PROJECT REPORT ON

Diversion of Land
Project submitted to:

Ms.Sonal Das
Submitted By:

Vivek kumar sai

Roll no. 146
Semester VIII
Land Law
Submitted on:16/11/2015

HIDAYATULLAH NATIONAL LAW UNIVERSITY

RAIPUR, C.G.

Acknowledgements
I would like to express my heartfelt gratitude to my teacher, Ms. Sonal Das for her unstinted
support. The topic given to me for my project is one that I really enjoyed to do it.
Thank you, jurists, masters of law and various governmental departments for the expression
of your ideas, thoughts and immense amount of knowledge in the form of the various books,
articles and opinions. Without all of this, it would have been impossible for me to complete
my project.
My gratitude also goes out to the staff and administration of HNLU for the infrastructure in
the form of our library and IT Lab which was a source of great help for the completion of this
project.
Vivek kumr sai
Semester- VIII

RESEARCH METHODOLGY
The research was based on descriptive sources of information comprising of books,
newspapers as well as Internet. The topic has been extensively researched upon so as to
accomplish the goal of completion of the current project report.
Sources of Data:
The following secondary sources of data have been used in the project1. Books
2. Websites
3. Commentaries
Method of Writing:
The method of writing followed in the course of this research paper is primarily analytical.
Mode of Citation:
The researchers have followed a uniform mode of citation throughout the course of this
research paper.

Table of Contents
Acknowledgements................................................................................................................2
Introduction............................................................................................................................5

Land use and allocation change economy.................................................6

Diversion of forest land for non forest land.........................................................8

Conversion of per urban agriculture land ............................................9

Impact of diversion of land in urban periphery selected.11

compensatory mechanism problem and way forword.13

Conclusion............................................................................................................14
Reference.............................................................................................................................15

INTRODUCTION
One of the important and yet less attended downsides of Indias major stride towards
economic development has been diversion of land.
The legal structure that governs land alienation and compensation in India is complex. While
policies pertaining to diversion of land from forest and agriculture to other uses seemed
conservative (and also conservationist), in practice they remained liberal and lacked
transparency. There is a lack of information sharing on the rationale for the diversion of land
and the basis and extent of compensation. The process of diversion of land from the forest or
agriculture sector is the outcome of a congruence of various vested interests those of the
state, the private sector (often multinational corporations) and the local elites. Globalisation
has fostered these processes further through liberalisation of the land use policies. Land is in
limited supply and is the critical factor of production for almost all kinds of economic
activities as well as for human settlement (Shah et al, 2005). It is therefore essential that its
allocation across different economic activities and uses is based on sound theoretical
premises, combined with the ground realities of multiple objectives some of which often go
beyond the narrowly defined goals of economic growth per se. In a predominantly agrarian
economy such as India, the entitlement to livelihood and access to factors of production,
especially land, are important objectives that need to determine allocation of land across
different uses and users. The allocation mechanism must not only address the needs of
economic activities or sectors (including housing) but also look into the specific needs of
various ecosystems, regions and communities.
The conservationist, hence conservative, policies pursued so far are prohibitive rather than
proactive in terms of evolving a rationale for allocating land for the rapidly growing sectors
other than the primary sector, which contribute more than three-fourths of Indias
GDP. But this does not mean absence of diversion to other uses. In fact, these policies have
given rise to processes and mechanisms that have proved counterproductive to the very cause
of conservation.

The issue of land allocation has been one of the most contested policy issues. It has triggered
many controversies, especially when developmental projects for irrigation, mining and other
infrastructure (like ports, etc.) have involved large-scale acquisition of land and/or
displacement of the people. The latest is the controversy about special economic zones
(SEZs). In fact, urbanisation is the most important use to which land is being diverted.

