The Land Acquisition, Rehabilitation and Resettlement Bill, 2011 (LARR), to be tabled in Parliament this winter is well intentioned but seriously flawed. Its principal defect is that it attaches an arbitrary mark-up to the historical market price to determine compensation amounts.
This will guarantee neither social justice nor the efficient use of resources. The Bill also places unnecessary and severe conditions on land acquisition, such as restrictions on the use of multi-cropped land and insistence on public purpose, all of which are going to stifle the pace of development without promoting the interests of farmers.
The post-liberalisation economic boom continues to create a voracious appetite for space to meet the demands of industrialisation and infrastructure. Finding a way to balance the needs of economic growth, equitable distribution and human rights, rescuing these complex and sometimes conflicting objectives from the demagoguery of single-issue advocates and political opportunists, is perhaps the greatest challenge facing our democracy.
SKEWED PRIORITIES
Eminent domain is one of the most controversial and politically sensitive instruments of state power anywhere in the world. Depending on how it is used, it can clear the way for rapid economic transition, technological progress and inclusive growth, or it can trample on property rights.
Despite its good intentions, the draft Bill misses out on an opportunity to promote growth and prosperity, while protecting the vulnerable.
The new LARR Bill is expected to increase the cost for real estate developers by a whopping amount. The developers will now have to either pass on the cost to customers or take a hit in margins. If they do hike land price, they might end up wrecking the already measly sales the industry is seeing.
According to the McKinsey Global Institute report, the urban population of India would soar to 590 million by year 2030 from 340 million in year 2008, and form about 40 per cent of the total population.
This will translate to a net addition of 250 million urbanites, almost equivalent to 12 Delhi(s), which approximates to an impending demand of 50 million new dwelling homes. These homes cannot be built by 2030 if the recent Bill is to stay.
And such rapid urbanisation cannot be achieved without the help of the real estate builders and developers.
EMULATE CHINA
China stood in a similar juncture in the 1950s to build homes for its rapidly increasing population, and it chose development over other pursuits. The People’s Republic of China now boasts of newly built cities like Shenzhen, Guangzhou, Tianjin, Chongqing, etc. that provide dwelling units for the urban population of China. India can now either tread on a path of development similar to China or hold itself back to lesser ends like resettlement issues between farmers and developers.
China and India are in the vanguard of a wave of urban expansion. In 1950, India was a more urban nation than China (17 per cent of the population lived in cities, compared with China’s 13 per cent). But from 1950 to 2005, China urbanised far more rapidly than India, to an urbanisation rate of 41 per cent, compared with 29 per cent in India.
The LARR Bill 2011 severely underestimates the significance of urbanisation in the Indian scenario. The trade-off between agriculture and urbanisation is not clearly understood.
The LARR Bill gives power to the Government to take over land in times of conflict. The Government should utilise this power to identify the miscreants who knowingly stand in the way of the developers to cash in on their helplessness. India has underinvested in its cities; while India spends $17 per capita on capital investments in urban infrastructure annually, China spends $116.
The LARR Bill 2011 suffers from another vital flaw- the limitation of development projects to a mere 100 acres in rural areas and 50 acres in urban areas while the need of the hour is to build sprawling 5,000-10,000 acre cities.
It has not taken into consideration the mammoth need of new homes in India. India needs new cities like Shenzhen or Guangzhou to satiate the housing needs of its urban residents. The Government however does not understand this need and expects its population to settle with satellite towns, which draw on the bigger cities for providing them with jobs and industry.
Countless developmental works in India, be it industrial or business complexes or residential or retail projects or social and educational complexes, are presently in virtual animated suspension for want of a few tiny parcels of land.
For instance, revenue raastas -- which existed in the revenue records because of their utility centuries ago, have largely remained contentious and intractable issues.
Likewise there are some other tiny parcels of lands either held by panchayats or societies or such bodies which don’t admit of any remedy for their acquisition and thus in the process holding to ransom mammoth resources locked up in long stalled projects.
The power intended to be given to landowners is already been misused by some ill-guided, ill- directed land aggregators/ land mafia.
Farmers and landowners are either too ignorant to understand the repercussions or give importance to their personal gains over national development.
TOWNSHIP DEVELOPMENT
What India needs right now is not satellite towns. Now, India needs new self-sufficient, self-reliant cities and townships in which the residents don’t have to travel intercity for their jobs or for their education. Each city or township needs to have its independent community schools, colleges, recreation centres, industry hubs, etc.
Presently India has only 8 metropolitan cities, which act as a hub for satellite towns. This adds to the pressure on these already over-populated cities. Moreover, since public transport is under developed, the load on the existing transport is nightmarish.
This kind of hub-and-spoke urban expansion model, with one city having to support countless satellite settlements, tends to fail when there are too few hubs and too many spokes.
There are also the fast rising number of slums bordering these cities increasing not only the pressure on the cities but also the risk of theft and other crime. The only way to get rid of this mounting menace is to provide better housing to the slum dwellers.
The drafting committee of the LARR Bill, 2011 ought to have taken into consideration the larger objective of building new townships a la China, rather than restricting its scope to compensation.
(The author is Chairman, Ansal API.)