Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013


The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is an Act of Indian Parliament that regulates land acquisition and lays down the procedure and rules for granting compensation, rehabilitation and resettlement to the affected persons in India. The Act has provisions to provide fair compensation to those whose land is taken away, brings transparency to the process of acquisition of land to set up factories or buildings, infrastructural projects and assures rehabilitation of those affected. The Act establishes regulations for land acquisition as a part of India's massive industrialisation drive driven by public-private partnership. The Act replaced the Land Acquisition Act, 1894, a nearly 120-year-old law enacted during British rule.
The Land Acquisition, Rehabilitation and Resettlement Bill, 2011 was introduced in Lok Sabha on 7 September 2011. The bill was then passed by it on 29 August 2013 and by Rajya Sabha on 4 September 2013. The bill then received the assent of the President of India, Pranab Mukherjee on 27 September 2013. The Act came into force from 1 January 2014.
An amendment bill was then introduced in Parliament to endorse the Ordinance. Lok Sabha passed the bill but the same is still lying for passage by the Rajya Sabha. On 30 May 2015, President of India promulgated the amendment ordinance for third time.

Background

History

The Land Acquisition Act, 1894 was a law passed by the Imperial Legislative Council, that governed the process of land acquisition in India until 2013 and continues to do so in Pakistan and Myanmar. It allows the acquisition of land for some public purpose by a government agency from individual landowners after paying a government-determined compensation to cover losses incurred by landowners from surrendering their land to the agency. In India, a new Act, The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, replaced this law.

Need

The Government of India believed there was a heightened public concern on land acquisition issues in India. Of particular concern was that despite many amendments, over the years, to India's Land Acquisition Act of 1894, there was an absence of a cohesive national law that addressed fair compensation when private land is acquired for public use, and fair rehabilitation of land owners and those directly affected from loss of livelihoods. The Government of India believed that a combined law was necessary, one that legally requires rehabilitation and resettlement necessarily and simultaneously follow government acquisition of land for public purposes.
Forty-Fourth Amendment Act of 1978 omitted Art 19 with the net result being:-
  1. The right not to be deprived of one's property save by authority of law has since been no longer a fundamental right. "No person shall be deprived of his property saved by authority of law". The amendment ensured that the right to property‟ is no more a fundamental right but rather a constitutional/legal right/as a statutory right and in the event of breach, the remedy available to an aggrieved person is through the High Court under Article 226 of the Indian Constitution and not the Supreme Court under Article 32 of the Constitution..
  2. Moreover, no one can challenge the reasonableness of the restriction imposed by any law the legislature made to deprive the person of his property.
State must pay compensation at the market value for such land, building or structure acquired, the same can be found in the earlier rulings when property right was a fundamental right. Elsewhere, Justice, Reddy, O Chinnappa ruled that the fundamental right to property has been abolished because of its incompatibility with the goals of "justice" social, economic and political and "equality of status and of opportunity" and with the establishment of "a socialist democratic republic, as contemplated by the Constitution. There is no reason why a new concept of property should be introduced in the place of the old so as to bring in its wake the vestiges of the doctrine of Laissez Faire and create, in the name of efficiency, a new oligarchy. Efficiency has many facets and one is yet to discover an infallible test of efficiency to suit the widely differing needs of a developing society such as ours" .
The Land Acquisition, Rehabilitation and Resettlement Bill, 2011 was introduced in Lok Sabha. Two Bills on similar lines were introduced in Lok Sabha in 2007. These Bills lapsed with the dissolution of the 14th Lok Sabha.

Aims and objectives

The aims and objectives of the Act include:
The Act aims to establish the law on land acquisition, as well as the rehabilitation and resettlement of those directly affected by the land acquisition in India. The scope of the Act includes all land acquisition whether it is done by the Central Government of India, or any State Government of India.
The Act is applicable when:
The provisions of the Act does not apply to acquisitions under 16 existing legislations including the Special Economic Zones Act, 2005, the Atomic Energy Act, 1962, the Railways Act, 1989, etc.

