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Annual World Bank Conference on Land and Poverty A private sector perspective on India's Land Acquisition Act Mr. R V Kanoria Past President, FICCI Chairman,

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Presentation on theme: "Annual World Bank Conference on Land and Poverty A private sector perspective on India's Land Acquisition Act Mr. R V Kanoria Past President, FICCI Chairman,"— Presentation transcript:

1 Annual World Bank Conference on Land and Poverty A private sector perspective on India's Land Acquisition Act Mr. R V Kanoria Past President, FICCI Chairman, FICCI Task Force on Land Reforms and Policy & Chairman and Managing Director, Kanoria Chemicals & Industries Ltd March 26, 2014

2  Land Acquisition Act of 1894, enacted during British Rule  Based on principle of Government Eminent Domain concept (Power of the sovereign to take private property for public use)  Purpose got diluted when government started engaging in commerce New Land Acquisition Act: Why is it required? LA Act, 1894 : Archaic Law  LA Act, 1894 was being used as a tool by the government to purchase land at a lower price than the regular market price  Rising protests by farmers, NGOs  Increased litigation and disputes Rising Public Concern Thus, need for a new Land Acquisition Law that ensures: Non-discretionary and transparent land acquisition process Just and fair compensation to land owners Rehabilitation and resettlement of affected families Availability of land for developmental purpose

3 Noble objectives but are these being overplayed? Some displacement inevitable but to be done in a balanced manner Land ownership not necessarily the best way of livelihood security  For a transition economy, gradual shift away from agriculture to industry and services is a natural process  But in India, while share of Agriculture in GDP has dropped from 29% to less than 14% over the last two decades, nearly two-third of population is still dependent on agriculture  Industrialization is important for large scale job creation and livelihood security  Land acquisition is bound to displace people; thus sensitivities of people and their livelihood concerns need to be adequately addressed  Land acquisition process should balance the interests of the acquirer and seller keeping in view the developmental requirements of the economy The Act must look at the issue in totality giving due importance to fulfillment of development needs rather than overplay on sentiments which could potentially create ill-will, litigation and social tension Land acquisition imperative for economic development  Limited land resource  Urbanization and industrial development require large tracts of land RTFCTLARR Act, 2013 Land Acquisition (Amendment) Bill, 2009 Rehabilitation & Resettlement Bill, 2009

4 Key Challenges in Meeting Development Needs: Focus on Industry Implementation concerns Increased costs Time overrun New Land Acquisition Act poses numerous challenges in the process of procuring land for development purpose

5 Time Overrun  Timeframes not clearly specified  Minimum time to be taken for procedures: 50 months  Likely delays at each stage due to difficulty in implementation as per set procedures under the new Act

6 Delhi-Jaipur Expressway Costs have increased 3 times post the enactment of legislation Increased costs  100% Solatium over and above the Consented price  Multiplier (1-2) times for market value in rural areas  R&R applicable even for private purchase – willing buyer willing seller (no clear threshold prescribed for applicability)  Delays to increase overall cost burden

7 Implementation Challenges Multiple Public Hearings Finalization of PAPs/ PAFs Modalities for SIA  After completing the SIA  Hearing of objections  After conducting Survey and Census of the affected families  Poor land records  Difficult to authenticate affected persons that may include immigrated/ emigrated persons  Mandatory for all acquisitions  Several procedures  SIA team‘s inadequate experience  Separate ToRs for each project Implementation would be extremely difficult in cases of linear projects

8 Major Suggestions from Industry Critical Suggestions for Implementation of the Act Set clear timeframes Include ‘not-for-profit’ companies for public purpose Include manufacturing projectsSet Minimum Threshold Guideline for applicability of R&RCompensation Need for timelines specifying beginning and ending period for all activities to avoid delays Large projects (like steel, cement, etc) often face ‘last mile’ acquisition problem, thus require government facilitation for land acquisition R&R should not be applicable for projects meeting any of the below criteria Number of affected families is less than or equal to 400 Land to be acquired is less than or equal to 500 acres Employment generated is more than or equal to 1,000 numbers Consented price should not be included in the criteria for determining market value of land as former already takes into account the expectation of the land seller and is not the discounted price Definition of private company should include even ‘not-for-profit’ companies for public purpose as these often contribute to wards social development (e.g. schools, hospitals)

