Need, background and evaluation of Land Acquisition Controversy

In India 6 out of 10 people depend on Agriculture and live on menial and low paying jobs in agriculture. And contribution of Agriculture to India’s GDP is just 17%. Do you see the structurally distorted ratios? i.e., if there are 100 people, 60 people are earning only Rs. 17 while, rest 40 people are earning Rs 83.

Indian agriculture is heavily dependent on monsoons, and one monsoon failure and result would be suicide of farmers in large scale. In order to avoid that, we need to reduce the dependency of people on agriculture.

Question is how do we do that?

By creating more and more high paying jobs, for that we would need industries. For industries we need land.
So land is the crucial resource here. The land in India is divided into Agricultural land which is over 60%, Deserts and totally unusable land is 4% , Forest covers about 23%, and remaining land is where we are settled,  i.e., our cities, houses, offices etc.
Obviously Forest cover can’t be touched. And the 4% is of no use.
So for industries to grow some of the agricultural land has to be used.
Here, comes the requirement of a policy called Land acquisition policy that would help Govt to take the land and rehabilitate the farmers who are losing out on land, about which the current ruckus in India is all about.

While the subject matter “Land” falls under Concurrent list, that is States and Union have equal right to make laws on it, if there is a conflict, the law made by Union prevails. The previous UPA Govt made a law that overrides the laws made by states. And the law they made required consent of 80% of people to acquire land, plus a detailed social impact assessment has to be carried out along with plethora of requirements, which made it difficult for the Govt to acquire land. It is calculated that, by following all the procedures, it requires 4-5 years to acquire a tract of land sufficient to construct an Industrial corridor. Since the time law was made, not a single piece of land could be acquired and projects worth 300 billion USD are in pending list retarding the growth of the country.

This law also means that law made by states cannot be applied.
In order to solve this problem, NDA Govt introduced some amendments to the Land acquisition policy, where it wants to do away with clause of 80% consent and Social impact studies for sectors like Defense equipment industries, affordable housing, rural infrastructure and industrial corridors making sure that the amount of settlement or compensation is same as previous policy decided, i.e., 4 times the market price in rural areas and twice the market price in urban areas along with providing them opportunity for alternate land, or a job with education for their children and other social facilities like Hospitals, and educational institutions.
Some are butt hurt with this policy and are creating ruckus by walking out from Parliamentary discussion and ganging up on the Govt to make sure this law is not passed.

Why are they doing this, if the law is progressive and going to be helpful?
Apply the simple law of economics here. Though land is available, it can’t be used, that creates artificial scarcity which in turn means demand for land becomes extremely high as days pass, which will sky rocket the prices. If the prices rise, the land owners will get benefitted. Who are the landowners here?

Majority of them are the Landlords, Politicians, middlemen or well-to-do families with a minority of them being farmers who hold small pieces of land which will also be grabbed forcefully in important areas slowly till the time issue gets resolved.

Now do you understand the reason for the ever soaring prices of Land in India?

A French friend of mine says, for 2Cr rupees, he can get a posh house or a villa in Paris outskirts while it is the same in Bangalore too.

Also, if input Land costs are high, would setting up of industries be feasible? Why would an industrialist set up a plant in India if land is available for him at a cheaper price in China or elsewhere?

Now do you understand the logical connection between all the opposition parties ganging up on Govt?

Some of you might think that giving up on fertile land will impact food production. No it doesn’t, it is Luddite thinking. With lesser land in agriculture will lead it more investment in agriculture, with calling for mechanized farming, and adopting better technologies to produce. Case in point, America, Germany, Japan where people depending on agriculture and land under agricultural use is way less than ours, yet they are not only self sufficient but also export to other countries.
It is simply like saying, I want railways, metros, hospitals, etc but, hey sorry I can’t give you my land even if you give me 4 times the price of it.

If it makes sense, share. If you have questions, comment, I will be happy to answer.

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