2. LAND USE AND ALLOCATION IN CHANGING ECONOMY

Land use and land markets have been subject to large number of regulations across countries
developed and developing. The basic rationale underlying state regulations is the nonrenewable nature of land, which is the basic factor of production. Land, besides being critical
for ensuring sustained economic growth, under different categories of capability and uses,
performs specific ecological functions. Each of the various uses, especially in primary sector
activities (such as crop cultivation, pasture development, plantations, livestock rearing, inland
fisheries and mangroves in the coastal areas) makes a specific contribution towards sustaining
diversity and thereby ecological balance. Moreover, land and its use or management is
important for facilitating drainage, hence governing groundwater regimes or catchments
(Government of India, 2006). This, in turn, has special significance for managing natural
resources on a watershed basis. Minerals beneath the surface land also have special
implications insofar as they are both exhaustible and non-renewable.
Finally, land, as noted earlier, plays a significant role in shaping the socio-cultural milieu in
predominantly agrarian economies. Although rooted in economic value as an ultimate source
of economic security, land becomes a symbol of social status and a means of deriving
political power. It is in this context, that various economies have tried to evolve a strategy for
land use and its allocation over different sectors. The most important thread underlying the
policy approaches across various economies is recognition of market failure in allocating land
across different economic activities, especially the shift away from the primary sector, where
intrinsic value of land as a natural resource is still retained. Obviously, marginal productivity
measured in terms of monetary value is not the appropriate indicator for determining the
diversion of land from the primary to other sectors in the economy.
The demand-supply dynamics, at a given point in time or even in the context of forward
trading and speculative transactions, may not completely capture the future as well as existent
value of land, and the forest, water and minerals embodied therein. This mainly leaves

land markets within urban and peri-urban areas, where land is already diverted from primary
sector activities and is subject to growth, which at least in theory, is possible to stipulate.
Economic theory, especially in the neoclassical tradition is thus most applicable to land
markets in urban and per-urban areas. For the rest, perspectives emanating from various
disciplines or analytical frameworks, such as environmental and ecological economics,
political economy and development with equity and a human face, may have to be combined.
Unfortunately, a holistic perspective like this is yet to emerge for simultaneously addressing
the critical issue of land use, allocation and management.
Big dams have a peculiar feature of representing one of the most successful experiences in
Indias economic development and at the same time being a major culprit of displacement
and uneven development in the country. The big irrigation projects have contributed
significantly towards enhancing Indias capacity to produce food grains and thereby provide
employment as well as food security (beside flood moderation and drought mitigation),
hydropower generation and groundwater recharge . But the flipside of this development is
fairly large, especially when one looks at complex ecological issues based on their long-term
environmental impact. Displacement caused by large irrigation projects is considered to be
the most contentious, simply because of the fact that these encompass extensive tracts of
land. Most of the displaced populations are the inhabitants of the upper reaches. Owing to
poor quality of land there, they generally live in poverty. The construction of dams
necessitates their displacement, which only adds to their miserable condition. As the quality
of land is generally not good, it does not fetch high prices and, if land is provided, it is also
uncultivable. The net result of the entire process is that the poor are made to suffer while the
farmers in the lower reaches reap all the benefits. Thus, the equity issue remains unattended.
An important aspect of the draft Resettlement and Rehabilitation (R&R) Policy in irrigation
is provision of land in the command area. In fact, this should be the acid test for assessing the
benefit to cost ratio of an irrigation project. The experience over a long period of time,
however, suggests that this is not feasible politically as well as administratively.
Alternatively, the norm of land for land has been accepted as part of the R&R Policy. The
Sardar Sarovar Project (SSP) on the Narmada river in Gujarat presents exemplary evidence
on how the norm could be followed in actual practice.

