New Delhi: The Confederation of Indian Industry has called for streamlining land acquisition to promote job creation in industry. “With economic growth slowing down, it is imperative to boost manufacturing facilities that will add to jobs and incomes,” stated Mr. Chandrajit Banerjee, Director-General, CII. The upcoming monsoon session of Parliament is likely to take up the Land Acquisition and Rehabilitation & Resettlement (LARR) Bill 2011.

CII had welcomed the LARR Bill 2011 since it takes a holistic approach towards Land Acquisition and Rehabilitation & Resettlement and provides a prominent role for Government in land acquisition so as to make the process more equitable, fair and transparent. “Agglomerating land from numerous owners is not a task which the corporate sector can do effectively, especially in the absence of proper land records and with small, scattered land-holdings. Therefore, Government intervention becomes necessary in assisting such land acquisition,” said Mr. Banerjee. “ 

CII had however expressed some concerns about certain provisions in the LARR Bill 2011 and had made specific recommendations :

Ø  Compensation Package – As per the provisions stipulated in the LARR Bill 2011, cost of land acquisition in the country is likely to increase by 3-3.5 times, severely affecting the viability of industrial projects across the board and this may erode competitiveness of the Indian manufacturing sector. CII has therefore opined that no Solatium should be imposed over and above the multiplier and if at all Solatium is to be retained, it should be reduced to 30% and the multiplier be reduced to 1.5 instead of 2.

Ø  R&R Entitlements - The R&R costs is likely to go up by about 3 times compared to the prevailing practice as per the proposed package, which, to a large extent treats / compensates different categories of affected families at par, not aligned to their losses. Against this backdrop, CII suggests that instead of using the broad term “affected families” category of families need to be clearly defined and according to their losses, suitable compensation package should be laid down. Further, R&R provisions need to be justifiably different for each categories, depending on what they lose as a result of land acquisition, keeping in mind that families need to be much better off than prior to land Acquisition.

Ø  Acquisition of Irrigated Multi Cropped Land - With reference to special provisions to safeguard food security, certain restrictions have been imposed in the LARR Bill 2011 on acquisition of irrigated multi-cropped land.  As this may hamper the industrial development of States which predominantly have multi-cropped land and would also severely affect Industries based on nature, CII suggested that this provision should not be applicable in case of mineral extraction projects as minerals occur naturally and hence their locations cannot be chosen.

Ø  Return of Un-utilized Land – LARR Bill 2011 stipulates return of the acquired land if not utilized for a period of 10 years, which may affect the future expansion plans of industries which grow over a period of more than 10 years due to their nature of activities.   Hence, CII has recommended that Industry must submit a “land use plan” and the provision of return of un-utilized land should be aligned to it, to be decided by a Committee under the chairmanship of the Chief Secretary of the concerned state, on a case to case basis.

Ø  80% Consent for Land Acquisition - The provision of consent of 80% affected families being made mandatory only on land acquisition for Private Sector appears discriminatory in nature, since both the Public and Private Sector are equal partners in generating wealth and employment for the country. There should thus be no distinction between Private and Public Sector. Also, If, at all the provision of “Consent” is to be accommodated, it should be reduced to 60% of project affected families, uniformly & equally applicable to all cases, irrespective of its end use.

Ø  Retrospective Applicability of the Bill – LARR Bill 2011 stipulates that in cases of land acquisition where award under section 11 has not been made, the process would lapse upon enactment of the new bill and process of land acquisition would have to start afresh. As the proposed provision would affect the on-going industry projects and re-starting the process of acquisition would mean delays & cost escalation, ultimately affecting the viability, CII opined that In cases of Land acquisition where the notification under section 11 of LA Act 1894 has already been issued and the process of award commenced, such land acquisition cases should be continued as per the LA Act of 1894.

It is in this regard that there are serious concerns in the Indian Industry on some of the recommendations of the recently released Report of the Parliamentary Standing Committee on Rural Development. The Standing Committee’s recommendation prohibiting the Government from acquiring land for PPP Projects, private use or private companies will make land acquisition in the country more complex and difficult, leading to slower growth in Industry, and therefore, the economy.

Another recommendation of the Standing Committee pertaining to imposing restrictions on acquiring ‘any land under agriculture’ by the private sector is also an issue of major concern – this could effectively render a significant portion of land out of the purview of acquisition for industry or infrastructure. Further, the Committee’s recommendation of ‘return of unutilized land merely after 5 years’ will effectively stall the future expansion of many industries which expand in phases, have a greater gestation period and generate returns over a longer period of time.

“Going ahead, a balanced approach to land acquisition that takes care of needs of all stakeholders and promotes industrialization and inclusive growth is the need of the hour. We are thus hopeful that some of our recommendations are considered while finalizing the amendments to the LARR Bill 2011,” concluded Mr. Banerjee.