Provisions

Definition of public purpose

Section 2 of the Act defines the following as public purpose for land acquisition within India:
When government declares public purpose and shall control the land directly, consent of the land owner shall not be required. However, when the government acquires the land for private companies, the consent of at least 80% of the project affected families shall be obtained through a prior informed process before government uses its power under the Act to acquire the remaining land for public good, and in case of a public-private project at least 70% of the affected families should consent to the acquisition process.
The Act includes an urgency clause for expedited land acquisition. The urgency clause may only be invoked for national defense, security and in the event of rehabilitation of affected people from natural disasters or emergencies.

Definition of 'land owner'

The Act defines the following as land owner:
  1. person whose name is recorded as the owner of the land or building or part thereof, in the records of the authority concerned; or
  2. person who is granted forest rights under The Scheduled Tribes and Other Traditional Forest Dwellers Act, 2006 or under any other law for the time being in force; or
  3. Person who is entitled to be granted Patta rights on the land under any law of the State including assigned lands; or
  4. any person who has been declared as such by an order of the court or Authority;

    Limits on acquisition

The Act forbids land acquisition when such acquisition would include multi-crop irrigated area. However such acquisition may be permitted on demonstrable last resort, which will be subjected to an aggregated upper limit for all the projects in a District or State as notified by the State Government. In addition to the above condition, wherever multi-crop irrigated land is acquired an equivalent area of cultivable wasteland shall be developed by the state for agricultural purposes. In other type of agricultural land, the total acquisition shall not exceed the limit for all the projects in a District or State as notified by the Appropriate Authority. These limits shall not apply to linear projects which includes projects for railways, highways, major district roads, power lines, and irrigation canals.

Compensation

Section 26 of the Act defines the method by which market value of the land shall be computed under the proposed law. Schedule I outlines the proposed minimum compensation based on a multiple of market value. Schedule II through VI outline the resettlement and rehabilitation entitlements to land owners and livelihood losers, which shall be in addition to the minimum compensation per Schedule I.

Market value

The market value of the proposed land to be acquired, shall be set as the higher of:
The market value would be multiplied by a factor of, at least one to two times the market value for land acquired in rural areas and at least one times the market value for land acquired in urban areas. The Act stipulates that the minimum compensation to be a multiple of the total of above ascertained market value, value to assets attached to the property, plus a solatium equal to 100 percent of the market value of the property including value of assets.
In addition to above compensation, the Act proposes a wide range of rehabilitation and resettlement entitlements to land owners and livelihood losers from the land acquirer. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some circumstances.

Rehabilitation and resettlement

For land owners, the Act provides:
In addition to the above compensation and entitlements under the proposed LARR 2011, scheduled caste and schedule tribe families will be entitled to several other additional benefits per Schedule II of the proposed bill. India has over 250 million people protected and classified as SC/ST, about 22% of its total population. The proposed additional benefits to these families include:
Schedule III of LARR 2011 proposes additional amenities over and beyond those outlined above. Schedule III proposes that the land acquirer shall provide 25 additional services to families affected by the land acquisition. Some examples of the 25 additional services include schools, health centres, roads, safe drinking water, child support services, places of worship, burial and cremation grounds, post offices, fair price shops, and storage facilities.
LARR Bill 2011 proposes that Schedule II through VI shall apply even when private companies willingly buy land from willing sellers, without any involvement of the government.
The Bill as drafted mandates compensation and entitlements without limit to number of claimants. Thus, for clarity and as an example, if 1000 acres of rural land is to be acquired for a project, with market price of ₹2,25,000 per acre, 100 families claim to be land owners, and 5 families per acre claim their rights as livelihood losers under the proposed LARR 2011 Bill, the total cost to acquire the 1000 acre would be
The average effective cost of land, in the above example will be at least ₹41,00,000 per acre plus replacement homes and additional services per Schedule III to VI of the proposed bill. Even if the pre-acquisition average market price for land were just ₹22,500 per acre in the above example, the proposed R&R, other entitlements and Schedule III to VI would raise the effective cost of land to at least ₹33,03,000 per acre.
The LARR Bill of 2011 proposes the above benchmarks as minimum. The state governments of India, or private companies, may choose to set and implement a policy that pays more than the minimum proposed by LARR 2011.
For context purposes, the proposed land prices because of compensation and R&R LARR 2011 may be compared with land prices elsewhere in the world:
A 2010 report by the Government of India, on labour whose livelihood depends on agricultural land, claims that, per 2009 data collected across all states in India, the all-India annual average daily wage rates in agricultural occupations ranged between ₹53 to 117 per day for men working in farms, and between ₹41 to 72 per day for women working in farms. This wage rate in rural India study included the following agricultural operations common in India: ploughing, sowing, weeding, transplanting, harvesting, winnowing, threshing, picking, herdsmen, tractor driver, unskilled help, mason, etc.