3.DIVERSION OF FOREST LAND FOR NON FOREST USE

The National Forest Policy, 1988 stood enunciated pursuant to Resolution No. 13/52-F, dated
12th May, 1952 of GOI to be followed in the management of State Forests in India. The said
Policy stood enunciated because over the years forests in India had suffered serious depletion
due to relentless pressures arising from ever increasing demand for fuel wood, fodder and
timber; inadequacy of protection measures; diversion of forest lands to non-forest uses
without ensuring compensatory afforestation and essential environmental safeguards; and the
tendency to look upon forests as revenue earning resource. Thus, there was a need to review
the situation and to evolve, for the future, a strategy of forest conservation including
preservation, maintenance, sustainable utilisation, restoration and enhancement of the natural
environment. It is this need which led to the enunciation of National Forest Policy dated 7th
December, 1988. The principal aim of the Policy was to ensure environmental stability and
maintenance of ecological balance. The derivation of direct economic benefit was to be
subordinate to the principal aim of the Policy . Under essentials of forest management it is
stipulated that existing forests and forest lands should be fully protected and their
productivity improved. It is further stipulated that forest cover should be increased rapidly on
hill slopes, in catchment areas and ocean shores. It is further stipulated that diversion of good
and productive agricultural lands to forestry should be discouraged in view of the need for
increased food production . Under the Policy a strategy was prescribed vide . The goal is to
have a minimum of one-third of the total land area under forest or tree cover. In the hills and
in mountains the aim is to maintain two-third of the area under forest or tree cover in order to
prevent erosion and land degradation and to ensure the stability of the fragile ecosystem.
village and community lands, which is the common feature in north-east regions, not required
for other productive uses, should be taken up for development of tree crop and fodder
resources and the revenue generated through such programmes should belong to the
panchayats where lands are vested in them and in other cases such revenues should be shared
with local communities to provide an incentive to them and accordingly land laws should be
so modified wherever necessary so as to facilitate and motivate individuals and institutions to
undertake tree farming. Vide para 4.3.1, the Policy lays down that schemes and projects
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which interfere with forests that cover steep slopes, catchment of rivers, lakes and reservoirs,
geologically unstable terrain and such other ecologically sensitive areas should be severely
restricted. Tropical rain/moist forests, particularly in areas like Arunachal Pradesh, Kerala,
Andaman and Nicobar Islands should be totally safeguarded. No forest should be permitted to
be worked without the Government having approved the management plan in a prescribed
form and in keeping with the National Forest Policy (See para 4.3.2). Under para 4.3.4.2 the
rights and concessions from forests should primarily be for the bona fide use of the
communities living within and around forest areas, specially the tribals. The Policy
recognizes the fact that the life of tribals and other poor people living within and near forests
revolves around forests and therefore the Policy stipulates vide para 4.3.4.3 that the rights and
concessions enjoyed by such persons should be fully protected and that their domestic
requirements of fuel wood, fodder, minor forest produce and construction timber should be
the first charge on the forest produce.
4. CONVERSION OF PERIURBAN AGRICULTURAL LAND
Four important features distinguish conversion of land in the urban fringe from the issues of
land acquisition and displacement noted above. These are:
1) Development of the urban fringe is the single most important
factor causing diversion of land.
2) The land is generally sold out by the owners rather than acquired; hence, there is presence
of a land market (though imperfect) in the urban fringe. This would imply that the
phenomenon is more of voluntary rather than forced displacement.
3) The land in the urban fringe is generally more fertile as compared with wasteland available
4) There is a fairly well-developed theoretical literature on land markets and perspectives on
peri-urban development.in areas further away from urban centres.

There is a fairly rich and growing literature on the theme of conversion of agricultural land in
urban and peri-urban areas. It is neither the objective nor within the scope of this paper to
review the entire literature. The limited objective here is to understand the main

