FEBRUARY 10, 2015

By Naresh Minocha, Our Consulting Editor

THE budget session of Parliament is expected to witness fresh political slugfest over the land ordinance in particular and ordinance raj in general.

The Finance Minister Arun Jaitley has justified, the land ordinance on various counts, one of which is to avoid India becoming "a nation of incomplete projects." He has contended that ordinance would help farmers earn higher price for their land.

Congress leader Jairam Ramesh, on the other hand, has claimed that ordinance is a blow to farmers. He likened it with the erstwhile the Prevention of Terrorism Act, 2002 (POTA), which NDA Government had ushered in through an Ordinance and which the UPA Government repealed through an ordinance in 2004. Mr. Jairam dubbed the land ordinance as promotion of terror against farmers.

Polemics aside, the fact is that we have been a country of incomplete projects, non-starter projects and unrealized dreams for decades. This trend emerged much before the enforcement of the new land acquisition law on 1st January 2014 and its amendment through ordinance on 31st December 2014. And this anti-development, anti-jobs phenomenon would continue as laws alone can't facilitate rational allocation and use of scarce land including the one bearing minerals and renewable energy. Forget fresh land acquisitions, the governments have at times failed to launch or complete projects on land that they own for many years.

Thus, both UPA and NDA are at fault for their narrower agenda for land legislation. Both the alliances have neglected a holistic perspective on land to minimize the need for fresh land acquisitions and to reduce related social conflicts.

We need rationale and innovative initiatives to meet the diverse and conflicting requirements for land for society that long crossed environmentally sustainable level of population load. Both the Centre and the States must thus give highest priority to optimal usage of vast chunks of land in their possession instead of being obsessed with dispossessing farmers of their land.

According to official data, the per capita availability of land has reduced from 0.89 Ha in 1995 to 0.27 Ha in 2007/08 due to population explosion. The per capita land availability will further reduce on the way to our dubious march to become the world's most populous country by 2030.

Keeping this in view, we need to restrain the well-entrenched lobbies that have divided the country's land mass into numerous enclaves that override national interests. We have created no-go areas for mining ostensibly to protect tigers. We have also created elephant corridors to appease eco-tourists and wildlife enthusiasts. We are creating more and more eco-sensitive zones/buffer zones around wildlife sanctuaries to appease green activists. We are earmarking thousands of square kilometres of area in the Western Ghats as de facto no-development zone.

As it is, we have allowed tribals' writ to prevail over areas where they reside. We would thus not be able mine even uranium in such areas even if it means compromising national security. We have created another set of protected areas for heritage enthusiasts. And most importantly, we have the Lutyen zones in New Delhi and similar islands of luxurious living in State capitals for the ruling class that wants to lord over the hapless public.

The Centre and the States as the largest owner of public land have miserably failed to optimally utilize land in their possession. They prefer to go soft on land encroachments in spite of Supreme Court's directives for zero tolerance of illegal construction on encroached government land. All these factors have combined to aggravate socio-economic tensions over the land. National development has indeed become a hostage of land politics.

Such issues neither figure within or outside the UPA Government-enacted the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCT-LARR Act). The BJP-led NDA's Government ordinance amending the Act also fails to address the issues.

Land acquisition was a big challenge under the archaic, exploitative the Land Acquisition Act, 1894. It has now become a bigger challenge under RFCT-LARR Act.

Before considering the way forward, factor in a few cases that developed prior to enactment of RFCT-LARR Act. This would help us realize the fact that land has become one of the biggest constraints in the economic development.

Take the case of Tata Power Company (TPC). It has been unable to start construction work on its 1600 MW Dherand project in Raigad for which it signed an MOU with Maharashtra Government in April 2005.

The State Government has taken long time to acquire the land and give its possession to TPC. In a communication dated 20th October 2014 addressed to the Centre, TPC stated: "The process of land acquisition has taken more time than expected due to compliance of MID (Maharashtra Industrial Development) Act process and to ensure peaceful land acquisition."

Jaypee Group has a horrible land tale to narrate about its 1320 MW Sangam Project in Allahabad district. It bagged this project from Uttar Pradesh Power Corporation Ltd (UPPCL) through competitive bidding in February 2009.

UPPCL allotted the requisite land to Sangam Power Generation Company Ltd (SPGCL) and the deed of conveyance for transfer of land was completed during February-August 2010.

SPGCL has failed to commence work on the project due to violent opposition from land owners, who won the case against land acquisition by UPPCL in Allahabad High Court in April 2012. Not a single land owner, however, turned up to refund the compensation in accordance with the Verdict.

In a communication dated 29th September 2014 to the Centre, SPGCL stated: "UPPCL is trying to sort out the issue of land acquisition through negotiations with the farmers."

