LARR 2011: Is it really Pro-Industrialization?

The Land Acquisition, Rehabilitation and Resettlement Bill, 2011 (LARR) is set to become a law. But does this really speed up industrialization.

LARR as a law will actually proved to be a hindrance in the industrialization process. It is just a populist measure of the political class to get votes by wooing the poor farmers and landowners. It will ultimately cut the job prospects in industrial sector and will not improve the quality of living of the Indian poor, which actually is its primary objective. LARR Bill is used as a tool by the political class to gain political advantage in coming Loksabha elections 2014.

Procedures & provisions for future land acquisition by Indian government for infrastructure projects or for its own need through PPP route has been made very complicated.
These procedures include:
• Social impact analysis of acquisition.
• Identify & compensate those who will be affected
• Capital gain will be shared over the next 10 years with the original owner.
• Under Rehabilitation & Resettlement provision, the purchasing party should provide 25 infrastructure services.
• Land acquisition will be prohibited beyond 5% in districts having multi-crop agriculture and beyond 10% in those single-crop agriculture districts.
• The acquisition can be completed only after having approval of 80% landowners.

The ostensible complex procedure being formed to safeguard farmer’s interest will actually end up harming their interests, because complex rules and regulations will bring a standstill in PPP projects which will result in decline of land prices that will make the landowner in loss & make them trapped in their less productive operations. It will also lead to huge amount of red tapes, litigation instead of making it simple and clear.
And the panoply of LARR’s R&R provisions are being applied on private purchase of land i.e. if the size of land to be purchased is 50 acres in urban region & 100 acres in rural region than an application should be filed to the district collector and who will further refer the case to the Commissioner for proper satisfaction under the Act of rehabilitation & resettlement. And in addition the huge increase in land price due to LARR’s pricing proposal, it will make projects more unviable.

Some of LAAR proposals:
• Rural land acquisition cost will be 4 times the market rate and for urban 2 times the market rate.
• Land owner compensation will have:

o A onetime allowance of Rs 36000
o A family member will be employed or Rs 500000 up-front or Rs 24000 per year adjusted for inflation. The choice is up to landowner between the two.
o Rs 50000 for resettlement.
o Rs 50000 for transportation.

The cost of R&R provision plus the costs of bearing 25 infrastructure services have to be added to land price which will ultimately increase the land price by one crore per acre. Price of rural land will be increased 5 times with the coming of LARR. The LARR will ultimately make land more expensive to purchase & make a mess with the complex procedure & red –tapism.

And these features in LARR will resultantly make Indian industrialization degrade in coming years. Ultimately what the poor farmer will get, no proper housing, low productivity agriculture operation. And this will further decrease the rate of manufacturing and it will abandon the new manufacturing policy which objective is to increase the manufacturing sector’s share of GDP to 18%. The opposition parties could have opposed this bill or should oppose in future parliamentary sessions before it deteriorates the whole industrialization process.

Dinesh Singh Adhikari
IIIT Allahabad