Land acquisition in India is currently governed by The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which came into force from 1 January 2014. Till 2013, land acquisition in India was governed by Land Acquisition Act of 1894 i.e The bill replaces the British-era Land Acquisition Act of 1894 and provides for land acquisition as well as rehabilitation and resettlement.
Land acquisition refers to the process where a government acquires land from land owners for any purpose. Generally, the purpose is related to development projects conducted either by PSUs (Public Sector units) or the private sector prior to the passage of this Bill
Pros and Cons of the bill with reference to recent debates:
The Land Acquisition Amendment Act, 2015 is currently creating a lot of hassle in Parliament with the Lok Sabha session being adjourned for the same on February 24. With both opposition and ruling parties equally holding their leashes tight on the Land Bill, only time will tell if the amendments in the Land Acquisition Act will be passed or not and whether they will be truly beneficial.
The main benefit of the Land Acquisition bill is that it ensures equity and fair dealing with farmers. Clear guidelines on the process of acquiring land and rules for compensation packages will ensure that the process of land acquisition is clear. However, the bill has negative consequences for industry. First, market prices of land have already been rising. By providing a compensation package that is a multiple of the current market price, the bill can raise the cost of land acquisition significantly, increasing the overall cost of a project. In some cases, this could make the overall project unviable and hurt apex. Second, rising land costs will have an overall inflationary impact on the economy. Third, the bill will elongate the process of land acquisition.
Overall, the challenge with the land bill is to balance the benefit to farmers with the cost to industry. However, if companies defer their apex plans due to the steep rise in land costs, then transactions may fall and the supposed gains to farmers may be minimal. From a macro perspective, the Land Bill is a negative for the private sector, as it increases land costs significantly and extends the acquisition process.