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Changes in land Act Source: by S. S.

Johl: The Tribune As the Land Acquisition, Rehabilitation and Resettlement Act, 2013, gets the stamp of the President of India and becomes a law, under one of its important provisions, the farmers in the rural areas whose lands are acquired by the government for public purposes will get four times the market value of the land and in the urban areas the acquisition price will be twice the market price. At the face of it, it looks to be a big step in favour of the affected farmers. Yet it is more of an illusion than a reality. The market price is normally estimated as the three years average price of the sale deeds in the area around, which in actual practice is invariably not higher than the circle value of land in that area. The sale deeds are registered much below the actual money that passes the hands in these transactions. In Punjab, the fact remains that sale deeds are registered at not more than the circle value of the properties, which is hardly one-fourth of the actual value of the transactions. Though the situation may vary from place to place and state to state, yet it may not be very different in the rest of the country. All this is done to evade the stamp duty that generates black money. The resultant situation is that it is hard to find a seller or a purchaser who may agree to accept or pay the whole of the transaction amount in white. The honest buyers and sellers are in an unenviable situation. Neither they can sell the properties nor buy any without converting their honest money into corrupt one. Twice the market price in the urban areas still would remain around one half of the actual market price of the land and the farmer/person whose land is acquired will get half of the market price in white, but will lose the half which he/she would have obtained as unaccounted money. In the rural areas the payments the farmers will get will be totally in white, yet not any more than the actual market price of the land in the area. This Act will not bring about any correction in the situation in the private land market. Now the problem arises in the handling of the white money in the hands of the farmers. Beyond the public sector or in case of some honourable corporate businesses, it will be difficult to invest this money in the purchase of alternative property in the corrupted land/real estate market. The alternative of parking these amounts as fixed deposits in banks or avenues like infrastructure bonds are not very attractive because of their low yields. The buying of shares even in credible companies/corporate businesses carries the risks to which the farmers are not mentally attuned. Consequently, a major part of these sale proceeds will get consumed in conspicuous consumption, social ceremonies and non-essential comfort and luxury goods. There is, therefore, a dire need to create some avenues for investment of these honest funds with attractive yields. One of the answers to the problem can be the creation of special public investment fund with reasonable yield for the investors and this fund can be earmarked for income-yielding projects in the public and PPP mode sectors. For the private sector small and medium scale entrepreneurs who purchase land for setting up new factories or enterprises, the implication will be that they may have to pay at least one half of the actual transaction value in white in the urban areas and whole of it in the rural areas, provided as a fallout of the Act the circle value gets raised to the level of the acquisition price of the lands acquired by the government. That will put them in a fix with respect to the

unaccounted money available with them that had been lubricating the wheels of their industry in the corrupted environment of the country. The new investment in such industries may get subdued and adversely affect the industrial growth and their spread in the rural areas. Another category on which this Act will have an unbalancing effect is the real estate dealers and construction contractors. If the circle rates get pushed upwards as a consequence of the acquisition prices paid by the government, their margin of manipulation with unaccounted money will get reduced to one half in the urban areas and nearly to zero in the rural areas. The field reality is that they play the sale-purchase game with the unaccounted money parked with them by the people who have accumulated the corrupt money. It is not for no reason, therefore, that these two categories, i.e. small and medium size new industrial investors and real estate dealers are crying hoarse against the Act. Otherwise there should be no problem in respect of honest deals. Further, this Act will help increase the government revenue from the stamp duty from private transactions, if the circle rates get escalated to the level of the acquisition price of the agricultural lands and as the fallout in case of non-agricultural lands also. Although the Act provides for an assessment of social impact whereby willingness of 80 per cent of the affected farmers in PPP mode acquisitions and 70 per cent in government purpose acquisitions will have to be obtained for the acquisition of their lands, which provides an opportunity to the affected population to scrutinise the kind of project to be established and its impact on their lives in the area around, yet in case of non-utilisation of the land for the purpose specified, the provision to put the acquired land in the land bank to be utilised later for some other project(s) nullifies this option of the affected populations. The provision to provide employment/avenues of livelihood needs to be elaborated to match the education, training and capabilities of the affected farmers and on-job training as an integral part of the employment provided. There should have been a certain percentage of shares reserved for the affected farmers, to be prorated according to the number of acres acquired from the individual farmers or the families, in case anyone opts for the same in lieu of a part of the compensation. It would have been a more egalitarian approach, if some percentage of shares could be reserved for the non-farming families that are affected by the acquisition and are entitled to compensation. The fallout of this Act when implemented in different states and areas as may be moderated/modified by the states would need to be carefully monitored in the impact on the land market, the affected farmers and the local population as well as on industrial growth and the spread of industry in the rural areas, that may necessitate some appropriate amendments to the Act at a later stage.

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