India's land acquisition bill passes: A win for the economy?

As the Indian rupee continues to do poorly, Delhi has pushed through a law designed to boost farmers' rights and jump-start India’s economy, which has hit a decade low.

But  analysts and economists are divided on whether the final product will do any good, with critics saying it may come too late and with too much government involvement. 

"It's a step forward in that it at least recognizes that great injustice was being done under the old law, but it is also two steps backward,” says Medha Patkar of the National Alliance of People's movements, which has been at the forefront of many campaigns opposing land acquisition. “Why can't the government get out of land acquisition for corporates and let the companies directly buy land from people?” she asks.

India’s land acquisition process has been notoriously slow and considered unfair to landowners. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2012, replaces an 1894 colonial era law that entitled the government to grab any land it wanted for with no rules on how much compensation it would give landowners - usually not much.

Attempts at forcible land acquisition by the government for private industry under the old law have even led to violence at times and are said to be a major cause of the Maoist insurgency in eastern India. 

Landowners and activists were hoping for a law that would boost farmers' rights and economists were hoping the land acquisition bill would also help clarify and streamline the land acquisition process to encourage businesses and promote economic growth.

The new law stipulates that landowners must be compensated up to four times the commercial value of the land in rural areas, and up to twice the commercial value in urban areas.  

Industry experts say they are hopeful that would mean that the cost of land could increase by 25 percent, given that the law lays down various kinds of compensation in detail in order to make sure those dependent in agriculture are not suddenly displaced and unemployed. 

In another win for activists and landowners: While consent from landowners is not needed for government projects such as highways, private projects need 80 percent of landowners in an area to consent to a land acquisition, and Public Private Partnership Projects (PPP) need 70 percent of landowners to consent. 

What many are most concerned about is the number of government people who must approve every land acquisition.  A medley of government officials from social scientists to rehabilitation experts must file a social impact assessment report (SIA) to approve every land acquisition. The process of securing such a report could cause major delays.

"This could lead to delays in the implementation of various government welfare schemes such as building public toilets under the Total Sanitation Campaign or building bus shelters,” warned a report by PRS Legislative Research. 

The law had been bitterly contested for years  and has finally been passed less than nine months away from general elections. The ruling Congress Party hopes it will be able to recover its lost credibility by showcasing a pro-people land acquisition law. But analysts say it may be too late. 

"With the passage of the bill, not only the cost of land will go up significantly, but the process of acquiring land will also get stretched by four to five years," said the Federation of Indian Chambers of Commerce and Industry in a statement.