Illustration: Liu Rui/GT

Land acquisition has become one of the most challenging issues for India. Many parts of the country have experienced violent protests against the compulsory acquisition of land. In some cases, farmers and tribal communities have chosen to buck the authorities rather than part with their rights. 

Consequently, a large number of developmental projects worth hundreds of billions of dollars have become stuck half-way. The protests against land acquisition pose a risk to the sustainability of India's growth rate.

Moreover, the issue has implications for national polity. It played a major role in the voting out of the previous governments in the states of Uttar Pradesh and West Bengal.

At the federal level, there are sharp differences over the issue not only between the ruling coalition and the opposition parties, but also within the government. Since 2007 the federal government has introduced three bills to revamp the land acquisition law, but has failed to get them passed by the parliament.

There is temptation in some quarters to blame the sluggish democratic process for the slow pace of industrialization and economic growth. Such a belief is of course totally misplaced. It is the misuse of the Land Acquisition Act (LAA) 1894 that is solely responsible for the current state of affairs.

Demand for land by private companies has increased alongside economic growth. Due to poor land records and small holdings, companies find it difficult and costly to buy land directly from the owners. In contrast, it is relatively easy to get the government to use its powers of eminent domain. The LAA is ambiguous on what constitutes a "public purpose." The nexus of corrupt politicians and private companies have exploited this ambiguity in the law.

On several occasions, "public purpose" has been cited to acquire agricultural land for activities that cannot meet any reasonable public-interest criteria. State governments have frequently used the "emergency clause" to avoid the mandated public hearing on the desirability of compulsory acquisition. 

In numerous instances, land acquired ostensibly for governmental use was covertly transferred to private hands. This has fueled the perception that private interests, rather than public need, have come to dictate the official decision-making.

What has made things even worse is that the compensation provided to the landowners has invariably been far less than the market value of their property.

Inadequate compensation is the primary cause of the rampant litigation over compensation. However, litigation in India is a costly and protracted process. Only the rich can afford it.

The new land acquisition law is expected to put an end to some of the above mentioned abuses. However, it has made the acquisition process unnecessarily complicated. Moreover, the bill also has controversial provisions.

According to the media reports, it requires private companies to buy at least 80 percent of the land directly from the owners and the rest will be acquired by the government. It will be difficult to get consensus on this issue, since some political parties are against acquisition for companies  altogether. Even more problematic will be the actual use of this provision without further eroding the public trust.

At the same time, it does not have to be all gloom and doom for companies. In the past, domestic as well as foreign companies have relied heavily on the state governments to get land for their projects. The alternatives have not been seriously explored. Direct but collective bargaining with the landowners seems to offer important channels for a fair exchange.

In numerous instances companies have successfully bought hundreds and thousands of acres of land directly from the owners. The owners themselves have taken the initiative to pool and provide contiguous land. Making landowner partners in the developmental process could hold the key to India's land woes.

The author is an associate professor of Delhi School of Economics, University of Delhi. ramsingh@econdse.org