones (SEZ)) to acquire land by invoking Land Acquisition Act in the name of public interest for industrialisation of the state. But this land-speculation has resulted in lower acceptability by the people for land acquisition by the state.  

Government has generally used the Land Acquisition Act (1894) for acquiring land to build public infrastructure, mines or factories. Historically, it has been seen that the benefit of large projects like irrigation, roads, electricity are primarily enjoyed by the richer section of the society and the brunt of these projects are borne by the small and marginal farmers, agricultural labourers, schedules castes and the scheduled tribes. For example, in Narmada project the displaced people belong to the tribal communities in the upstream areas and beneficiaries are the rich farmers of north Gujarat and Saurashtra.

The present pattern of industrialisation, which copies the technology developed in labour constraint western capitalist countries, has very limited capacity to generate employment, especially for the people without or low skill. So, most of the peasant and agricultural workers or tribals, who are losing their livelihood due to the acquisition of their land for industrialisation, are not getting alternative equivalent livelihood in industrial or modern sector. The benefits are going to those who are already skilled enough. Further, those who are losing their livelihood in this process, feel that the compensation provided is not adequate. This has led to popular movements against the projects and land acquisition, and legal attempts to stop the projects.


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