2. Focus
on Opportunity
3. Pitfalls
in Land Acquisition and Classification of Land
4. Buying
& Selling Land in Rural India
5. Rehabilitation
and Resettlement
6. CRZ
Rules and its consequences
7. Mining
and Dams, Rights and Wrongs
8. Transitioning
to a Market Based Economy
9. The
Tenant Advantage
10. Conclusion
1.
Overview:
For
India to progress
she has to:
-
Enact policies
that jettison the bad practices of the past,
-
Strengthen
prevailing good practices and,
-
Introduce new
policies that accelerate the rate of growth in an environmentally responsible
manner.
For
the purpose of this article, progress
is defined as; providing opportunities
for all and adherence to pragmatic
environmental guidelines. The most important issue is a balanced approach that
improves the Quality of Life for all, while addressing the needs of the stake
holders involved, namely; the citizens, the affected people, the government, the
investors and businesses.
2.
Focus on Opportunity:
At
the individual level opportunities
translate to education for the youth,
training for the unskilled, jobs for the willing and entrepreneurship for the able. It is projected that a Million youth will be entering the workforce every month for the next Ten years. Providing abundant opportunities for
the One Hundred Twenty plus Millions over the next ten years, requires Urbanization and Industrialization. There is a debate on
whether this is the appropriate approach for India. The prevailing conventional wisdom supports this
assertion. The detractors are primarily idealists, who partake in the fruits of
modernization while proposing alternatives that they themselves are unable to
demonstrate. India is at an inflection point and India’s only hope is proceed
in Urbanization and Industrialization as fast as possible, to realize
the “demographic dividend”. Not doing so will result in a “demographic
disaster”.
3.
Pitfalls in Land Acquisition and Classification
of Land:
India’s current land acquisition laws are a major
impediment for Urbanization and Industrialization. The Land Acquisition Bill is a long time coming, the jury is out whether it will provide some relief.
However there needs to be an over arching strategy that enables progress to
accelerate in an environmentally responsible and inclusive manner.
Not
all land deemed agricultural is suitable for agriculture and not all areas
deemed Forest has an abundance of trees or wild vegetation. The
emphasis of the laws has been on restricting who can own agricultural and
forest land as opposed to stipulating what can be done on the land.
Shortcomings in governance have resulted in rampant violations of land
utilization, while curtailing ownership. The pragmatic solution is to shift the
emphasis to strict environmental guidelines which can be monitored and
controlled. Furthermore, stiff penalties can be instituted for violating land
use guidelines and since that can be enforced, it would serve as a deterrent
and remedial actions can be taken.
For
instance, every small town in India has a main thoroughfare with a hodgepodge of gullies
and lanes leading to dwellings and surrounding farms. As the town expands,
surrounding agricultural land is converted to non-agricultural (NA) land and
growth occurs in a haphazard manner. Town expansion is not unique to India. What is lacking is a good town planning process, wherein
the town expansion grid is laid out with easements, and set backs for roads,
pavements and bicycle lanes. As part of the conversion process, the land owner
is made to surrender the portion specified in the town’s master plan. This is a
WIN/WIN/WIN solution, wherein the owner realizes the appreciation of the land
(which is often significant) when converted to NA, the town acquires land for
infrastructure at no cost and the town folks benefit.
4.
Buying and Selling Land in Rural India:
Buying
and selling agricultural land in Rural India is riddled with additional
stipulations that require the buyer to have an agricultural certificate or own
agricultural land. Furthermore in some States there is an income cap that has
to be met to qualify as a buyer. Indian citizens without these qualifications
are unable to acquire agricultural land. Because of these restrictions, land
values are artificially depressed and farmers are not able to realize the true
Free Market Value (FMV) of their holdings.
The
work around these restrictive laws and stipulations for U&I is accomplished
by the government acquiring the land and then selling it to a developer or
industrialist. Valuation of the land in these acquisitions is the major source
of contention. The people themselves are to blame for this. The government
appraisal of the land termed “Market Value” (MV) is in many instances set to lower
than 20% of what the land is actually sold for i.e. The Open Market Value (OMV).
The buyer is quite happy to register the land at or slightly above the MV
ascribed by the government and in doing so saves a significant amount on Stamp
Duty which is shy of 7%. This results in a WIN for the buyer and a LOSS for the
government.
When
government acquires the land, the compensation to the owner is based on the
prevailing government evaluation i.e. the MV. The government sets the acquisition
price at twice or thrice the MV. But in instances where the MV is lower than 20%
of the OMV, even 5 times the MV does not fetch the current OMV to the owner.
The Government then sells the land to the purchaser i.e.
