Why Government Needs to Acquire Land

While land is a state subject (Entry 18 of the State list), acquisition and requisition of property (including land acquisition) falls under Entry 42 of the Concurrent list. The power of compulsory acquisition of land by the sovereign (albeit with compensation) under the concept of ‘eminent domain’ is well established in law worldwide. In democratic societies, this power is exercised for a ‘public purpose’. The term ‘public purpose’ is very wide in its connotation and includes privately-executed projects if they result in an indirect public good or some larger good to society (including increased tax revenue or employment).

There is also strong justification in the theory of political economy for acquisition to resolve certain types of market failure. Firstly, many development projects require blocks of land. Any individual can stall the process of private market purchase by refusing to sell or demanding a price disproportionate to the market value, even if the majority of owners are willing to sell. Secondly, in Indian conditions, land titles are often disputed and a private purchaser gets no better title than the seller, and this discourages market transactions. When land is acquired by Government, the title defects are automatically cured by statute and the allottee gets clean title. Thus provisions for compulsory acquisition are essential to economic development.

Every developmental project undertaken by the Central or the State Governments is accompanied by a Rehabilitation & Resettlement (R&R) plan under the Rehabilitation and Resettlement Policy declared by the appropriate Government. People affected by land acquisition for the purpose of mining or hydro-electric projects are provided rehabilitation and resettlement package in accordance with the Rehabilitation & Resettlement Policy of the States or land acquiring agencies concerned. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act) has made the rehabilitation and resettlement a part of the land acquisition process itself.

Under the RFCTLARR Act, land acquisition in the Scheduled Areas takes places only as a last resort. Rehabilitation and resettlement have been made a part of the Act to ensure that no displacement takes place without adequate rehabilitation and resettlement. The collective rights of tribals are protected through the process of social impact assessment, which is also covered under RFCTLARR Act.

Need for the Amendment

• RFCTLARR Act made it mandatory for seeking consent of 70% of gram sabhas for PPP projects and 80% for private entities. This clause was seen as a major roadblock for acquiring land for projects, an object of persistent complaints by the industry as well as states.
• Amendments to the law are expected to balance national development requirements with the need to compensate land owners and questioned states who are opposing the changes.
• The existing Act vide Section 105 (read with Schedule IV) has kept 13 most frequently used Acts for Land Acquisition for the Central Government Projects out of the purview. These acts are applicable for national highways, metro rail, atomic energy projects, electricity related other projects etc. Thus a large percentage of famers and affected families were denied the compensation and R&R measures prescribed under the Act. The present amendments bring all those exempted 13 Acts under the purview of this Act for the purpose of compensation as well as rehabilitation and resettlement. Therefore, the amendment benefits the farmers and the affected families.
• In the process of prolonged procedure for land acquisition, neither the farmer is able to get benefit nor is the project completed in time for the benefit of society at large.

The Ordinance

Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014, which seeks to amend the RFCTLARR Act received President’s assent on December 31, 2014.

• The ordinance has amended Section 10(A) of the Act to expand the list of projects that would not require Social Impact Assessment (SIA) and prior consent of affected families. These include projects for defence and defence production, rural infrastructure including rural electrification, affordable housing and housing for the poor, industrial corridors as well as infrastructure and social infrastructure projects including public private partnership projects wherein the ownership continues to vest with the government.
• As per the changes brought in the ordinance, multi-crop irrigated land can also be acquired for these purposes. The earlier Act provided for consent of 70% of land owners whose land is acquired for PPP projects.
• The ordinance also changes the definition of ‘compensation paid’ from an amount deposited in the court - as defined by the Supreme Court - to any amount paid into any account maintained for the purpose.
• It also expands the scope of infrastructure to include private hospitals and educational institutions, which were left out in the original Act. The original Act, while defining infrastructure projects for which land can be acquired, says "excluding private hospitals, private educational institutions and private hotels".
• The ordinance also replaces the term “private company” with “private entity”, which means while earlier acquisitions for private purposes was limited to private companies registered under the Companies Act, it can now be extended to any private entity.


Amendments to the Land Acquisition Act are being criticised on following grounds:

• The land Acquisition Act, 2013 made the land acquisition process consultative and participatory. Further, it made the land-loser a stakeholder in the project. Land acquisition for private companies required consent of 80% of affected families, thereby reducing the scope for misuse of the law for private purpose. Moreover, it made rehabilitation and resettlement (R&R) of the project-affected a legal right. Rather than addressing the real factors holding up the projects, or simplifying the ‘complicated process’, the government has chosen to simply scrap several progressive features of LARR.
• The Ordinance subverts the crucial distinction between public-versus-private purposes. It widens the scope of private purpose acquisitions.
• The Ordinance has scrapped the requirement of Social Impact Assessment (SIA) studies for several categories of projects. This is fatal to the consultative and participative nature of the acquisition process under LARR. The SIA is vital for ensuring that the land acquisition is in social interest — the potential social benefits from the project outweigh the costs to the acquisition-affected people.

Social Impact Assessment

The impacts of development projects occur in different forms. While significant benefits result for the society, the project area people may often bear the brunt of adverse impacts. This can happen, for example, when they are forced to relocate to make way for such interventions. There is now a growing concern over the fate of the displaced people. This has given rise to the need to understand beforehand the implications of adverse project impacts so that mitigation plans could be put in place in advance. 

The National Rehabilitation & Resettlement (R&R) Policy, issued in 2007, recognises the need to carry out Social Impact Assessment (SIA) as part of the resettlement planning and implementation processes. Section 4.1 in Chapter IV Social Impact Assessment (SIA) of the Policy reads as follows:

Wherever it is desired to undertake a new project or expansion of an existing project, which involves involuntary displacement of 400 hundred or more families, en masse in plain areas, or two hundred or more families en masse in tribal or hilly areas, DDP blocks or areas mentioned in the Schedule V or Schedule VI to the Constitution, the appropriate Government shall ensure that a Social Impact Assessment (SIA) study is carried out in the proposed affected areas in such manner as may be prescribed. Social Impact Assessment alerts the planners as to the likely benefits and costs of a proposed project, which may be social and/or economic. The knowledge of these likely impacts in advance can help decision-makes in deciding whether the project should proceed, or proceed with some changes, or dropped completely. The most useful outcome of a SIA is to develop mitigation plans to overcome the potential negative impacts on individuals and communities.

Advantages of Doing Social Impact Assessment

The main advantages of doing a systematic Social Impact Assessment (SIA) include the following:

Identifying Affected Groups: SIA helps in identifying people and groups who affect or are affected by the project.
Allying Fears and Winning Trust: SIA can help allay fears of affected groups and build a basis of trust and cooperation which is so essential for successful project implementation

Avoiding Adverse Impacts: SIA provides the basis for preparing mitigation measures to avoid, reduce or manage adverse impacts.

Enhancing Positive Impacts: SIA preparation also helps identify measures to maximize/share project benefits.

Reducing Costs: Addressing social impacts at an early stage helps to avoid costly errors in future.

Getting Approval Faster: A well prepared SIA demonstrates that social impacts are taken seriously and helps in getting project clearance faster.

Courtesy: Current Affairs Survey