Issues and expectations regarding compensation

Issues

1. Compensation criteria is not understandable/clear
2. Compensation prices variation place to place
3. Compensation as per newly amended bill is not distributed

Example

  1. Land acquired in the period bill is under discussion in parliament.
  2. Not many changes are done in bill after parliamentary discussions and LARR 2011 bill passed with marginal changes.
  3. Large land acquisition are done by government/others during the period bill is under discussion in parliament.
  4. During this period LARR 2011 bill under discussion, Compensation is as per previous Land acquisition bill
  5. Multiplication factors in rural and urban area are added rather than increasing the base Land cost

    Expectations

  6. Bill recommendation to be implemented as dated bill appeared in parliament.
  7. Compensation should be time bound and to amount to be released with is a time frame / as per bill recommendations.
  8. Fair compensation including life time productive income from land to Farmer/land owner
  9. Land Holding & maintenance cost to farmers/Land owners till land acquired by government/others

    Benefits and effects

The 2013 Act is expected to affect rural families in India whose primary livelihood is derived from farms. The Act will also affect urban households in India whose land or property is acquired.
Per an April 2010 report, over 50% of Indian population derived its livelihood from farm lands. With an average rural household size of 5.5, LARR Bill 2011 R&R entitlement benefits may apply to about 10.9 crore rural households in India.
According to Government of India, the contribution of agriculture to Indian economy's gross domestic product has been steadily dropping with every decade since its independence. As of 2009, about 15.7% of India's GDP is derived from agriculture. Act will mandate higher payments for land as well as guaranteed entitlements from India's non-agriculture-derived GDP to the people supported by agriculture-derived GDP. It is expected that the Act will directly affect 13.2 crore hectares of rural land in India, over 10 crore land owners, with an average land holding of about 3 acres per land owner. Families whose livelihood depends on farming land, the number of livelihood-dependent families per acre varies widely from season to season, demands of the land, and the nature of crop.
Act provides to compensate rural households – both land owners and livelihood losers. The Act goes beyond compensation, it mandates guaranteed series of entitlements to rural households affected. According to a July 2011 report from the Government of India, the average rural household per capita expenditure/income in 2010, was ₹928 per month.
For a typical rural household that owns the average of 3 acres of land, the Act will replace the loss of annual average per capita income of ₹11,136 for the rural household, with:
If the affected families on the above rural land demand 100% upfront compensation from the land acquirer, and the market value of land is ₹1,00,000 per acre, the Act mandates the land acquirer to offset the loss of an average per capita 2010 income of ₹11,136 per year created by this 3 acre of rural land, with the following:
The effects of LARR Bill 2011, in certain cases, will apply retroactively to pending and incomplete projects. land acquisition for all linear projects such as highways, irrigation canals, railways, ports and others.

Criticisms

The proposed Bill, LARR 2011, is being criticized on a number of fronts: