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Land acquisition

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Land acquisition

  1. 1. Towards a Pragmatic LandAcquisition Policy for Industrial Use TOPIC C6 ANAND PATIL (16/128) MOHAMED ANAS (16/150) PRABHU P (16/155) RAM KUMAR V (16/159) SHYAM PRASATH B (16/171)
  2. 2. Value Land of Acquisition LARRB LandLand Act, 1894 2011 Valuation Land Case Global Solutions Acquisition of Scenario Posco
  3. 3. Land Ownership Confers.. Tangible Intangible Shelter Security Standing in Livelihood society
  4. 4. Land Acquisition in India  The process of land acquisition by the central or state government of India for various infrastructure and economic growth initiatives Reason for Acquisition: Definition of Public Purposei. Strategic purposesii. Industry & Infrastructureiii.Land acquired for R&R purposesiv. Planned development - residential purpose for poor, educational & health schemesv. Land for private companies for public purposevi. Needs that arise from natural calamity
  5. 5. LAND ACQUISITION ACT,1894Law that allows government to acquire land from the land owners afterpaying a fixed government compensation in lieu of their losses Acquisition Process Investigation & *From Chapter 7 of the ACT Notification Objection & Confirmation Claim & Reward Reference to Court Apportionment
  6. 6. LAND ACQUISITION• First Step – • Objections from Investigation of • The collector • Any person • Each of the the persons land by the offers a fair interested to claimants are interested authority who price to an whom the entitled to the within 30 days is need of land owner award is not value of his subject to & application • The market satisfactory can interest, which conditions has to be filed value of the submit a he has lost, by • Collector to written compulsory• Preliminary land is hear the application to acquisition notice must be determined at objections & the court published in the date of • Thus it is submit the official gazette notification. • This application required to report to & 2 daily • Award has to should be made value a variety government newspapers be given within within six of interest, • After weeks from the rights and• After a period of 2 notification the date of claims in the notification, the years from the collector declaration of land in terms of land owner is date of proceeds with the award money prohibited to notification the claim sell his land
  7. 7. Compensation and Valuation The current Act requires  The 2007 Bill requires payment of the market value to be paid for highest of three items: the land and any other  the minimum value specified for stamp property on it as well as duty expenses for compelling  the average of the top 50 % by price of the person change place of land sale in the vicinity residence or business  the average of the top 50 % of the land purchased for the project from willing sellers  For computing recent land sale, the intended land use is to be used. Thus, agricultural land being acquired for an industrial project will be paid the price of industrial land
  8. 8. Impacts – Controversies & CriticismsDevelopment Related Displacement Displacement of public due to large scale projects like dams, canals, thermal plants, sanctuaries, industries & Mining etc.., Statistical reports indicated 1 in 10 Indian tribals is a displaced person  Compensation offered was fairly low with regard to the current prices  The displaced people failed to get better jobs due to low Human Capital  Majority of the displaced people are from the weakest sections of the society & they are unable to raise their voiceIgnorance of stakeholders in the share of the property  This provides an added benefit to many entrepreneurs and promoters of the company
  9. 9. Law is Weak Lands are acquired Procedure is costly with NO public & cumbersome, purpose attached in Law is Harsh delayed the name of the ACT Valuation Compensation offered techniques are is lower than market flawed prices Land owners get to The matter of peg a higher value Relocation & than the real value Rehabilitation of land Additional payment owners displace was of solatium over the not covered in the property value framework current law
  10. 10. Impediments for Industries Acquisition cost increase by 3 – 3.5 times No clear PPP is not definition of defined in ‘public “Affected purpose’ families” Agglomeration of land (numerous 80% of the land sources, land from willing records and land sellers holdings)Industries not Return of land if under public Impediments not utilized for a purpose certain period
  11. 11. Land Acquisition Issue: POSCO Case  $12 billion investment  Biggest FDI project in India  Signed MoU with Orissa state Govt in 2005  Project implementation required 2900 acres of land
  12. 12. Land Acquisition Issue: POSCO Case Issue 1. Current status- acquired 2,100 acres of land and transferred 546 acres to POSCO India 2. Land to be given to POSCO plant is classified as forest land 3. Hundreds of tribal families using the forest land for betel cultivationForest Rights Act: “Many of the people of the area are eligible for right over this land,especially the lands they are cultivating, as they have been living in the area for morethan 75 years”NC Saxena committee: all land acquisition and transfer for Posco Indiaproject is violation of Forest Rights Act and need to be stoppedPosco has not set up any health clinics schools in the region
  13. 13. WHAT IS THE REMEDY ?
