Towards a

Pragmatic
Land
Acquisition
Policy for
Industrial Use

Main Philosophy behind Land Acquisition Act, 1894

The fifth aspect of this philosophy is
that there is only one way of
development and that is to
industrialize and industrialize even
more and that this will benefit
everybody.

Compensation
The third aspect is that compensation is
payable only to the owner of the land
or a legally recognized tenant.
Everybody else who is dependent on
the land are to be ignored.

Individual centric
This is the main philosophy behind this
Act. The State may directly own lands
through acquisition, purchase or by
default. That means all lands which are
not privately owned are owned by the
State. But even in respect of privately
owned lands the State has the power of
eminent domain.

Industrialization = development

The fourth aspect of the underlying

philosophy is that money can
compensate for all losses and once
people are paid adequate
compensation they can go on to
have a wonderful life

Ignore other dependents

The second aspect of the

philosophy be- hind the Act is that it
is constructed around an individual
whose land is acquired.

State of eminent domain

01
02

03
04
05
06

Process of acquisition under Land Acquisition Act,

1894
Under Section 4, if the State is satisfied that land in a given locality is required for public
purpose then a public notice to this effect will be put up in the locality. After this the survey of
the land can be carried out.

Hereafter, under Section 5A, any person with a claim in the compensation for the land to be
acquired can raise an objection with the collector within 30 days who will in turn give a
personal hearing.

The next step is the Section 6, A declaration which has to be issued by the government after
taking into account the objections. This notification is required to set out the details of the the
public purpose for which it is to be acquired. It will be treated as conclusive and after this the
government can proceed to acquire the land.

After this, a public notice is given under Section 9, asking that claims of compensation be
made to the collector before a notified day.

The next step is the enquiry by the collector who will decide the value of the land. Section 23
provides that the authority shall take into account the market value of the property on the date
of the Section 4 notification and an additional payment of 15% of the market value . Section
24 says that any increase in the value of the land acquired owing to the use to which it is
likely to be put is to be ignored.

Section 17 is the urgency clause which permits the collector to take possession of
land in the event of an urgency within 15 days of the Section 9 notice.

Impediments to Industry Legal Controversies

The main legal controversies are the following:

A. What constitutes public purpose for which the
lands are to be acquired and who determines this?
B. Is the government obliged to take into account the
kinds of lands it can acquire for instance
agricultural as against fallow lands, etc?
C. Who is entitled to compensation under the act?
Only the landowners or those dependent on land
such as landless labourers, artisans, etc?
D. What is meant by compensation? Does it include
only monetary compensation and if so how much?

Impediments to Industry Defining Public Purpose

Firstly, The definition of public purpose under the act is totally vague and the section is
much litigated.
Secondly, the courts have also held that if a land is acquired for a particular public
purpose and is subsequently used for another public purpose there is nothing wrong
with it.
Thirdly, the courts have held that even if a portion of the land is not put to public use
but becomes surplus for the use it cannot revert back to the owner because the land has
already been vested in the government.
Fourth, while the landowner can challenge the acquisition order such a challenge can
only be on the limited ground of quantum of compensation or its apportionment and
not on the issue of public purpose unless of course mala fides are proved.

Land Acquired For Yamua Expessway Challenged:

The two most important grounds were that
1. apart from acquiring lands for the expressway itself, there were other lands being
acquired for amusement parks, etc, which could not be held to be acquired for a public
purpose.
2. The second ground was that the land was being acquired and handed over to a private
developer.

Impediments- Compensation- How, to whom and

How Much
According to the Land
Acquisition Act 1894, only
monetary compensation will
suffice
They were given no
rehabilitation, no land for
land no jobs, no shares

How ?

To begin with, only those

persons are entitled to
compensation who have
aninterest in the land.
Landless labourers who may
have worked on the lands for
decades are not to be given
any compensation.

Who ?

In Korba, the villagers were protesting

against the planned expansion of a 1320
MW power plant set up by Lanco
Amarkantak
Earlier, we gave our land willingly on
the condition that the company would
provide us with jobs, said Laharam
Murao, a village leader from Imilibhata

If a substantial part of a village is

acquired,the artisans on whom the
landownersor tenants may be
dependant do not have to be provided
any compensation.
If common village grazing land is taken
over, no compensation will be payable
to anybody and if an entire village is
acquired the fisherfolk who may be
dependent on the river for their
livelihood will not get any compensation
for loss of livelihood.