Developer/Industrialist “officially” at a price that is higher than the
acquired price, which is still lower than the OMV. However, the purchaser is
made to part with an amount that is the OMV or thereabouts with the difference
between what the actual cost to the purchaser and “official” sales price
pocketed by corrupt bureaucrats and politicians. When the owners find out that
the land was sold to the purchaser at the price recorded “officially”, all hell
breaks loose. This is a Lose/Lose situation wherein owners are unable to
realize the true value of their holding, the government is shortchanged, the purchaser
at times pays less than the OMV and a windfall is realized, by the corrupt
bureaucrats and politicians. What is needed is policy that results in, and
ensures a reversal of the current situation.
For
example say:
- The Open Market Value
(OMV) is 100.
- The Market Value (MV)
set by the government is 20.
- Government pays the
owner 40 and proudly claims we paid 2 times the MV.
- The government then
turns around and sells to the purchaser - Developer or Industrialist for an
“Official Price” of 50 and shows a 20% profit.
- However the Actual Cost
paid out by the purchaser is the OMV i.e. 100 or at times less, maybe 90
or 80.
- The difference
between the Official Price and what the purchaser’s Actual Cost is pocketed by the
intermediate corrupt maggots.
There
are many ways to circumvent this situation. One is for the government to reduce
the amount of Stamp Duty which is currently about 7%. To use the above example,
The Stamp Duty paid on the MV purchase price of 20, falsely declared by a buyer,
will be 1.4. If the government reduces the Stamp Duty to say 2%, and the land
is registered at OMV of 10, the government will realize 2. Buyers will be
motivated to declare the actual price paid and pay the 2%. In addition all land
transactions should be posted in a public registry and available to the public.
One
hurdle still remains and that is the classification of land allotted for
development. It has to be classified as NA. This could be factored into the Master
Plan of the Town, Taluk or District. Town guidelines will have to be constantly
updated as Towns expand. A policy could be established that each Taluk should
set aside a certain percentage of their land for Development (Housing and
Industry) and this could be rolled up to the District Level. Non-arable and
non-forested land could automatically be allowed for conversion to NA and be
made available as areas for development. The price negotiations can then be
left to the buyers and sellers. This policy has been instituted effectively in Gujarat, where owners of non-arable land have benefited significantly.
An
additional step each district should take is to develop Industrial Parks that
entrepreneurs could lease, to set up small scale businesses. The Maharashtra
Industrial Development Corporation has many such successes set up around
cities. This program could be expanded in a smaller scale to smaller towns.
5.
Rehabilitation and Resettlement (R and R):
RandR
is the most controversial and often botched up aspect of Land Acquisition. The
requirement of a Social Impact Study is only as good the follow through in its
implementation and the ability to modify the approach as and when what is
actually experienced warrants it.
Transactions
concerning private land should be treated differently from acquisition of
public land. In many cases privately owned land has been encroached upon by
squatters and the rights of the owners are subordinated to that of the
squatters. R&R in this situation should be the responsibility of the
government with incentives provided to the acquiring parties involved to assist
in the R&R of the squatters.
More
importantly is land acquired for Dams and Mining. This is covered in a
following section. The big question confronting India is whether it is fair to continue on the path of
progress on the backs of the marginalized poor who are affected.
Compensation
to displaced persons should be based on their prevailing income level along
with appropriate incentives that encourage rehabilitation. Lump sum payments
and land grants are often frittered away, with the displaced person being worse
off than prior to being displaced. This is often the case of good intention going
bad.
Rehabilitating
a person who has lost their livelihood/current way of life is an uphill task.
The adults are usually entrenched in their ways. Change in this context is a
generational issue. The young have to be educated. There has to be strict laws
prohibiting the sale of liquor that is accompanied by jail terms for people
engaged in the selling of liquor. R&R provides a good opportunity to
provide internships to urban youth to work closely with the affected people.
6.
CRZ Rules and its consequences:
CRZ
(Coastal Regulation Zone) rules that oversee coastal development are yet
another instance of imposing extreme controls that strangle development of the
coast. Instead of promoting good practices, discouraging bad practices and
providing a path to achieve the former for existing violations, the situation
is such that violations are frequent and the very intentions of the laws are
not realized.
Under
the updated 2011 rules, coastal land has been classified into four zones:
- CRZ I will comprise ecologically sensitive areas
like mangroves and mudflats;
- CRZ II will comprise developed areas;
- CRZ III will consist
of underdeveloped areas, not
classified ecologically sensitive; and
- CRZ IV will comprise
territorial waters from the low tide line to 12 nautical miles into the
sea.
Restricting
development in zones designated CRZ I makes eminent sense. CRZ IV pertains to
jetties and ports and would require licensing and clearance. However, CRZ II
and CRZ III could be governed through establishing and enforcing environmental
guidelines. The government could even add a “develop at your own risk” clause
to insulate it from storm damage and ocean erosion i.e. “Acts of God”.
