BY: Summer Allen, Research Coordinator at IFPRI

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The International Food Policy Research Institute (IFPRI), supported by the Swiss Agency for Development and Cooperation (SDC), held an electronic dialogue April 20-22 on amendments to India's high profile Land Acquisition Bill hosted on the India Food Security Portal. The dialogue provided a platform for a constructive debate on a number of issues related to the amendments to the Land Acquisition Bill and how they will impact farmers and ultimately, food security. It was noted on several occasions by participants that this forum helped facilitate a more open dialogue that considered not only economic and political drivers in the issues but also the interests of small-scale farmers. Ignoring the politics involved in these decisions is not a feasible option, making open dialogues even more critical in generating that acceptable policy solutions.

This electronic dialogue complemented ongoing dialogues hosted by IFPRI and the supporting institutions in the target states that cover a range of timely issues. The purpose of the electronic and actual dialogues is to exchange experiences and generate joint research activities that foster targeted food-security policies and investments in India.

Below is a summary of the main themes discussed over the three days released following the close of the dialogue. While it does not attempt to capture every important point that has been made, it does give an overview of the popular topics in the discussion and the key points debated among participants.

Information Sharing: There was consensus that more information is needed to understand the benefits and impacts for farmers. The issue is heavily politicized and this has stalled the movement of information and actual details on how this would be implemented. It was suggested that the national and state governments should hold discussions with farmer groups and responsible opposition leaders to foster a dialogue about the plans and the potential impacts. The impacts discussed should consider the long-term costs and benefits to the farmers. The media should also play a role in disseminating this critical information.

Consent Clauses: Overall, the amended bill will need to provide more securities for farmers in terms of compensation plans if the consent clause is removed. The consent clauses require a certain percentage of affected families to agree to acquisition (in the 2013 law it was 80 percent). It was suggested that the clauses not be removed but perhaps adjusted by lowering the consent threshold or in other ways. Economic development is needed but providing infrastructure and other forms of development must be planned in a comprehensive way and through partnerships (public-private). While the consent clauses and the Social Impact Assessment (SIA) process has delayed development and in some situations has been impossible to achieve, there is concern that social equity will not be sufficiently considered if it is removed (or exempted) completely. If the SIA process cannot be structured more efficiently, more information is required on how farmers’ and their families’ interests will be protected over time without these processes. In SIA, prior biases of the implementing agencies and time delays are the problem areas.

There is also a concern that the negotiations required between landowners and private firms will be time-consuming but not lead to efficient outcomes. Recommendations were that negotiations instead be done with the land acquisition agency or through joint bids of farmer groups. In order for these systems to work in a corruption-free environment, land records need to be updated and revised regularly. The previous exercise of eminent domain has resulted in several allegations of wrongdoing in land acquisition.

Fair Compensation: One of the challenges to passing the Land Acquisition Bill amendments is concern that there is not a good track record for compensation and it is not clear there will be new safeguards to avoid this in the future. It will also be critical that the value of the land be assessed and agreed upon (perhaps through auctions that are ensured for fairness). This price information (and the determinants of land price heterogeneity) must be digitized and be made publicly available. A master plan for five years or more could be developed for public sector activities in rural areas that are being considered for development. It should be framed after public consultations and be accessible in all relevant languages. In the absence of this plan, the land will be undervalued and the prices too low.

While some have argued that it would be best if land that is consider non-productive should be targeted, those are hard to delineate as their determination would be based upon purpose (i.e., some non-productive lands could have good and services that support landless groups or the ecosystem). They also may not available or inherently suitable for the development purpose (e.g., large-scale projects such as transmission lines, canals, or transportation infrastructure). In these cases, innovative methods of providing compensation are needed to address longer-term needs of the farmers in addition to the short-term requirements. Already different models exist among Indian states and studies of best practices should be undertaken.

Consideration should be given to provision of adjacent land, dynamic compensation, long term leasing strategies, including farmers as shareholders and providing ongoing skill development. In the past few years, the importance of skill/capacity development has increased but it is not clear whether farmers and their families are being adequately trained to face new challenges. Leasing strategies could solve some of the bargaining power concerns if prices were fairly established. It should be ensured that transfers do not require that farmers are only compensated with isolated land without connection to markets and social infrastructure and that they have options for employment. The Land Governance Assessment Framework was cited as an example of a diagnostic tool for guidance on this issue.

Examples of compensation models: In addition to the compensation with adjacent land (which was supported heavily but agreed to be difficult to implement in many cases), making farmers equity holders or part of a long-term lease is supported. It is also recognized that states will likely need to be able to implement the Central policies in a way that works in that state. However they can provide some examples of schemes that could be implemented, at least in part including the following:

Although only implemented for a year thus far, the Andhra model of land pooling to build the capital city is being watched as a potential alternative given that it will provide both developed land and a cash flow.[1] Pooling has been done in a number of situations and can help share risks as well as benefits. How this could be scaled out is being considered if farmers do benefit under the scheme in Andhra. The Gujarat model is considered very efficient in terms of land acquisition but it is unclear how well farmers’ interests are being protected and compensated.

In addition, the compensation scheme in Magarpatta City (Maharashtra) should be analyzed as a potential model to be scaled out as a farmers’ company jointly developed the township. Other compensation schemes discussed included a one-time payment with installments over time for the remainder with interest. This may pose tax challenges but those should be well understood and discussed as the options are weighed. Annuity periods for benefits should also be well structured and enforced. The current land acquisition for the new capital of Andhra Pradesh is effectively a pilot test for land pooling with a two-part compensation system but it could take some time to understand the long-term impacts.

Additional Points Raised:

The actual need for projects should be assessed (e.g., large-scale irrigation schemes versus a focus on increases in water use efficiency) and additional support in terms of pro-farm policies is needed for farmers including crop insurance, marketing reforms, and climate-smart technologies.

Each of the amendments has a potential for positive and/or negative effects on farmers and these should be discussed openly and addressed. In particular, impacts to poor women farmers who cannot sustain their livelihoods on agriculture alone should be considered explicitly and they should be included in plans for development, perhaps through labor in the services sector given the insufficiency of the land they currently hold to properly feed many of their families.

The extent of land transfer must also be considered in terms of the rural to urban space as even in the biggest of Indian cities, this can be large. As it is difficult to gauge how much land transfer will take place as a portion of the total land, estimates for both the rural and the urban area should be made under different scenarios. States have sovereignty in making their modifications and that should be realized to the extent possible (e.g., the Delhi-Mumbai industrial corridor would cut across different states and the policy stance of different states would need to be aligned in that case).

Ultimately nothing succeeds like success. Unless farmers and buyers see demonstrated successes the choices and stance would be affected because of incomplete information. In that way, the movement of these acquisitions over time will depend upon social learning.

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