Land Acquisition from Colonial Times to the Present

Special Economic Zones (SEZs) are being lauded as the newest “engines for economic growth”. After the SEZ Act was hurriedly passed by parliament in 2005, the government has been on overdrive putting administrative procedures in place and handholding a host of private developers through the process of SEZ approval. Newspapers regularly carry the government provided ‘score card’ of the number of SEZs approved together with the planned investments, the potential employment and the projected exports they will bring – news that is expected to enthuse the middle classes with visions of an imminent speedup of economic activity and attendant benefits.

Special Economic Zones (SEZs) are being lauded as the newest “engines for economic growth”. After the SEZ Act was hurriedly passed by parliament in 2005, the government has been on overdrive putting administrative procedures in place and handholding a host of private developers through the process of SEZ approval. Newspapers regularly carry the government provided ‘score card’ of the number of SEZs approved together with the planned investments, the potential employment and the projected exports they will bring – news that is expected to enthuse the middle classes with visions of an imminent speedup of economic activity and attendant benefits.

While government extends a host of concessions under the umbrella of the SEZ to private industry with the plea that this will lead to increased economic growth, the matter does not end with this. SEZs have a territorial component – they must be constituted on a demarcated contiguous area of land that can be fenced off and treated as a “foreign territory”. Further, the land area for the proposed “multi-product” SEZs – locating enterprises with a mix of different products/services – must be at least 10 sq km and may be as large as 100 sq km. How are such large contiguous areas of land to be obtained? This is where the State governments are expected to play a major part in the current scheme of things.

The current activity by state governments in relation to several of the largest proposed SEZs is illustrative. The West Bengal government has not been deterred by the failure of its land acquisition programme in Nandigram; it is looking at alternative areas as well as land for the Haldia SEZ. The Maharashtra government is actively acquiring on behalf of Reliance for the Maha-Mumbai SEZ while it has transferred lands already acquired by CIDCO to the Navi-Mumbai SEZ. And near Delhi, there is the example of the Reliance Haryana SEZ where the state government and Reliance together have signed an agreement for developing what is billed as the largest SEZ in India within a stone’s throw from Delhi with the expectation that this will eventually get approval from the central government. Acquiring the land by using the coercive land acquisition laws at their command is indeed the biggest incentive held out to the private SEZ developers by the state governments.

The Power of Eminent Domain
The current ‘campaign’ to establish Special Economic Zones has thus once again brought into focus the Land Acquisition law. The Land Acquisition law represents an instance of the power of Eminent Domain claimed by modern states the power to take any private property for public use. This power is justified by maxims such as “regard for public welfare is the highest law” and “public necessity is greater than private necessity”. To understand this law and all its features, we must turn to our colonial past.

The origins of the land acquisition law can be traced to the East India Company era regulation, The Bengal Regulation I of 1824 that enabled land to be acquired for roads, canals and other ‘public purposes’. With the development of the railway network, railways were declared to be public works in 1850 so that land could be acquired for them. Separate laws that had evolved in the territories around Calcutta, Bombay and Madras were consolidated into a single law applicable to all the territories of British India in 1857. Land could be acquired by the colonial administration for ‘public purposes’ and the compensation to the land owner was fixed by the collector. In case of a dispute on the compensation amount, the recourse was to an arbitrator appointed by the administration. 

A role for the judiciary
In 1870, the colonial state took steps to dress up what was earlier called the ‘Indian Expropriation Act’ as the ‘Land Acquisition Act’. Rules for determination of compensation for the acquired land based on ‘market value’ were defined, a ‘solatium’ (additional compensation over market value in view of the involuntary nature of parting with the land) introduced, and the right of appeal to civil court in case of dispute over compensation provided. By this time, the judiciary had evolved as the second pillar of the colonial state and was accorded a role as an arbitrator between the state and the person(s) losing land, but only in respect of compensation – the right of the state to take the land was not itself contestable. The law continued to be fine tuned over a period of time under British rule and took the consolidated form of the ‘Land Acquisition Act 1894’ – and this law (with some amendments) remained in place through the colonial period.

