Business Today

The R&R roadblock

The documents and debate on rehabilitation and resettlement (R&R) abound. Yet none—companies, governments, farmers/landowners— know the right course. Here are the reasons:

Print Edition: September 21, 2008

The documents and debate on rehabilitation and resettlement (R&R) abound. Yet none—companies, governments, farmers/landowners— know the right course. Here are the reasons:

Is there a law or there are only guidelines?

Well, there are both. The Land Acquisition Act, 1894 states that government has the right to acquire land in public interest. The Act is silent on the issue of rehabilitation of people displaced when their land is acquired. And displacement can be challenged under Article 21 of the Constitution that guarantees Right to Life. To take care of rehabilitation, the Centre formulated an R&R policy in 2003.

R&R Policy: There is still a long way to go on this front
R&R Policy: There is still a long way to go on this front
How many laws and guidelines?
Let’s talk of the laws first. The Land Acquisition Act Amendment Bill is pending in Parliament, as is the R&R 2007 Bill. The Union Cabinet has recently approved the R&R policy, which is not really a law. But it can serve as a guideline. The policy does clarify some issues, but creates some new confusions too (see R&R Bill: Key Takeaways & Criticisms). Virtually every state has its own R&R policy, the legality of which varies. No two state government policies are identical, though some are better thought through than the others. Then, many public sector companies (e.g. NHDP and NHPC) have their own R&R policies, as do several private companies, too.

Policy innovation: In Haryana, land owners are to be paid an annuity of Rs 15,000 per acre for 33 years over and above the compensation

Public versus private interest

According to legal experts like Prashant Bhushan, the land acquired by the government under the Land Acquisition Act should only be for public interest. He does not include the spate of recent acquisitions for private projects under the definition of public interest. Clearly, there is a large grey area between public and private interest. Will the Nano plant benefit the public at large or not? If it does, should the government not enable setting up of the plant? Why are then states competing for investments? Perhaps, answers to these questions go beyond the purview of current policies. The Land Acquisition Act Amendment Bill tries to overcome the confusion by coining a phrase “any purpose useful for general public”.


 R&R Bill: Key takeaways

  • Will establish an R&R administration at the central and state levels
  • Administration will plan and implement R&R
  • Guidelines laid down for identifying "affected areas" and "affected families"
  • Projects will be mandated to seek a Social Impact Assessment (SIA)
  • Emphasis on minimising large scale displacements
  • Grievance redress mechanisms like project/district R&R committees, an ombudsman and a National Rehabilitation Commission
  • Civil courts restrained from intervening in disputes
  • Focus on providing land for land rehabilitation
  • Unutilised land to be returned to the government

R&R Bill: Shortcomings

  • Project planning process excludes local community participation
  • No in-built mechanism to minimise large scale displacements
  • No guarantee of land for land and alternate livelihood-based rehabilitation
  • No clear time frame for completion of R&R
  • No penalty for violations of the guidelines

Role of the government
If public interest can’t be separated from private interest, the government will have to step into land acquisition for privatelyowned projects. The proposed policy changes seem to assume this. For instance, the Land Acquisition Amendment Bill proposes that the government will step in with acquisition only after 70 per cent of the required land has been acquired by the companies. A possible confusion: will the method of acquisition be different for the 30 per cent from the rest?

Government and project size

Policy innovation: The Orissa rehabilitation policy entails 50 per cent of cash compensation for land acquired paid in the form of convertible preference share
Apparently not all projects involving land acquisition are covered by the R&R and the Land Acquisition Act. The R&R Bill lays down the benchmark of “involuntary displacement of 400 or more families en masse in plain areas and 200 or more families en masse in tribal or hilly areas” for coverage. Projects that displace fewer families than these escape the provision of the proposed law. The Narmada Bachao Andolan (NBA) has questioned this benchmark. Then, of course, there are state policies that have different benchmarks.

Who decides the price?
Land price varies hugely across location and terrain, which makes a policy formulation on its determination difficult. Most state governments’ R&R policies define some criterion or the other for determining prices. Haryana, for instance, has fixed three price bands for different grades of lands. The state has also worked out a 33-year annuity payment plan for farmers whose land is acquired. Most industrial houses claim that they have paid prices higher than those mandated by the government. If the problems still persists, blame it mainly on the mismatch between the buyer and the seller on the expectations of future price appreciation.

Land owners with no records
Policy innovation: Tamil Nadu asks companies acquiring land in the state to employ local youth and invest in local social infrastructure
This is a tricky aspect of land acquisition on which the policy seems to be least clear. A large percentage of land users—farmers and non-farmers— in India have no records to prove that the land they are using is theirs. Land records are the worst kept official records in the country— the key reason why for all these decades the country couldn’t implement land reforms. When it comes to acquisition and pricing, buyers will ask for proof of ownership—fearing multiple claimants to a piece of land. NGOs and lawyers have suggested ways of dealing with this situation (e.g. using the number of years a family has been occupying a plot) as criterion of compensation. Many states and companies have used this method.

Time frame and violation
None of the policies specifies any time frame to complete land acquisition and rehabilitation. This works against the interest of both companies and land owners. The only reference to time is in the case of failures. The R&R policy states that if the land acquired remains unused for five years, it will be taken back by the government. Nothing contained in the provisions of the R&R Bill or the Land Acquisition Amendment Act makes violations of the provisions a punishable offence. This, claims NBA, makes much of the legislative effort pointless. This is especially true in the case of Rehabilitation and Resettlement where there has been several instances of companies and the land users refusing to comply with provisions. While policies relating to land acquisition and resettlement are unclear, what compounds the confusion is political interference. Political demands often override the existing policy provisions. Till there is greater clarity, India Inc.’s best bet is to deal directly with the land users. For more on this, read BT’s guide to land acquisition.

Additional reporting by Ramesh Vinayak

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