In the Meanwhile, the company has already invested Rs 887.47 crore on purchase of power generation equipment, etc.

Take now the case of Machillipatnam Port Limited, which is waiting for more than four years for allotment of 6262.19 acre of land from Government of Andhra Pradesh (GoAP) for developing phase I of the deep water port at Machilipatnam.

The company says: "GoAP has so far leased about 412.57 acres of land to MPL for the port development. The Phase –I development of the port shall be implemented immediately upon the GoAP making available major part of the remaining land on lease as per the Concession Agreement. Land acquisition and alienation process is now being rigorously pursued by GoAP."

All the three land acquisition problems are similar to the ones that entangled Posco's steel project and Vedanta aluminium and bauxite mining projects in Odisha.

New or old, the land acquisition law can't be singled out for failure to implement or complete projects. Take the case of proposal for revival of Fertilizer Corporation of India Limited's (FCIL's) mothballed plant at Sindri in Jharkhand.

UPA Government allotted this brownfield project to Steel Authority of India Limited (SAIL), which incorporated a wholly owned subsidiary, SAIL-Sindri Projects Ltd. (SSPL) in November 2011 for setting up a steel plant and a fertilizer unit.

According to Department of Fertilizers, out of total land of 6652 acres with FCIL at Sindri, only 498 acres (the area of existing fertilizer plant) is encroachment free contiguous land as against the requirement of 3247 acres of encroachment free contiguous land required by SAIL for setting up the proposed facilities. However, no much progress has been made due to non-availability of around 3000 acres of contiguous piece of land for the steel plant.

Another shocking instance of mismanagement of Government land is Kandla Port Trust's (KPT's) proposal to develop liquid storage tank farm as a public private partnership project. In 2006, KPT issued letter of intent to successful bidders for 30-year lease of plots for development of liquid tanks, subject to receipt of requisite environmental approvals.

A few months before the receipt of approvals, the Ministry of Shipping asked KPT in August 2009 whether fresh tenders should not be floated to realize the market value of plots. After getting environmental clearances in February 2010, KPT decided to issue allotment letters to successful bidders for 17 plots. It, however, played safe by also deciding to seek the opinion of Additional Solicitor General of India (ASG) on the issue.

ASG opined: "It would be prudent for the KPT to cancel 2005 tender process and start a fresh process so as to fetch the realistic market price in accordance with the market value of the land presently in the year 2010."

KPT invited fresh tenders in 2011. It issued pre-acceptance letters to successful bidders in July 2011 subject to the outcome of litigation in the Supreme Court. Following the Court's verdict in March-April 2014, KPT could not proceed further with the 2nd round of bidding competition. This is because the Ministry had issued Land Use Policy guidelines 2014 for major ports that envisaged e-tender-cum-e-auction.

KPT is now gearing up for fresh tendering competition under the 2014 guidelines. This is not an isolated case. Jawaharlal Nehru Port Trust (JNPT's) fourth container terminal project has also been subjected to repeated tendering and litigation at the Supreme Court.

After the Court's verdict, the project has hit unforeseen fresh green hurdle. As put by JNPT, the environmental clearance for the project was received in 2008. However, due to court cases, the project could not be taken up at that time. During the span of 5 to 6 years, the mangrove vegetation has been grownup in the area earmarked for road/rail corridor."

JNPT is now awaiting forest clearance to divert mangrove stretch. By the time clearance is received, someone might flaunt the idea of fresh bidding to fetch higher revenue for JNPT.

Both these and other PPP projects on land owned by major ports have nothing to with land acquisition law. The problem lies with the way Indian democratic system functions. It is small wonder then that as much as 2,35,020 acres of land at ports remains unused.

Another instance of Government's indecisiveness relates to the prime land worth several thousand crores of rupees which was owned by erstwhile Videsh Sanchar Nigam Limited (VSNL). Though the Government divested controlling stake in VSNL to Tata group in February 2002, the surplus land valued at several thousand crore rupees has remained unutilized.

At the time of disinvestment, surplus land measuring 773.13 acres located at 5 sites namely Dighi-Pune, Halishahar- Kolkata, Chattarpur-New Delhi, Greater Kailash- New Delhi and Padianallur-Chennai was demarcated. It was decided that the surplus land will not be part of disinvestment bid and will be disposed of as per Share Holding Agreement (SHA) and Share Purchase Agreement (SPA).

Later, the Government and Tata group have formed a joint venture named Hemisphere Properties India Limited (HPIL) to which this surplus land has been transferred. The core issue of utilization/sale/lease of this land remains unresolved. The saga of non-starter and incomplete projects after enactment of RFCT-LARR Act is at the conception stage as some States have not framed rules for implementation of the new law. Moreover, prospective project developers are in the wait-and-watch mode.

