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Indian Landowners Resist Reform Measure

  • Anjana Pasricha

A signboard is pictured at the proposed site of Navi Mumbai airport, about 45 km (27 miles) east of Mumbai, August 8, 2012.

A signboard is pictured at the proposed site of Navi Mumbai airport, about 45 km (27 miles) east of Mumbai, August 8, 2012.

In India, a new law dealing with the acquisition of land will soon ensure better compensation for people whose land is taken over for infrastructure and industrial projects. But both industry leaders and land-owning farmers are critical of the measure.

For decades, well-known social activist Medha Patkar has been the face of many struggles by farmers and tribal communities whose land was acquired to build dams, roads and factories as India industrialized. She says the displaced people got a pittance for their land and were never rehabilitated.

“Displacement is uprootment. The whole natural resource base is lost to the people and they are now lying in the slums or on the periphery of everything,” said Patkar.

Amid growing resistance in the countryside over giving up land, parliament last week passed a new bill to address the charged issue of land reform. It will replace a centuries old colonial law after being signed by the president.

Better compensation

Under the new law, landowners will be paid up to four times the market value in rural areas and double in urban areas. Private industry will also have to get the consent of 80 percent of landowners before acquiring land.

The government says it will balance industry’s need for land while protecting the rights of farmers. Facing elections next year, it is pitching it as a major step in addressing grievances of rural and tribal communities, and hopes it will spell the end of violent struggles.

But business bodies have warned that the new law will have adverse consequences on the country’s industrial development. They say it will increase the cost of acquiring land. Even more worrisome - it will make the process of acquiring land for industry much more cumbersome.

“The process of acquisition has become so complicated that the time line will increase enormously with all the social impact analysis. That would mean land that could have been acquired in one year will take three years and that will increase uncertainty and that will increase the rate at which you calculate the rate of return. The processes involved are just becoming so complicated,” explains Rajiv Kumar, an economist who was former head of the Federation of Indian Chambers of Commerce and Industry.

Manufacturing slow down

Industry fears the new law will be yet another dampener on the development of India’s manufacturing sector whose expansion has been already set back by bureaucratic bottlenecks and what is called policy paralysis. At least two foreign investors, Posco an Arcelor Mittal recently scrapped plans to set up steel projects in India, partly due to problems over land acquisition.

Rajiv Kumar says the new law comes at a time when India is already facing an industrial slowdown. In the long run, it could make the country more import dependant.

“The share of manufacturing sector in our GDP has declined from 1984 onwards. It has gone from 17 percent to 14 percent or so and increasingly for a population whose incomes are rising and whose demand for manufactured goods is increasing, you will then have to import these products,” he said.

Protecting farmers

However, activists like Patkar say industry should use barren land and stay away from cultivated land in a country where farming still supports two-thirds of the population.

While the new measure ensures some resettlement help for displaced people, Patkar fears it does not go far enough.

“The whole process many give some space to the farmers, but for the farmers there is no rehabilitation projected and provided based on alternate livelihood, which is a major flaw. The rehabilitation is more cash based,” he said.

Indeed, the new law is not likely to settle the contentious debate over the rights of rural communities to continue using their land for their sustenance and the need for rapid industrial development.