9 Major Suggestions from Industry Practical Suggestions for Easing Land Acquisition Process Prior ZoningStandardisation EIA to be exempted Accredited SIA agencyPublic hearing process Zoning should be done by the government and prior SIA be conducted in these zones. Industries set up in these zones need not further conduct SIA Need for Model TORs as a new set of TORs may not be required every time Only accredited agencies should conduct SIA and selection of agency for carrying out SIA amongst the empanelled ones should be based on competitive bidding Multiple public hearing processes should be consolidated to the extent possible to expedite the process of land acquisition. Once SIA has been done, the requirement of Environmental Impact Assessment (EIA) should be removed or the two processes be carried simultaneously to avoid duplication

10 Major Suggestions from Industry Other Suggestions Consent of Local Self Government at the Village LevelChange of purposeDefinition of unutilized land So long as the ‘public purpose’ criterion is being met, industry should be free to use land for any other stated public purpose Definition of ‘Unutilized land’ should be based on ‘intended use’. As long as the schedule of utilization as submitted at the time of application is being met, the physical utilization of land should not be necessary Ambiguities in the consent seeking process from Gram Sabha (Local Self-Govt at Village level) need to be cleared; the process has to be made conclusive

11 Alternative Models for Alternative Land Uses Community land consolidation and leasing Collaborative Business Model (landowners being stakeholders in project) Participative development Land pooling/ Land readjustment policy  Land use needs differ across sectors and thus land procurement for each has to follow a different model (the model has to be different even for linear and non-linear projects)  Procurement of land through negotiations with stakeholders is an optimal solution over land acquisition  Alternative models need to be studied and explored by enterprises Some alternative models Real estate Agro based industries Manufacturing Service sector like IT/ITeS

12 Land Pooling/ Land readjustment policy  Attractive method for Urban Development by Local Municipalities  Involves assembly of small rural land parcels into a large land parcel, provide infrastructure and return part of reconstituted land to landowners  Successfully adopted by Municipalities in various countries  In India too, such scheme adopted in states like Andhra Pradesh, Maharashtra, Gujarat, Tamil Nadu, Punjab

13 Land consolidation and leasing  Land owners forming co-operative/ company and pooling their land which can be leased to industrial/ service enterprises, etc.  Land becomes source of income; landowners can engage in supplementary services for the new eco-system so evolved  Successful example: Magarpatta township project in Pune, Maharashtra IT park School Residential apartments Transportation services Retail shops Township built through land consolidation Other services Private sector Private sector (Real estate developers) Land owners (contractors) Land owners

14 Collaborative business models  Useful Model for Agro based industries  Business engagement with farmers through JVs/ Franchisee, where businesses provide input, R&D and marketing support to farmers and source agro-produce from them  Ownership of JV company lies with the business, while land may be controlled by smallholders Ownership status Company and plantation management: lies with Private sector Land: Owned by Panchayat (local govt.) Benefits For Landless farmers: Means of earning livelihood For Panchayat: Rent (financial/ non- financial) For Private enterprise: Stable source of inputs with desired quality Example: P4 model followed by Nandan Biomatrix in Uttar Pradesh Key features Basic model P4: Public, Private, Panchayat Partnership Local govt provides land Plantations managed by Private firm and partners Farming done by landless labourers

15 Participative development  Framing policy to attract land-owners and village community to participate in development of industrial estate  Example: Participative policy of Gujarat Government Compensation for the land at market price and also sharing with the landowners the proceeds of allotment of land to industries land owners will be given developed commercial plot to the extent of 1% of their acquired land at a token rate of Rs 1 per Interim relief: one time financial assistance equivalent of 750 days minimum agricultural wages Spending a portion of the proceeds of allotment of land of the estate on development works for the village community such as schools, roads, etc. Capacity building activities : GIDC at its own cost to sponsor one person from each affected family for training ; provide employment to one member of affected family in the units within industrial estate.

16 Thank You

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