This Article is From Nov 30, 2014

Truth vs Hype: The Myth of Land Acquisition

A shortage of land is held to be a key factor in stalling industries from setting up business.

New Delhi: This session of Parliament saw the government mulling changes to the Land Acquisition Act, specifically to do away with or dilute provisions that make acquiring land difficult. Pressure for amendments has come from state governments, and corporate India. A shortage of land is held to be a key factor in stalling industries from setting up business.

But a detailed investigation by NDTV found a different reality. We focused on state-level Industrial Development Corporations, whose primary role is to acquire land and ready it for industrial use.

Accessing data wasn't easy - most states were reluctant to part with it, or had not maintained proper records.

In the end, we got the numbers from 5 major Indian states: Maharashtra, Andhra Pradesh, Uttar Pradesh, Rajasthan and Gujarat.

Between them, these states had acquired 5,72,793 acres since their inception. Of this, a huge 2,55,471 acres - about 45 per cent - has not been allotted to any industrial projects.

In their defense, the states offered a variety of explanations. For one, not all land acquired is allotted for industrial units - some of it is reserved for common areas, roads, and so on.

But that is an average of 20-25 per cent, still leaving another 20-25 per cent lying idle.

It is worth bearing in mind that the figure doesn't include the land occupied by units which have fallen sick, but the owners continue to 'squat' on the plots they have been allotted.

Most states permit industries anywhere between 3-5 years to get their factory going, failing which the land is repossessed. In practice, this is rarely enforced. In some states, units are permitted to seek indeterminate extensions.

The need to tap into vacant or unproductive land is important given the contentious nature of land acquisition in a largely rural society like India, a process marked by social unrest, and allegations of malpractice.

Maharashtra, for instance, despite an unallotted bank of 1,00,000 acres of land, is in the midst of acquiring land for its leg of the ambitious Delhi Mumbai Industrial Corridor.

In just one region of Raigarh, along the Konkan coast, the Maharashtra Industrial Development Corporation plans to acquire 25,000 acres of land, of which 6400 acres is in the first phase. This has sparked protests amongst locals.

In Dakhne village, they told us that this is their land, and they will not leave it.

The MIDC's regional officer Balalsaheb Kolekar, in charge of the Raigarh project, told us that only a handful of people were against it; that they have already got consent signatures for about 1800 acres.

But activists found that the consent is not from farmers, but land brokers who had bought the land in advance. "They are not locals; they purchased the land, which a few farmers sold because they needed money," said Ulka Mahajan, who has worked with various land rights movements in Raigad over two decades.  She read out the names of the land owners: "Oswal, Mehta, Shah - none of these are local people."

Mahajan alleges that the brokers are acting as proxies for politicians from Maharashtra's then ruling Congress-NCP alliance, who had prior knowledge of the location of the project and were able to acquire the land on the cheap.

Whether that is true or not, these brokers - not farmers - will get the benefit of the MIDC's special compensation of Rs 18 lakh per acre, for land which they bought at Rs 2 lakh per acre, a 900 per cent profit.

Ironically, there are 6 industrial parks in Raigarh, with a total of 7000 acres of land.  Of this, 2000 acres is vacant and another 1700 acres occupied by defunct units.   

Industrial units closing down is an inevitable part of economic activity.

But, some believe that the delays in repossessing the land gives squatters more time to sell, or inflate its net worth.

The Uttar Pradesh State Industrial Corporation, which has 35 % of its 49,000 acres lying vacant, is one such example.

We visited a UPSIDC park near Lucknow, which given its prime location should make it highly sought after.

But, we found vacant plots as well as units - an atta mill, a pickling unit - that had closed down after a brief spell of activity. Several had 'Available for Lease' or 'For Sale' signs hanging on them.

More serious instances of the misuse of industrial land has emerged from Andhra Pradesh. In 2012, the AP Industrial Infrastructure Corporation (APIIC) had 1,39,000 acres of land of which unallotted land was 50,000 acres, and allotted land not in use amounted to 23,000 acres. 

Behind those numbers are the massive land scams centred around APIIC land allotment, mostly during the tenure of the late Congress Chief Minister YSR Rajashekhar Reddy.

In June 2007, for instance, the Andhra Pradesh government allotted a mammoth 10,760 acres - one of the biggest individual land allotments for an industrial project - to the infamous Reddy brothers in Kadappa district,.

No project came up. Instead, the Reddys leveraged the land - which they purchased for Rs 18 crore - to raise Rs 350 crore.  In 2013, then Andhra Pradesh chief minister Kiran Kumar Reddy cancelled the allotment.

Even Gujarat, billed as India's premier industrial destination, has shown a record not unlike that of other states.  Of the Gujarat Industrial Development Corporation's land bank of 1,03,784 acres, only 50 per cent has been allotted.

Jaynarayan Vyas, a former chairman of GIDC admits that some of the industrial parks in Gujarat's hinterland had no takers. "In the government's enthusiasm to promote industrial development, parks were developed in a large number of districts," he said. "But they are not successful in attracting the industries."

The vast amount of unallotted or unproductive industrial land across India doesn't preclude the need to tweak clauses of the Land Acquisition Act.

But, it does indicate that the much ballyhooed shortage of industrial land can be absorbed by better managing the existing land resources: develop land banks faster; make transparent allotments to genuine industrialists; tighter monitoring to cut down on squatters and speculators.

"The government must first complete the inventory of all available land: with defence, railways, state-owned public sector undertakings, sick and closed industries," said Vinayak Chatterjee, chairman of the CII's National Task Force on Infrastructure.

This could not only reduce the inevitable tensions that accompany land acquisition, but also encourage more legitimate industrial activity.