  14. 14. Land Acquisition Rehabilitation and Resettlement Bill 2011 • Heightened public concern on Land Acquisition issues Public Concern • Absence of a national law to provide for the resettlement, rehabilitation and compensation for loss of livelihoods • While multiple amendments have been made to the Original Act, the principal law Outdated law continues to be the same i.e. The Land Acquisition Act of 1894 • Addressing concerns of farmers and those whose livelihoods are dependent on the land being acquired Need for Balance • While facilitating land acquisition for industrialisation, infrastructure and urbanisation
  15. 15. Land Acquisition Rehabilitation and Resettlement Bill 2011Purpose of the BillLARR 2011 seeks to repeal and replace Indias Land Acquisition Act, 1894. The Bill seeksto enact a law that will apply when Government acquires land for its own use, hold and control. Government acquires land with the ultimate purpose to transfer it for the use of private companies for stated public purpose. The purpose of LARR 2011 includes public-private-partnership projects, but excludes land acquired for state or national highway projects. Government acquires land for immediate and declared use by private companies for public purposeLARR Bill 2011 aims to establish the law on land acquisition, as well as the rehabilitationand resettlement of those directly affected by the land acquisition in IndiaNeed for the Bill• fair compensation when private land is acquired for public use• fair rehabilitation of land owners and those directly affected from loss of livelihoods
  16. 16. Definition of ‘Public purpose’ under LARR, 2011The following categories are considered as • Village or urban sites: plannedPublic purpose development -• Strategic purposes: e.g., armed forces, residential purpose for the poor andnational security educational and health schemes• Infrastructure and Industry: where • Government administered schemesbenefits largely accrue to the general public or institutions• Railways, roads and ports built by • Needs arising from naturalgovernment and public sector enterprises calamities
  17. 17. Definition of ‘Affected Families’Land Owners• Family whose land/other immovable properties have beenacquired• Those who are assigned land by the Governments undervarious schemes• Right holders under the Forest Rights Act, 2006Livelihood Losers• A family whose livelihood is primarily dependent on the landbeing acquired• May or may not own property Land Owners Affected Families Liveliho od Losers
  18. 18. Major Changes brought by LARR Bill 2011•Consent 80% consent for acquisition for private projects, 70% consent for public-private partnership (PPP) projects No consent for infrastructure projects fully owned and executed by the government Consent from affected parties in addition to land owners•Return of Un-used land Land acquired and if no development in 5 years, it should be returned to Land bank or Original land owner• Share in Appreciation Return of The Land revised Bill stipulates the original land owners a 40% share in the appreciated land value• Fertile, irrigated, multi-crop land out of bounds for compulsory acquisition
  19. 19. R & R in LARR Bill, 2011 Acquisition of more than 100 acres, R&R Committee shall be established to monitor the implementation of the scheme at the project level and National Monitoring Committee is appointed at the central level The definition of ‘affected family’ has been enlarged to include landless families of agriculture labourer or artisans dependent on such land for their primary source of livelihood along with the land owners Every resettled area is to be provided with certain infrastructural facilities. These facilities include roads, drainage, provision for drinking water, grazing land, banks, post offices, public distribution outlets, etc Potential escalation in land price after acquisition to be shared for ten years R&R entitlements •land for a house as per the Indira AwasYojana in rural areas or a constructed house of at least 50 square metres plinth area in urban areas • a one-time allowance of Rs 50,000 for affected families • the option of choosing either mandatory employment in projects where jobs are being created or a one-time payment of Rs 5 lakhs or an inflation adjusted annuity of Rs 2,000 per month per family
  20. 20. Comparative Evaluation of Land Acquisition andCompensation Processes across the World
  21. 21. Land Acquisition – Three Axes Method of compensation Process of Land AcquisitionPrinciple of Land Acquisition
  22. 22. Land Acquisition Principles – Public Purpose • Power and the terms under which it can be exercised is either directly vested in the constitution (US, Australia and China), or, is specified in enacted legislation (Hong Kong, Malaysia and Singapore) National Infrastructure Public benefit Purposes that Planning and UKChina Mexico Australia Singapore defence, development, or public the public transport, conservation of interest history or Parliament purposes if it water projects has the is suitable for, culture, national conservancy, security or power to and required government public benefit define by for agencies and projects, and legislation development so on projects that preserve the ecological balance and natural resources
  23. 23. Land Acquisition – Three Axes Method of compensation Process of Land AcquisitionPrinciple of Land Acquisition
  24. 24. Process of Land Acquisition Forcible • Mostly used in public purpose projects and procurement where the state don’t have enough option • Implementable when the land is not required for public purpose and if theProcurement through developing agency has more than one negotiation with option on which land parcel to acquire stakeholders • negotiation often leads to an economically efficient and socially optimal solutions• Cases where land acquisition is critical and for public purpose, countries such asJapan advocate the use of negotiation techniques in order to decide upon thecompensation to be provide to stakeholders• In Singapore and Philippines first negotiations are carried out, if it fails thencompulsory acquisition is done
  25. 25. Land Acquisition – Three Axes Method of compensation Process of Land AcquisitionPrinciple of Land Acquisition