Impediments- Compensation- How, to whom and

How Much

Firstly, This has to be paid as per the

market value of the property. The
market value can be determined by
looking at amounts received in
respect of similar lands in the
neighbourhood in the recent past.
This can be highly misleading.
In virtually every sale deal a cash
component is involved (sometimes
very large) which would not be
reflected in the sale deed. Moreover,
there may not be any sale of lands in
the nearby area in the recent past
which gives a completely arbitrary
power to the authorities to Decide
the market value

How
Much ?

Secondly, at no stage is the future

price of the property to be
considered. An agricultural property
would be worth much less than
commercial property. Similarly
property acquired for constructing a
special economic zone (SEZ) would
subsequently be valued much higher.
But the Act itself provides that the
use to which the Property will be put
to in the future is not to be
considered.
Thirdly, the history of such
displacement has shown that poor
people often do not know how to
invest money, can be easily misled or
misguided and ultimately be left with
nothing.

Singur Case
The size of plots acquired were non-negligible
The majority of those affected were marginal
landowners engaged in cultivation
The governments compensation offers were
approximately equal to the reported market
values of acquired plots on average, but the
inability of the official land records to
distinguish between plots of heterogeneous
quality meant that a substantial fraction of
farmers were under-compensated relative to
market values
Those under-compensated were significantly
more likely to refuse the compensation offers,
as were those whose livelihoods were more
dependent on agriculture;
Incomes and durable consumption of affected
owners and tenants grew slower between 2005
and 2010 compared with unaffected owners
and tenants earnings of affected workers fell
faster than unaffected workers.

Land acquisition resulted

in substantial economic hardship
for large sections of
the rural population, for many of
whom compensation
offered was inadequate.

Stakeholder wise Analysis

TATA Motors

Farmers

The land chosen by the former Government

Was preferred for its availability of infrastructure
Renewal of lease every year
Demanded a huge compensation

Forced to submit their land holdings details

Inadequate compensation
Delayed housing facilities
The land was the most fertile in West Bengal

Government

Was advised to maintain the status quo of land

distribution
Cannot terminate the lease forcibly
Competition

Major Criticisms
Designed by the British to serve their only purpose of taking-over land to serve
their colonial interests, the law is too narrow and lacks humanitarian touch and
sense of justice that any modern law should have.
Method of fixing the monetary compensation
No consideration of rehabilitation
A lack of rehabilitation policy violates Right to Life under Article 21 and Right to
Equality
under Article 14 (interpreted as right against arbitrariness) of the
Constitution of India.

Perversities in Compulsory Acquisition in India

Unfair Process of Valuation
Natural Resources and Intangibles

Contd..
No provision for dialogue with the affected people- a mockery of
democracy

The objections will be valid on one or more of the following grounds:

That the purpose for which the land is proposed for acquisition is not a public purpose.
That the land is not or less suitable than another piece of land for the said purpose.
That the area under acquisition is excessive.
That the acquisition will destroy or impair historical or artistic monuments or will desecrate
religious buildings, graveyards and the like.

Total silence about project affected landless people- Violation of

traditional community right
Vague and wide Definition of Public Purpose- Lack of application of
Section 4 and Section- 3(f) rules.

Key contentions against Land Acquisition Act, 1894 & Resolutions

Proposed
Attempts at providing alternate
livelihood or lifelong support is
attempted in the new Act

Compensation
The Act forbids land acquisition when
such acquisition would include multicrop irrigated area. Additionally,
wherever multi-crop irrigated land is
acquired an equivalent area of
cultivable wasteland shall be developed
by the state for agricultural purposes.

Rights Of The Land Owners (Only)

Public purpose now defined as,
For strategic purposes relating to
naval, military, air force, and
armed forces, infrastructure
projects
project for planned development or
the improvement of villags.

5 Rehabilitation and resettlement ignored

4 times the registered value will the

compensation in rural areas and two
times will be in case of urban areas

Limits on acquisition

Definition of Affected Families

has now been expanded to
include livelihood losers as well.

Ambiguity regarding Public Purpose

Key Elements of LARRA 2013

Return of
Unutilized
land

1
Social impact
assessment

2
Acquisition of
multi-crop
land

Provisions
for SCs
& STs
Displacement

Requires the consent of no less than 70% for PPP and 80% for
private projects respectively.

Time bound assessment to be done within six months.