Requiring an open space from the high tide line to the building of High Rises makes sense, but making the distance 500 meters is rather extreme.
CRZ
II and III rules severely restrict the development of tourism on the coasts
of India and with that opportunities tied to tourism is
eliminated completely.
7.
Mining and Dams, Rights and Wrongs:
The
rights to mine natural resources and constructing Dams add another layer of
complexity to the land acquisition situation. Dams are government undertakings,
while Mining involves private party participation. To the average citizen these
are engines that drive progress. What is ignored or brushed aside are the
hardships borne by the affected people and the environmental impact.
Past
practices continue to be pervasive in present projects. The modus operandi in
many cases is literally to bulldoze the way to get the job done with no regard
for the welfare of the affected people coupled with abject disregard for the
environment. Furthermore, promises made are broken and as a result there are
protests due to skepticism. Those
protests are responded to by lathi charges, resulting in death at times. It is
alarming that the people who promote and execute these projects are presumably
members of civil society. However, how they proceed, amounts to legitimized
thuggery driven by extreme “laalach” in the name of progress.
Mining
and Dams by their very nature are controversial activities with conflicting
agendas between stakeholders. The big question confronting India is whether it is fair to continue on the path of
progress on the backs of the marginalized poor who are affected. In all
fairness there are many in civil society who work continuously to bring such
issues to the attention of the press and public. However, more often than not,
this leads to a confrontational approach where each party digs its heels,
refusing to budge. As a result instead of working towards a negotiated
resolution, the issues get buried into accusations and counter productive
debate.
There is a saying that the needs of the many far
outweigh the needs of the few. Mining and Dams are examples of those activities
that meet the needs of the many who rely on the output of these projects.
Besides, they also provide a wide spectrum of opportunities from unskilled to
highly skilled individuals. While it is impossible to address every issue of
every stakeholder, each stake holder has to agree to sacrifice or give in a
little so that an optimal agreement is arrived at. It is therefore imperative that
a balanced workable solution be arrived at. What can be and should be achieved
is a “Compromise Solution” since a “Consensus Solution” is well nigh
impossible.
At risk is the environmental impact that has to be
factored into the discussion. Environmentalists are the stake holders who serve
as custodians of the environment, with the other stakeholders being the
Miners/Developers, the Government, the Inhabitants of the area and the owners
(if any) of the land itself.
To arrive at a Compromise Solution all parties have
to accept that development is inevitable and everyone has to commit to a
workable solution. Also on a case by case basis a comprehensive solution will
require “give and take” from all parties concerned. With that in mind the
following is a partial list of what has to be factored:
-
The
environmental impact should be minimized as much as possible.
-
Concerns of the
inhabitants should be addressed. Besides relocation assistance, they need to be
rehabilitated, which is no simple task. Rather than giving them a big payout,
which is frittered away, a monthly payout is the preferred option.
-
Owners (if any)
must be compensated fairly
-
Additionally, in
the case of Mining:
o
Restoring the
environment has to be factored into the operational costs. It may take many
years for the environment to be restored, but with proper actions such as
grading, the planting of trees or ground cover, it is possible
o
Miners should
achieve a viable rate of return on their investment
o
Government
should receive a fair share by way of revenue
8.
Transitioning to a Market Based Economy:
Another
factor to be taken into consideration for India to progress is to transition from a Socialist driven
populist economy which strangulates the pricing of goods and services to a more
pragmatic “market based” economy that serves all classes of people. With
respect to land, one such solution is to structure the laws that govern an SEZ
differently in that the pricing of essential resources such as electricity,
water, LPG, diesel, petrol & property taxes etc. are priced based on
economic and commercial rationality as opposed to Political or Societal
pressures. Only members of the lower
economic classes in an SEZ should be eligible for specific subsidies that cover
essentials.
9.
The Tenant Advantage:
An
artifact of the laws and the legal process that owners are painfully aware of
is that the balance of power is tilted in favour of those who occupy the land,
be it through a lease or through encroachment. In India, possession is 9.99 tenths of the law and evicting
the occupants is a lengthy arduous time consuming process. The problem with
this situation is that it encourages miscreant behaviour, wherein the
encroacher uses the law and the at times, the patronization of politicians to
deny the rightful owner the privilege that they legally possess. Furthermore,
lawyers take advantage of this and proceed to lengthen the process resulting in
an extended and guaranteed source of income for themselves.
10.
Conclusion:
The
major flaw regarding land in India is a focus on who can own land based on its
classification, as opposed to land use. Emphasis is given to protect land encroached
by the landless, rather than promoting an abundance of affordable of rental options
and opportunities. The desired objective ought to be to remove burdensome restrictions
on land ownership and acquisition and ensure good environmental practices. This
will go a long way in realizing opportunities for the “demographic dividend”
and prevent a “demographic disaster”.
Related Articles:
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