features of theoretical applications and empirical findings from studies that have gone into
examining the cost and benefit of land conversion. The vast literature on urban economics
provides a basic rationale for urbanisation and examines factors that determine the pace and
pattern of urban growth in the midst of vast and, at times, stagnant rural economies,
especially in developing countries like India. Productivity differentials and growing
populations as well as underemployment in rural economies are the two basic forces
pulling and pushing populations out of rural areas. Agglomeration economies, locational
economies and economies of scale and scope are other major factors operating on the pull
side. Growing disparities in public investment in agriculture and allied activities (vis--vis
other sectors) on the one hand, and basic amenities (in rural vis-vis urban areas) on the
other, lead to further impetus for the push
factors.
The literature, while reinstating the inevitability of urban growth and the shift of the labour
force away from the primary sector, has paid little attention to the implications of these
spatial as well as sectoral shifts for the determinants of the processes of land allocation
between rural and urban areas, or, equivalently between agriculture and nonagriculture
(Bhadra and Brando, 1993: 2). The urban economics literature usually treats the role of the
rural sector as residual, and most of the analyses employ the partial equilibrium model in
isolation of the agricultural economy.
India, like most developing economies, is also characterised by the phenomenon of overurbanisation, owing mainly to the push factors driving large number of in-migrants to the
urban centres. This raises a question as to whether the low level of industrialisation (and
employment growth therein) will ever reach a scale to lift a large proportion of the population
to income levels high enough to initiate the process of de-concentration of urban centres
(Vining et al., 1986). This implies that urbanisation, given the population dynamics and
sectoral imbalance in terms of output and employment growth, is a reality to reckon with.
Recognising the close interface between the agriculture and nonagriculture sectors and
between rural and urban economies, some of the relatively recent strands in urban economics
have laid increasing emphasis on peri-urban environment or rurban development (Allen,
2003). Prima facie, the new perspective is built on the ruralurban continuum and seeks to
retain, to the extent possible, rurality, while planning for urban development and natural
resource use and/or strengthening the co-existence of ruralurban features within and in the
periphery of urban areas. Environmental planning and management of peri-urban areas should
therefore draw on three distinct fields:

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rural, regional and urban planning. This is so because ecological,economic and social
functions performed by the peri-urban area affect both urban as well as rural areas. In this
situation, the debate over compact vs. expanded cities assumes special significance
(Richardson et al., 2000). Whereas the former seeks to minimise diversion of agricultural
land, the latter may open up new avenues for agriculture and related services to cater to the
urban demand, by retaining basic elements of natural resource management and rural
economies. The second approach may require broad-based development of infrastructure as
Both have strengths and weaknesses. What is therefore needed is a comprehensive analysis of
cost benefit under alternative scenarios of growth in rural economies and patterns of
urbanisation. Such analyses have until recently been more or less missing.

5. IMPACT OF DIVERSION OF LAND IN URBAN PERIPHERY:

SELECTED EVIDENCE
Land conversion surrounding urban centres presents a typical scenario, different from that in
most other conversions, say forest or remote rural areas. What makes land conversion in the
rural urban fringe4 different is the fact that most urban centres evolved
originally because of the natural endowments of the area.5 Thus, the fringe lands are
generally more fertile and have been put to agricultural use. With increasing population
pressure, such lands are bound to feel the strain.
The situation is further complicated by an aggregation of uses by a variety of stakeholders. Even
the farmers living in the area might find non-agricultural income sources to be more
profitable and may go for land speculations .
Evidence from Calcutta

There is a small but growing literature examining the impact of urbanisation, especially
diversion of agricultural land, on the rural economy and communities. Using a dual economy
model in the context of Calcutta Metropolitan District in India, observed that conversion of
rural land into urban uses may lead to improvement of aggregate welfare for the regional
economy. However, this observation is subject to the limitation that the welfare impact is
shaped by the characteristics of urban economies. The statistical results, as in the case of
many developing countries, appear to support the hypotheses of over-urbanisation. This, in
turn, may reinstate the case of broad basing the farm economy, which may give a further
boost to non-farm activities, in both rural areas and small/medium towns.
Unruly development in New Delhi