The key concerns of the colonial law makers were eminently clear. The state had to be able to acquire land for any purpose quickly; compensation payouts, seen as a drain on the government resources, were to be minimised; the acquisition had to be seen to be ‘lawful’ and not arbitrary and the authority of the state to acquire land was to be absolute. The law was framed with exactly the above concerns in view. While acquisition was always made under the guise of “public purpose”, what constituted “public purpose” was neither defined nor limited by the law; it was sufficient for the state to declare it to be so. Thus land acquisition for enterprises operating railways and mines or even manufacturing salt – though privately owned – qualified as being for ‘public purposes’. Elaborate rules were framed for determining compensation and ensuring that ‘excessive’ payouts did not happen. This was the genesis of the draconian land acquisition law.

An insidious aspect of the colonial law was that it recognised rights only with respect to individual land ownership. All land not individually owned was considered to belong to the state. Traditional community oriented rights of villagers over common lands were not recognised and hence not compensated. Also, as was only to be expected, the colonial state took no responsibility for compensating people who did not own land but whose livelihood depended on it, such as agricultural workers and others who serviced the farmers. Compensation of the land owner was deemed to have served the requirements of justice. Loss of livelihood of the landowner or others dependent on the land consequent to a forced land acquisition was not the state’s concern.

Republican Constitution and colonial law
The end of colonial rule in 1947 and the Republican Constitution of 1950 did not bring about any change (leaving aside verbal changes such as using the words “all the provinces of India” for the words “the whole of British India”) in the land acquisition law. The Constitution of India, by article 372, allowed all colonial laws to remain in force unless they were explicitly repealed – and this applied to the land acquisition law as well. The Law Commission appointed by the Government of India reviewed the land acquisition act in 1956. A large number of suggestions were received by the commission urging that the term ‘public purpose’ should be clearly defined by the act. However, the commission chose the safe alternative and recommended in its 10th report in 1958 that it is ‘neither possible nor expedient to attempt an exhaustive definition of public purposes’ and that all that can be attempted is to ‘provide an inclusive definition so as to endow it with sufficient elasticity to enable the courts to interpret the meaning of the expression ‘public purpose’ according to the needs of the situation’. The state clearly felt quite comfortable with the colonial law.

The human cost of the ‘temples of modern India’

Starting with the fifties, there was an enormous increase in infrastructure building and industrial activities by the state. Numerous large dams, power plants, mines, steel and heavy engineering plants came up over land acquired using the colonial law, causing a massive displacement of small farmers, agricultural labour, landless village workers and artisans and forest dwellers. Various social scientists estimate the number of people displaced by big projects in 50 years since 1947 at over 50 million! The national leaders and policy makers viewed the displacement to be the legitimate and inevitable cost of development and acceptable in the ‘larger national interest’.

Compensation followed the requirements of the colonial land law and was available to only those who could show ownership of land and then too based on ‘market value’ rather than to cover the cost of replacement. Rehabilitation, inadequate in the best of cases, was mostly absent – the law did not mandate it. Often, forced relocation was carried out without even settlement of compensation claims. In the case of the Hirakud Dam for example, it was reported that only one-third of compensation claims had been disbursed, when in March 1956 people were forcibly displaced. In the absence of any rehabilitation plan, people occupied whatever open lands they could locate. These lands are still not legally theirs, and they live under constant harassment by forest officials.

Even while the people were asked to sacrifice, the administration exploited the unbridled powers available to them. Social Scientist, Walter Fernandes cites a few instances: “two thirds of the land acquired for the HAL-MIG Plant at Sunabeda, Orissa, in 1966, lay vacant for three decades and was later sold at a high profit. But the 3,000 tribal families it displaced have not been resettled. Much of the land acquired on both sides of the Roro Irrigation Canals in Jharkhand for ‘public purpose’ was given to relatives of the officials to build housing cooperatives. The Burla township has come up on excess land acquired for Hirakud.”

