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Devangshu Datta: Leave 'em alone with their land

Devangshu Datta/New Delhi 27 Mar 10 | 12:23 AM


The Central Statistical Organisation (CSO) gathers mountains of data to track income distribution. A shortcut: buy something in the Rs 30-50 range (soap, toothpaste) at a kirana store and hand over a high-denomination note. In South Delhi where I live, the shops change Rs 500 without blinking.

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The nominal rental yields in my apartment complex are roughly 3-4 per cent. If the land was redeveloped for commercial use, it would generate more revenue. Land value would also rise. It, therefore, makes sense for the government to seize my complex, reclassify it from residential to commercial and redevelop.

This is not flat-out impossible, though very unlikely. Despite flat-owners holding clear titles, the Right to Property ceased to be a Fundamental Right in 1978. Under the Land Acquisition Act (LAA), 1894, land can be acquired for any public purpose and surely, bolstering public finances is a public purpose.

Under LAA, compensation is paid. That compensation is assessed by the acquiring agency. It explicitly precludes considering "any increase in the land value likely to accrue from the use to which it will be put when acquired". This translates into instant profits. Post-seizure, compensation may be paid at the former residential or agricultural rates, while the land is resold (or leased) at commercial rates.

My neighbours and I would all scream very loudly if we were served LAA notices. Being white-collar folks, we wouldn't need to get violent. We could ensure strong public scrutiny and seek to legally stay the process. If somebody tried to scare us into vacating possession, the local police would register FIRs on our behalf.

In the villages of Lalgarh and Jhargram, where the lalajis struggle to change Rs 100, the LAA profit margins are higher. Land cleared for commercial use is worth several multiples of agricultural land. The windfall multiplier comes from a stroke of the pen. Also, fewer people qualify for compensation. Titles are unclear, and in the tribal belts, individual ownership is rare. By default, most "tribal land" belongs to the state, even if it has been used for millennia by local tribes.

The dispossessed land-users (who have no legal claims) have no legal recourse. Governance, which is no great shakes in Delhi, is an alien construct in such places. They face extreme violence if they don't vacate. So, faced with zero recourse and zero compensation, they pick up guns.

The imperial legal framework has created a massive opportunity for wealth generation. The downside is that, coupled with poor local governance, it has also helped trigger Maoist insurrections. The real costs are paid in blood and bitterness, and bloated internal security budgets. The Maoist violence has long crossed the point where it can be countered by non-violent means. It must be suppressed before improvement in governance can even be contemplated.

But the violence is a symptom, albeit one that must be addressed. The underlying disease requires multi-pronged treatment. Clean up land titles. Reintroduce the Right to Property as a Fundamental Right. Define public purpose stringently. Recognise and reconcile community rights to land in some fashion. Scrap official classification for land-use and let owners do what they want with their land. Rework compensation formulae to include upsides from future value-addition and get third-party compensation valuation.

The windfall profits would reduce. But there would be wealth-generation as mining, steel plants, national parks, paper mills, etc, replace subsistence farming. Resentment will abate only as and when dispossessed locals get a stake in that wealth-generation.

Side by side, governance must improve. The loss in instant profits would be compensated for by lower policing costs and rising tax revenues as economic activity increases. One tangible sign of improvement would be the lalajis in Jhargram making change for Rs 500 notes.

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