“With the lapse of the Ordinance amending the Land Acquisition Act, 2013, it is an opportune time to take a fresh look at the land acquisition issue and look for ways forward,” Arvind Panagariya, Vice-Chairman, NITI Aayog, wrote in his blog. Tasked with the responsibility of setting up NITI Aayog, a body that replaced the 65-year-old Planning Commission, a legacy of the socialist era, Panagariya also faces the challenge of changing the earlier one-way policy flow from the Centre to States and introduce the concept of ‘cooperative federalism’. Panagariya, known for his market-friendly views, shares with BusinessLine his thoughts on the land law, why India needs it, and the way forward. Excerpts:

The perception is that the government has stepped back in implementing the Land Acquisition Bill by allowing the Ordinance to lapse, as powers will now rest with the States. Do you think this will prove to be a hindrance in taking forward key infrastructure reforms?

It is a change of path due to the insurmountable obstruction on the original path, but not destination.

The Ordinance had a facilitating provision that empowered States to exempt public-private-partnership (PPP) and private projects in one or more areas of rural roads, affordable housing, industrial corridors and infrastructure from consent and social impact assessment provisions of the 2013 Act.

It left the final decision to the States. We are now in almost the same situation except that under the Ordinance, the States did not require legislative action and Presidential assent which they will now require to bring about the same change.

Does the NITI Aayog believe that if a majority of the NDA-ruled States implement the flexibility given in the existing law, it will be enough to take forward the infrastructure reforms that the government has been talking about? Will it not create a wedge between States that adopt more industry-friendly land laws and those that don’t? 

As I just explained, States had to notify the sectors in which they would exempt the PPP and private projects even under the Ordinance.

Therefore, in principle, the potential for the discrepancy you mention existed under the Ordinance as well. It also existed prior to the 2013 Act since many States had carved out their own legislation for land acquisition for specific purposes such as roads or industrialisation. The same discrepancy also exists across States within the US.

As regards the future of land acquisition in India, I expect that it is only a matter of time that most, or all States, will introduce amendments to the 2013 Act to suit their individual circumstances. So yes, differences will crop up, but they will be very much in the spirit of competitive federalism that the Prime Minister talks about.

Compensation has been another critical issue, besides social impact assessment. Have you, in the recent meeting with the States, dealt with this? If yes, how far were the States willing to accommodate? Does the Land Act of 2013 set a floor on compensation? (Maharashtra reportedly had decided to give four times more compensation than the land as per the ready reckoner rate for acquiring land in urban areas, while land owners in rural areas would get five times more.)

To my knowledge, no State has complained about the compensation in the 2013 Act as being excessive. As you mention, some States have chosen to go farther.

What are the key differences in land acquisitions being done in rural areas versus urban areas? Is the issue of leasing being treated differently?

Land leasing and land purchase transactions are fundamentally different from land acquisition. The former requires consent while the latter generally does not. The 2013 Act in India is in fact unique in introducing consent requirement for land acquisition for PPP and private projects regardless of the public good that they may do. Differences between rural and urban areas in the 2013 Act relate to compensation.

Do you think extending the benefits of the Land Act to 13 other laws pertaining to railways, highways, and other such projects through an executive order will be acceptable to the opponents of amendments?

What the executive order does is to apply the compensation and rehabilitation and resettlement (R&R) provisions of the 2013 Act to the 13 laws. There is no disagreement on this matter including among the opponents of the Ordinance.

When Niti Aayog was constituted it was announced that it will work on the concept of giving more powers to States. Do you think the recent developments on Land Law are in line with this?

In the interest of speed, the government had sought to amend the law Centrally instead of one State at a time. But the Opposition parties have scuttled the process and so the alternative track of amendments by States must be pursued. Fortuitously, this alternative turns out to be in conformity of the Prime Minister’s emphasis on cooperative, competitive federalism.

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