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The pressure of increasing urban space has been felt most severely in New Delhi, particularly
in the past two decades. The rapid expansion of urban boundaries to the bordering villages
has caused widespread changes in the land use and livelihood patterns in these villages. In a
detailed analysis of a rural-turned-urban block in northern Delhi (Bentinck, 2000), the impact
of urbanisation on the intertwined aspects of land use and occupation has been found to be
largely positive.
Urbanisation of these villages has brought them physically and socially closer to the
metropolitan city and much of the benefits accrued can be explained by the increase in
opportunities to commute to the city regularly. This has encouraged the village dwellers to
opt for formal and informal work in the service sector in the city. But the real boom in the
economy in the fringe areas has been brought about by a surge in the rent and tenancy
business. Most of the factories and enterprises set up in these areas belong to the city
dwellers, hence the owners the erstwhile large farmers realise good amounts on the rented
land. Very few villagers have gone for the industrial activity themselves, probably for the lack
of experience and training, and have instead preferred joining government service or entering
the transport business.
This does not mean that only the large farmers have benefited. The marginal farmers and
landless and migrant labourers have all entered the service sector, joining white or blue collar
jobs, depending on their educational level. Of these, few of the economically better villagers
have opened small commercial units; the migrant class has preferred to work in the newly
created small manufacturing units in the village itself.
Another notable aspect of urbanisation in the fringe areas in New Delhi has been that
concerning agricultural activity. Many of the farmers have continued with agricultural
practices, of course with increasingly intensive cultivation and changes in cropping patterns.
Thus, floriculture and horticulture, fuelled by a huge market in the city, have replaced staple
crops. Many of the villagers have even gone for high-value perishable crops, with some
opting for marketing the produce themselves with a view to reaping higher benefits.
Similarly, dairy farming has also signified gains to the farmers. Urbanisation also has had
some adjunct benefits for agricultural activities, for instance easier access to fields through
better roads, flood prevention and so on. Thus, the net effect of urbanisation on agriculture in
the fringe villages is also found to be positive. All this has been compounded by an obvious
increase in urban infrastructure facilities and amenities in these villages. The electricity and

12

water supply and, more importantly, health services have greatly improved, bringing
increased awareness about health and hygiene.
Thus, it can be largely inferred that urbanisation of the fringe villages has had a positive
impact on the socio-cultural and economic lives of the original dwellers, across all classes.
The obverse side of the story stands mainly on ecological concerns. Increased industrial
activities resulted in a sharp increase in various types of pollution. This, in turn, has had a
very bad effect on the health of poor labourers, who generally live in slums close to the
factories. Several incidences of asthma and tuberculosis have been found since the
establishment of industrial units. Second, rapid population increase in these villages has
resulted in increased congestion. The richer erstwhile landowners have moved out from the
villages and settled in the city or elsewhere.
6. COMPENSATORY

MECHANISMS:

PROBLEMS

AND

WAY

FORWARD
Although there are clearly laid down norms and procedures for compensation under the Land
Acquisition Act, the actual practice is far below the provisions made in the policy.7 We do not
intend to get into the details of the critical gaps in the process of acquiring land. The
following aspects assume special significance in this context:
Multi-stakeholder agency to inform, negotiate and oversee the processes of land
acquisition and compensation;
Assured financial provision for supporting resettlement and rehabilitation of the PAPs;
Transparency and scope for negotiations within a stipulated sphere;
Monitoring over a longer period of time;
Ensuring avenues for productive investment of the one-time cash compensation received
by farmers selling land/PAPs receiving compensation.
The draft R&R Policy proposes a special institutional mechanism to take care of these aspects
but, essentially, an agency like this ought to be outside the states domain.
The bottom line is that if the project cannot pay for the cost of compensation and/or the state
is unwilling to accept checks and balance through the agency of the people, especially the
PAPs, this may lead to a primitive form of capital accumulation as noted by Chandrasekhar
(2006). In this case, society may have to be prepared to give up the expected benefits from
developmental projects that exclude people who lose their basic source of livelihood.
13

Conclusion
The conservationist, hence conservative, policies pursued so far are prohibitive rather than
proactive in terms of evolving a rationale for allocating land for the rapidly growing sectors
other than the primary sector, which contribute more than three-fourths of Indias
GDP. But this does not mean absence of diversion to other uses. In fact, these policies have
given rise to processes and mechanisms that have proved counterproductive to the very cause
of conservation.

14

Reference
Chhattisgarh land revenue code

15