  26. 26. Land Valuation Methods Evaluation of market value of the Evaluation of the net value of land income from the land Valuation MethodsDetermining original land use value Arriving at land values through as set by the state negotiation
  27. 27. Land Valuation MethodsEvaluation of market value of the land Evaluation of the net value of income from the• Malaysia, China, the US and India advocate landfollowing the comparable sales method •This method is used where market for land is not• Sales data on comparable tracts of land may developed or is not reliablenot be available • The value of the property is taken to be the value of• The registered value of the sale is kept the expected economic income that could be earnedartificially low for tax purposes through the ownership of the property• An open, reliable, fair market environment • Tanzania is one country where this method is used,might not be available primarily because the market is assumed to be inefficientDetermining original land use value as Arriving at land values through negotiationset by the state • Compensation is fixed purely on the basis of• The Land Act of China does not permit free discussions with stakeholderstransfer of rural land, the original use of land • Peru follows a policy of compensation basedis used for compensation purposes with strictly on negotiation with the affected partiesvaluation mechanisms set by the state • Singapore and Japan are other countries that• Problem in defining “Original use” endorse this approach• Assumption is that agricultural use is thehighest and best use of all rural land but ruralland may have other more profitable uses,such as residential, commercial or industrialdevelopment
  28. 28. Issues in Indian ContextVery little meaningful negotiation is undertaken The methods by which compensation is fixed are subjective and suboptimal No autonomy for officials to take independent productive decisions Delay in overall process leading to difficulty in many other aspects Corruption – The full compensations doesn’t reach the beneficiaries and delay in payment
  29. 29. Recommendations Acquire Surplus Land and Reallocate the Excess to Displaced People Post Development• Combats the resentment due to increase in the value of the land post-acquisition and development• Allows land owners to benefit from increase in land values• Example: Jaipur urban development and housing department Distribute Stocks and/or Options of Development Venture to Landowners• Includes displaced parties in the benefits accruing as a result of the venture• Provides additional income over fixed compensation• Example: Magarpatta City in Pune• Pitfall- shares do not provide instant relief to project affected parties Establish a Liberal, Competitive Framework to Reflect Market Realities• Identifies potential parcels of land• Negotiates with landowners to acquire some of these parcels• If a landowners wishes to retain the landholdings, move to the next parcel• Reduces transaction cost
  30. 30. Recommendations Uttar Pradesh’s Pragmatic Move• Government will act only as a facilitator if the developer is Private• Compensation + annuity of Rs.23,000 for 33 years, the right to 16 per cent of the developed land and shares in the project• Also job schemes for members of dispossessed families• Farmers have welcomed this policy Issue Government Orders to Circumvent Bottlenecks in the Land Acquisition Process• Imbibes public officials to sanction greater amount of compensation• Streamlines a consultative and equitable land acquisition process• Example: TNUDP projects in Tamil Nadu
  31. 31.  Land Acquisition Act, 1894 Can Posco cross the Indian Border ?, Forbes India, August 10, 2011 Bill for Land gives the true Value, The Hindu dated September 13, 2012 Ashwin Mahalingam, Aditi Vyas(2011): “ Comparative Evaluation of Land Acquisition and Compensation Processes across the World”, Economic & Political Weekly, August 6, 2011, Vol XLVI Nos 32 Morris, Pande (2007): “Towards Reform of Land Acquisition Framework in India”, Economic & Political Weekly, June 2, 2007, pp 2083-90 Desai, Mihir(2011): “Land Acquisition law and the Proposed Changes”, Economic & Political Weekly, June 25, 2011, Vol XLVI, Nos 26 &27 Levien, Michael(2011):”Rationalising dispossession: The Land Acquisition and Resettlement Bills”, Economic & Political Weekly, March 12, 2011, Vol XLVI, No 11 Sau, Ranjit(2007):”Second Industrialization in India: Land and the State”, Economic & Political Weekly, February 17, 2007 Taming the waters by Satyajit Singh http://www.indiawaterportal.org http://www.dnaindia.com http://en.wikipedia.org/wiki http://www.deccanherald.com
  32. 32. A Successful Case of Land Acquisition: TNUDP Phase III Project Tamil Nadu Urban Development Phase III Project was funded by World Bank & coordinated by CMDA & DOHRW – Construction of 5 roads Project needed to acquire 40.12 acres affecting 2073 people Special NO COURT CASES deputyAcquisition Process collector Proper notification Base line survey Identification of affected people Issue of photo ID cards Local Negotiations Project Representati implementatCompensation ves committee ion Er. 142-150% of land value Building allowance : 25% of land of lane value Subsistence allowance: 1800/month*6 months Deputy Er., Shifting allowance: 1000/person Highways of Replacements Sub projects Delayed Payments: 12% Interest rate on the due
  33. 33. World Bank Mandate: Minimum of 150% of Compensation  The project officials argued that the other projects were offered lower compensation and it would be unfair to increase only for this project  The minimal value did not exceed beyond 150% Price of land < true market value the property Reason: The Tendency of landowners to record lower value of their sale of lands to save stamp duty The question arises here isWhether the true value to the owner was not provided due to the their lower record value ?? Yes but, the project-affected parties did not protest against the award since the process of award was open and transparent, and due to the apprehension that compensation awarded through the Land acquisition Act would be lower and would take longer to arrive The constitution of an independent negotiating committee, was helpful in solving issues and providing compensation for indirect losses as well as delayed payments