Even before a parliamentary panel form sought critical changes that could thwart the industry, the Land Acquisition Bill, now planned for the monsoon session of the Parliament, needs to change several thorny clauses including a definition of public purpose, writes DS Rawat.Land markets are imperfect. That is why the Indian government has a critical role in putting in place a transparent and flexible set of rules and regulations and to ensure its enforcement. The issue of who acquires land is less important than the process of land acquisition, compensation for land acquired, R&R, package and conditions.Assocham recommends following suggestions in the various provisions of the bill:Section 1A of the Bill provides for obtaining consent of 80 per cent of project-affected families (PAFs) before the proposed acquisition if the government acquires land for use by private companies for stated public purpose or PPP projects other than that for national highways. It also states that the public purpose once stated cannot be changed. This mandate is unreasonable and irrational, and is likely to add to substantial delays in project implementation because of the difficulty, if not impossibility, of obtaining the required percentage of consent. Rather, the mandate should be 65 per cent.Schedule I of the Bill provides for multiplication of market value by three times in case land is acquired in rural areas. This clause should be made applicable only in case of land acquisition for urbanisation projects as the land value appreciation is faster in such projects. As highest value is provided, the value including solatium should not exceed three times. Payment of six times of the original market value of the land will make the land cost of any project prohibitively expensive and affect industrialisation adversely.The bill also provides that Solatium amount of 100 per cent to be paid on the amount of the total compensation. The Bill provides for payment of both solatium and R&R benefits. However, the word "solace" is nothing but an additional relief over and above the total compensation. Therefore, if R&R benefits are payable by the developers, the solatium should be reduced to 30 per cent as prescribed under the existing Act. To reduce the chances of endless litigations and prevent politicisation of compensation issue, the government should fix what the total package for each village should be through a transparent mechanism and then ask the private companies taking over the land to pay it into a publicly held trust fund.The arrangement as envisaged in the draft legislation is too complex and companies cannot be made liable on a long term basis for payments. All payments offered on market value, annuities and R&R entitlements should be handled through banking and insurance system of the country. There must be no scope of continued interaction between project company and land owners and livelihood losers. Continued interaction can lead to agitations and collective bargain for a long time.Schedule II: The Bill provides that a house of minimum 150 sq m plinth area in rural area and 50 sq m in urban area is to be provided. The minimum limit of house is very much on higher side. Instead, it should be of 80 sq m and of 48 sq m respectively. However, if actual plinth area held by such affected family is less than the such minimum prescribed area, a new house equivalent to actual plinth area in case of rural area can be provided. Regarding employment for a person of affected family and R&R package will have to be offered as mutually exclusive alternatives and employment for one member per affected family should be subject to suitability of such persons for such employment.If the ST family holds less than one acre of land being acquired, it should get the land to the extent of its holding. In the case of R&R package for STs, the project company/government can acquire the land in nearby uninhabitated areas and resettle the families. The project company/government may construct and hand over the house to each family together with R&R package similar to livelihood losers.Schedule III: In this Schedule, most projects would require to develop infrastructural amenities. This will lead to increase in the project cost. We suggest that this should be limited to existing infrastructure facilities that may get damaged due to project development. For each 100 displaced families, the following should be provided:a) A community centre of 2,000 sq m open area and 3,000 sq m (constructed)b) For each 500 families displaced, a community centre of 4,000 sq m open area and 10,000 sq m (constructed)Infrastructure facilities can be organised and arranged only by government/government authorities and hence the cost of such infrastructure amenities can be estimated and included as part of the rehabilitation package.Section 95 of the Bill stipulates the return of land to original landowners if not used in five years for the purpose for which it is acquired. Return of land if not used in five years for the purpose for which the land was acquired is impossible to implement. In case the land is not used for the purpose for which it was acquired, any interested party who is keen to acquire the land and wants for alternative use (also must be for public purpose) should take over and discharge outstanding obligations of the original acquirer. There should be no insistence on return of the land to the original owners in case a project for which the land was acquired is cancelled or fails to be implemented. The government could be empowered to take the land back after returning the money paid by the project owner. The government could then find some other entrepreneur for the use of the land.Chapter III Clause 10 (1) of the Bill prohibits acquisition of multi-cropped land. Acquisition of multi-crop irrigated land on contiguity basis say 20 to 30 per cent of the total land to be acquired and that must be permitted based on the District Collector's report and after proper justification.Definition of Public Purpose: Urbanisation should be specified as a public purpose even when private real estate companies seek to acquire the land. Otherwise there would be endless litigation as each village that is set to transform into urban land would pretend that it would not sell land just to jack up compensation or do that when it finds another neighbouring village has got/has been offered larger compensation.The distinction made in the draft law between the land owners and those whose livelihood depends upon the land will not be easy to be decided at the ground level. In most villages almost the entire population depends upon the land directly or indirectly. The livelihood of even a barber depends upon the income flow of the land owner. The only people who could be excluded would be government employees like school teachers of government or aided schools. Once a formula that could estimate the compensation that should be given to an entire village which is to be acquired for both land and R&R and a village specific package is fixed, it will help whoever makes a project report to know in advance what should be his investment on the land acquisition and R&R and formulate his project costs accordingly.Some kind of mechanism is needed to regulate the payments by stretching them over a longer period rather than depositing the entire amount in the accounts of the entitled. Even local social destabilisation is possible as the amounts involved are far in excess of normal cash flow in the village economy as has never happened before. This factor does not find consideration in the Bill as tabled in the Parliament.Why distinguish Public Purpose? Public Purpose as a criterion should be applied across the board with no distinction between what government acquires and what the private sector does for locating projects. Obviously individual land purchases for private use like construction a house for oneself would not be covered by the new legislation. Also acquisition of land for defence and other security purposes should also be excluded from the proposed compensation packages and only market value should be given for the landholders.Retrospective application of the new Act will open up a whole lot of litigation and upset business plans formulated before the new Act was even contemplated. The new law should not be applied with retrospective effect, at worst the retrospective application should not go beyond three years.Last month, the House panel recommended a redefinition of the term "public good". These recommendations appear to be socialistic in nature, but they are likely to burden the industry with higher costs, which will ultimately be borne by customers. That will increase the cost of goods and services. The industry will find difficult to acquire land at affordable costs. Hence, the recommendations need to be reviewed further.The author is Secretary General, The Associated Chambers of Commerce and Industry of India (ASSOCHAM).