Land is fast becoming a high-risk asset in many parts of India. Once a relatively abundant resource, especially in areas away from major urban centres, land is increasingly becoming difficult to acquire and prone to uncertainties. Landholders, especially politically organised farmers, are resisting large-scale government land acquisitions and even questioning past buyouts.

Much of this is the result of forcible land acquisition by state governments at rates determined by administrative fiat and not market. An antiquated colonial law on land acquisition has allowed local governments to compulsorily acquire land merely by declaring it to be in public interest and without issuing notice to the land owner. The original idea behind this 1894 law was to get land for essential works such as roads, public buildings, railways and similar infrastructure projects.
In recent times, however, much of the acquired farm acreage has gone towards private housing schemes. Much of these lands acquired by local governments have been and continue to be transferred to private real-estate players, industrialists and powerful individuals at relatively modest prices. This has helped private players, and in some instances government institutions, reap huge profits, leaving villagers dispossessed and marginalised.
Resentment against this clearly unfair process has been growing in different parts of the country and in recent times has become a potent political issue. The best-publicised examples of this include the Singur land agitation in West Bengal, the Bhatta-Parsaul episode in Uttar Pradesh, the continuing anti-Posco agitation in Orissa and the Jaitapur protests in Maharashtra.
The cannier politicians in the country are beginning to realise that land acquisition has become an issue fraught with great political, and at times, security risks. Judging from available trends, the political class is responding by increasingly washing its hands of this process, even though land has often been the single largest source of political funds.
Earlier, anti-acquisition agitations were localised affairs, a significant percentage confined to remote tribal areas, that attracted little media or political attention. The politicisation of this process was inevitable and once politicians like Bengal’s chief minister Mamata Banerjee, and more recently the Congress’ Rahul Gandhi, jumped into the fray to make capital of such agitations, the equations changed abruptly and dramatically. Today, every political party is fast getting into the land agitation bandwagon. In Orissa, for instance, as many as five different political parties — the Communist Party of India, Communist Party of India-Marxist, Forward Bloc, Samajwadi Party and Rashtriya Janata Dal — have joined peasants in their agitation against the South Korean giant Posco’s $12 billion steel project.
Government land acquisition in many parts of the country has consequently become the principal political issue of the day. Even Prime Minister Manmohan Singh, whose government has been sitting on the proposed changes to existing land acquisition law for the past four years, has commented on the urgent need to amend them. In contrast, Uttar Pradesh chief minister Mayawati has moved swiftly to contain the political fallout of the Bhatta-Parsaul uprising, where two policemen were shot dead by protesters and an unknown number of villagers killed in police retaliation, by issuing an amendment to the land acquisition process.
Ms Mayawati has declared that the government henceforth will not involve itself in acquiring land for private developers. Further clauses in her land acquisition policy stipulate that bulk land transfers will not be valid unless 70 per cent of the farmers consent to the project and that, apart from cash compensation, 16 per cent of the developed land will be given to those dispossessed by the acquisitions.
Ms Banerjee has not as yet legislated on the subject but has told a group of industrialists that the state government would not involve itself in land acquisition for private industry. This declaration has left industry cold. For, as the chief of the ITC group pointed out, the do-it-yourself suggestion has little practical merit given that even his company has not been able to get land for its project in the state even after trying for five long years.
Telling the private sector to go its own way in land acquisition is not going to work. Industrialists, real-estate developers and even agricultural-estate developers require governmental assurances and guarantees without which the whole process becomes highly uncertain. Two further risks have become apparent in recent times: legal issues and renewed agitations for retrospective additional payments even after sale has been long concluded. In Noida, for instance, farmers have been agitating for more money from private developers on the ground that the value of the land they had sold previously has risen sharply in recent times!
Public sector and infrastructure projects too are bound to be hit. Recently, the government scrapped plans to set up an expressways authority to speed up road construction because it would involve land acquisitions. Several railways projects, including a prestigious freight-corridor proposal, have been held up by protests in parts of Maharashtra. Such protests have only been growing all across the country.
The problem is unlikely to disappear soon for several reasons. It is very likely that more and more state governments will follow the non-interventionist Mayawati-Banerjee model. The pendulum that once swung in favour of state intervention in the matter of land acquisitions is rapidly swinging in the opposite direction. The result is another disequilibrium that is bound to add to business uncertainties in this country and stymie growth.

The author is an independent security and political risk consultant