‘Public purpose’ and private profit

Public sector and government projects were not the only purposes for which land was forcibly acquired by the state. Even in the Nehruvian period, land was being acquired for private industry by state governments. A landmark judgement (R.L Aurora vs. State of U.P, 1962) of the Supreme Court held that the government could not justify acquiring land for a textile machinery manufacturer as a ‘public purpose’. It further declared that “the land acquisition act did not contemplate that the government should be made a general agent for companies to acquire lands for them for their private profit”. The immediate response of the government was to amend the law through the Land Acquisition (Amendment) Act 1962 to allow land to be acquired for a company “which is engaged in or is taking steps for engaging in any industry or work for a public purpose”. With this amendment, the Nehruvian era state, quite definitive about preserving its power of acquiring land for private industry, superseded the Supreme Court judgement. Subsequently, in the courts, a variety of projects of private enterprise for diverse purposes – houses for members of a co-operative society, manufacture of alumina bricks, construction of a students home, an electrochemical factory, a sugar factory – were all held to promote ‘public purpose’, and the land acquisition by the state for these enterprises upheld. Another amendment to the land law in 1984 widened the inclusive definition of ‘public purpose’ to include acquisition of land for ‘planned development’ and subsequent sale to private enterprise (in other words, for state industrial development corporations and the like).

Governments used their powers under the law in unabashedly authoritarian ways. Some examples are illustrative: the West Bengal Government acquired level fertile agricultural land in West Medinipur for Tata Metaliks in 1992, which  dispossessed small and marginal farmers, in preference to undulating wasteland that was available nearby. In the case of the Century Textiles Pig Iron Plant in the same area, the state government acquired land for a proposed plant in 1996. However, till 2003 the factory had not come up and neither had all the original land owners been fully compensated; the company had decided that pig iron production was no longer profitable because of availability of cheaper Chinese output and refused to pay the compensation and take over the land. The Tamil Nadu Government was not above using emergency powers (available under the Land Acquisition Act) to get land from villagers near Pulicat Lake for developing a chemical industrial complex consisting of sites for private units.

Liberalisation and land for industry
However, governments have not been content with even this power as they consider the land acquisition process to be time consuming and cumbersome and a roadblock to quick industrialisation. Tamil Nadu came out with legislation, the Tamil Nadu Land Acquisition for Industrial Purposes Act, 1997 – especially aimed at speeding up land acquisition for industrial estates and parks. The central government too, for its part, proposed a Land Acquisition (amendment) Bill, 1998 to look at ways of speeding up the acquisition process for land for industries. This bill was never placed before Parliament and allowed to lapse after meeting with strong opposition from peoples’ organisations and social scientists. The first draft of a national rehabilitation policy was put out in 1993; the draft stated that this was done in view of the new economic policy, and the expected rise in the demand for more land and hence displacement ! The rehabilitation policy has since then been upgraded several times – the latest being the National Policy on Rehabilitation and Resettlement, 2007 that has just been approved by the government but without ever having been given any teeth in law.

The latest attempt by the Indian state to amend the land law to assist in the creation of SEZs is the Land Acquisition (amendment) Bill, 2007. Indian Express reported on Oct 11th 2007 that the UPA government approved the bill and described its highlights thus: “Keeping in view the land required for private industrial projects, in addition to land required for strategic and public infrastructure purposes, the amendment to land acquisition rules will suitably define public purpose, allowing state governments to acquire land for persons, which includes a private company, association or a body of individuals, provided it is “useful to the general public” ( for example, employment generation) but will be restricted to cases where at least 70 per cent of land has already been purchased by developers. This means that the government can acquire a maximum of 30 per cent of land for private industries to facilitate project development in cases of hold-outs by a few.” True to the style of government, this amendment was never made public for discussion. The reason for that too is obvious.
The Indian state of the 21st century – a state that never tires of proclaiming itself to be the world’s largest democracy – continues to see its rural citizens with the eyes of the British colonial power of the 19th century.

Land acquisitions continue to be made invoking the power of eminent domain in the name of “public purpose”, dispossessing large numbers of the public of their land and means of livelihood, displacing and disrupting entire communities. Compensation to the land owner does not reflect the real value of the land – it is never sufficient to buy equivalent area of land nearby even if such land were available. Rights of landless labourers, share croppers, village artisans, fishermen, salt workers and others who are also affected by the acquisition are not recognised. Loss of habitat and natural resources – commons used for grazing, forests yielding minor products, water bodies – are not compensated. And the law till date has no provisions for rehabilitation of the individual leave alone the community. Is it any wonder that the people of Nandigram, Singur, Kalinganagar, Paradeep refuse to accept the power of eminent domain of this state?     

The author, Kannan Kasturi is a physicist and a software engineer who writes on governance, law and public policy.


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