The case of Narmada Valley Development Authority (NVDA) would, however, illustrate the challenges of the new law in particular and land shortages in general.

NVDA obtained terms of reference (TOR) for environmental impact assessment (EIA) of Morand-Ganjal Irrigation project in Hoshangabad district of Madhya Pradesh in October 2012. It has, however, not been able to obtain first-stage forest clearance for the project due to non-availability of revenue land for compensatory afforestation which is mandatory to offset the diversion of 2500 hectares of forest land for the project.

In the meanwhile, EIA report prepared under the old law acquisition land and NVDA's R&R policy has become redundant after enforcement of RFCT-LARR Act.

MP Government has, however, not notified all rules under the new law, thereby creating uncertainty over the project.

The delayed, incomplete or non-starter projects underscore the need not only for satisfactory resolution of issues relating to land but also need for formulation of national land use policy. It should prioritize land allocations for conflicting purposes. It ought to ensure most optimum use of existing land to reduce the requirement for fresh land acquisitions.

The Modi Government is yet to implement the promise BJP made in this regard in its Lok Sabha Manifesto issued in April 2014. As put by the Manifesto, "Land acquisition is a contentious issue due to the opacity of the land acquisition process. BJP will adopt a 'National Land Use Policy', which will look at the scientific acquisition of non-cultivable land, and its development; protect the interest of farmers and keep in mind the food production goals and economic goals of the country. Its implementation would be monitored by the National Land Use Authority, which will work with the State Land Use Authorities to regulate and facilitate land management."

The Government had constituted an expert group on formulation of National Land Utilization Policy (NLUP) in August 2014. It has not disclosed the progress on this front.

UPA Government had unveiled draft NLUP in September 2013. It, however, did not finalize the policy. It obviously realized that it would get political mileage from RFCT-LARR Act and not from NLUP.

NLUP has been drafted in the past too. The policy was, however, never implemented. Way back in February 1986, NLUP was adopted by the National Land Use and Wasteland Development Council, which met for the first and last time under the chairmanship of the then Prime Minister Rajiv Gandhi. The draft was later finalized and notified as The National Land Use Policy: Outline and Action Points in 1988.

The acceptance and implementation of NLUP is responsibility of State Governments as land management is a State subject under the Constitution.

According to draft NLUP issued in September 2013, "During 1970's, all the states established 'State Land Use Boards' under the Chairmanship of respective Chief Minister of the State. These Boards were meant to provide policy directions and coordinate the activities of different departments dealing with soil and land resources. These Boards never functioned the way they were meant to be. Overtime, nearly all of them have been abolished. At present, the states do not have any mechanism at their disposal to deal with land policy issues in a coherent manner. Hence, the responses of the states to land issues are impulsive and adhoc without consistency. No rationale and scientific considerations appear to be guiding the decisions on land use."

It is here pertinent to quote a document titled 'National Land Use Policy: Draft Outline' prepared in 1986.

It stated: "Within Government itself right down from the Central Government to the block level, the use of land is dictated by the priorities of the sector which has control over the land resource and there is no effort by any of the Departments to plan their land use on the basis of a national system of optimal land use. This has substantially resulted in sub-optimal and in many cases destructive use of land resources. This leads one to feel that Government has to be blamed rather than the people for the situation which we are facing today."

This home truth calls for introspection by the ruling class at the Centre and the States. They can whittle down the requirement for fresh land acquisitions for housing, public delivery services and commercial requirements to a great extent. For this, the Centre and the States should allow vertical growth of buildings on their vacant land and the land on which single-storey structures including bungalow stand at present.

Vertical utilization of land in urban areas should be the guiding principle of utilization of urban land. Even the housing for poor in rural areas should by arranged in two or three-storey apartments.

At the time of approving construction of buildings on government land, the real estate regulatory should promote the concept of shared office space and residential apartments among different government agencies.

A cue for this can be taken for oil and gas pipelines. Petroleum and Natural Gas Regulatory Board (PNGRB) has laid down rules for sharing of pipeline capacity sharing right at the time of a project proposal is submitted by a developer.

By promoting such optimal use of scarce land, the Government can reduce the need for land acquisitions to unavoidable projects such as railway lines and roads and for large projects such as industrial estates and hydro-electric projects.

To avoid conflicts over land acquisitions, the Government should first build good houses and community facilities for persons to be displaced by proposed land acquisitions.

The Government should begin acquisition negotiations with the land owners only after showing them the ready-to-shift to habitations.

Let Modi Government issue another land ordinance to provide for such enlightened R&R package. The Ordinance should also mandate optimal utilization of Central Government's real estate including Lutyen's Bungalow Zone in New Delhi.