Safeguards food security and to prevent arbitrary acquisition

by directing states to impose limits on the area under
agricultural cultivation that can be acquired

Compensation to be four times the market value in rural areas

and twice market value in urban areas

No one shall be dispossessed until and unless all payments are

made. Multiple displacements of single owner are not allowed

Development Plan has to be prepared for settling land rights,

One-third compensation paid up front, Resettlement in the
same scheduled area, Approval from local bodies, fishing rights
and additional subsistence

Affected families includes anyone whose livelihood is affected

by the acquisition, Choice of employment or gratuity
,Employment in the project for which land is acquired (or)
One-time grant of Rs.5 lakh per family (or) Annuity payment
of Rs.2,000 per month per family for 20 years
.
States to return the land either to owner or to the State Land
Bank.

Consent

Resettlement
& rehabilitation

3
Compensation

Land Acquisition , Rehabilitation and

Resettlement Act, 2013
ISSUE

1894 act

2013 act

Compensation

Based on the market

value

Market value
doubled in rural
areas but not in
urban area

Market value

Based on the current

use of land. Explicitly
prohibits using the
intended use of land
while computing
market

Higher of: (a) value

specified for stamp
duty, and (b) average
of the top 50% by
recorded price of
sale of land in the
vicinity

Solatium

30%

100%

Profit sharing

If the acquired land

is unused and is
transferred, 20% of
the profits shall be
shared with the
original land

Recent amendments made in the Act

Modi government:
Removal of consent clause and Social Impact Assessment
including 13 so far excluded Acts under the Land
Acquisition Act

Oppositions view:
Congress has strongly opposed
the ordinance saying anybody
who is pro-farmer should raise
their voice against it. But
according to an Indian Express
report, Haryana and Kerala
wanted to remove the consent
clause for PPP or bring it upto
50%. States like Assam, Haryana
and Himachal Pradesh felt that
the definition of affected family is
too broad.
On social impact assessment,
Karnataka, Kerala, Maharashtra
and Manipur all demanded that
the process be restricted to only
large projects.

multi-crop irrigated land can also be acquired for these

purposes
mandatory condition for provision of job for those whose
land is acquired for industrial corridors

Land Acquisition ,
Rehabilitation and
Resettlement Act, 2013
Arguments favoring the ACT:
Arguments against the ACT:
No reference to adivasis who live in areas that are still not
covered by the Fifth Schedule
ambiguous last resort principle
Heavily loaded in favour of land owners
arbitrary mark-up to the historical market price to determine
compensation amounts
places no limit on total compensation or number of claimants
The beneficiaries of the Bill, with guaranteed jobs for 26 years,
will have no incentive to be productive
Amartya Sen claims prohibiting the use of fertile agricultural
land for industries is ultimately self-defeating
bill fails to adequately define "public purpose
Bill's sections 97, 98 and 99 are incongruous with other laws of
India in details and intent
Does not mandate a process by which the time involved in land
acquisition is reduced from current levels

Comparative Analysis with Other Countries

Principle of Land
Acquisition

Land Valuation
Methods
Land Valuation Methods

Land Acquisition Principles

value to the just

owner
compensation

most of the
Commonweal
th countries USA
Australia
Philippines
Hongkong
Brazil
Cambodias

reasonable
compensation

China
British Columbia

Comparab
Net value of
le sales Replacement income from
technique
value
the land

Determining
original land
Arriving at use value as
land values set by the
through
state
negotiation

Malaysia,
China, the
US, india Philippines

Peru,
Singapore,
Japan

Tanzania

Process of Land
Acquisition
compulsory procedures
China, India,
New Zealand, Austria

Consultative processes

Singapore & Philippines

Japan

China

Conclusion
The Land Acquisition Act 1894, from the colonial period till the
changes followed in 2015 by Modi government has tried to
address the shortcoming of previous acts and Bills, but only
fixing the compensation or reducing the indirect cost and time
taken for acquiring land will not lead to a point where the giant
problem of land acquisition will curtail .
So, learning from the countries abroad about the principle and
process of land acquisition methods, valuation methods will
certainly help in better implementation of land acquisition bills.
For eg. Negotiation in valuation of land, value to the owner and
consultative procedure will help in conducive process of land
acquisition, both for landowners and government.

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compensation: what really happened in Singur?. Economic and Political Weekly,
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proposal. Economic and Political Weekly, 46(41), 65-72.
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Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act)
Comparative Presentation with LA Act 1894. Rehabilitation and Resettlement
Act.

 Rigg, J. (2006). Land, farming, livelihoods, and poverty:

rethinking the links in the rural South. World Development,
34(1), 180-202.
Sampat, P. (2013). Limits to Absolute PowerEminent Domain
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https://www.youtube.com/watch?v=iG9xK3QNy3Q&t=0-Farmers sit with kerosene on pyres protesting land
acquisition in Madhya Pradesh