Economics & Politics / Political / Rural India

Land Acquisition Bill 2011 : ‘A road map for rural development, but not a cure for unemployment’

“In this draft, we are not only talking about the land owners, but those (farmers) whose livelihood depends on their lands and acquiring of the lands. We are also talking about the rights of their families. So this would be another big change we have got in the draft” – Jairam Ramesh – Union Minister – Rural Development

Land Acquisition Bill was first formed in 1967, again reformed in 1969, 1981, 1989, 1994, 2007, 2009 and again this year (September 2011) Union Rural Development Minister Jairam Ramesh came up with a new/revised draft of the bill.

But have we really studies the full impact when it becomes a law. 

Highlights of the Draft Land Acquisition Bill

  • Anyone acquiring land of 100 acres or more in urban areas or 50 acres in rural areas will need the consent of 80 percent of the landowners. He or she will also have to compensate those working on the land.
  • Compensation will be a minimum of four times the market value in rural areas, and twice the value in urban areas. Not only that, once the land is developed, 20 percent of the land has to be given back to the owners, and 20 percent of profits from sale or transfers within 10 years too will go to them.
  • Displaced individuals will be paid Rs 5 Lakh. And families displaced – both landowners and people employed on that land – will receive subsistence allowances of Rs 3,000 per month for the first year, and an annuity of Rs 2,000 a month for 20 years. Plus there is a resettlement amount of Rs 50,000 and mandatory employment to one member of the family.
  • The exceptions to these rules would be land acquired for public purposes – including for ports, highways, and railways, or land acquired for the government’s own use. Creation of infrastructure and industry by private companies can also be considered a public purpose – but the conditions are tough, since the requirement is that the benefits must largely accrue to the public.

The Impact

Lets look closely at the Employment & Unemployment Report of the GOI, Ministry of Labour & Employment, Labour Bureau based on 2010 survey which shows some very interesting numbers.

  • Out of the total 238mn households in India, while 172mn (72%) do live in Rural areas; its only 50mn (21%) households who are engaged in agriculture.
  • The rest of the 188mn household in India (79%) are broken up into
  • 104mn (43.7%) Workers/Laborers – 38mn (16%) in Agriculture; 32mn (13.4%) in non-agriculture rural; 13mn (5.5%) are Urban Regular wage workers; 21mn (8/8%) urban casual workers.
  • 46mn (19%) Self Employed – 24mn (10%) in Rural (engaged in non-agriculture activities); 22mn (9%) in Urban (businessmen/traders/professionals)
  • 38mn (16%) population is not engaged in any of the above activity; 10mn (4%) of them are in Urban & 28mn (12%) are in Rural areas.


‘A road-map cure for Rural Development, recipe for further increase in unemployment’

  • In the past we have seen movement from rural to urban for jobs and for their personal development, this triggered a lot of problem for the government since a large chunk of rural population was no more interested in farming and rural India and were migrating to urban lands which led to decline in agriculture.
  • The Land Acquisition Bill looks forward to retard this growth by slowing down urban expansion by means of acquiring land for housing and factories and creating more inflated incentives for land and rehabilitation to pull back rural from urban.
  • With the acquisition of rural land, more Industries and Housing complexes will be set up in rural India which will result in lot of development at rural front.
  • This turn will make rural a very attractive place for residence and opportunities for growth. Since the land rates will be touching all-time highs and the farmer will get 4 folds more the market value for his land which is a handsome reward. There will be a huge population which will be move from farming into the land development in the rural areas.
  • Even if we go by the best intentions of the government and honest implementation of the low for the farmers – there will be a huge impact of the increase in the effective land price – while for 21% engaged in Agriculture it will be a great windfall –  what about the other  79% of the Indian households – directly or indirectly.
  • And yes  there will be another class of household created out of the 16% Agriculture Laborers who will be dependent for their subsistence on a marginal monthly handout for limited period.
  • Without proper training & skill development to become employable in non-agriculture activities/industries – the youth from these household become a fuel for Gurgaon-like lawless situation – wish to copy the lifestyle of the Newly Rich but do not have the resources to do so hence ending up on the wrong side of the law.
  • In Urban areas, with The Urban Property Rates Going Double ‘The Rich becomes Richer, enforces Middle Class of Urban to shift to Rural’
  • In most cities, the real cost of a home is the land it is built on – not the construction cost of buildings and apartments. By quadrupling land prices, homes will become unaffordable to all but the super-rich.
  • So much for inclusive growth, where even the urban middle classes will be de-housed and they would prefer shifting to rural for homes. 

Impact on Agriculture & Farm Mechanization

  1. With the upcoming Food security Bill, Seed Bill, the farmer will get more subsidies and opportunities to carry out agriculture and Agri practices; hence he will be more involved in farming.
  2. With the advent of land acquisition bill, the rates of the land will go exorbitantly up, which will make a farmer consider 2 options- either sell off the entire land, or sell off a portion of land to the government and keep the later portion to himself, which will lead to land divisions and bifurcations of land, earlier the farmer who owned 4 Biga land, would now own 1-3 Biga land, the more we divide our land, the more focus will be onto the increase in mechanizations since the farmer will crave for higher productivity and output from a smaller land. This will shift the focus of farmers completely to the more mechanized form of farming. It will be exclusive growth, not inclusive
  3. With the subsistence allowances of Rs 3,000 per month for the first year, and an annuity of Rs 2,000 a month for 20 years, the poor farmer/rural person will not want to focus much on labor hood, and it will again push lot of labor problem. But at the same time it is up to farm mechanization companies to bridge that gap of labor shortage by coming up with application based solution for the farmers and Agri businesses in return giving a boon to farm machineries and new techniques.





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