Karnataka land reforms may trigger fresh look at land acquisition process

Land acquisition being a concurrent subject, states have considerable leeway in shaping how land is acquired by the government
In the middle of the pandemic-induced lockdown, the Karnataka government earlier this month notified an amendment to the state’s Land Reform Act, 1961, allowing industry to buy land directly from farmers.

Just like in the case of recent relaxations in labour laws, industry experts feel the move by the Karnataka government is likely to trigger a fresh look at cost, procedure, and processes of land acquisition by other states. This is be an opportunity for the Centre to reconcile the differences that have cropped up over the years between the Right to Fair Compensation & Transparency in Land Acquisition, Rehabilitation & Resettlement (LARR) Act, 2013, and various state-specific laws, experts say.

“The goal should be to maximise value for the landholder and create a larger market of buyers/occupiers,” opines Anand Prasad, senior partner at law firm AP&Partners, on how the crisis provides an opportunity to iron out structural impediments in the country’s land regulations.

Shilpa Kumar, investment partner, Omidyar Network India, agrees. “The lockdown has brought to light the key role that land needs to play — both as source of livelihood for migrants and in driving industrial growth. There lies an opportunity to take action on the long-pending land reforms.”

According to Dhiraj Nayyar, director, economics and policy at Vedanta, the end goal of any factor market reform should be to enable markets to function efficiently. “Land is no different. Instead of the government trying to fix prices, it must allow the market to determine prices.”

Experts say reforms pertaining to the land market are long overdue. And that this has to touch upon provisions ranging from regulation in ownership to operation, to sale to leasing and inheritance. Anuj Puri, chairman, Anarock Property Consultants, points out land ownership in India is still done through registered sale deed. “This is not only presumptive in nature but also subject to challenge since it doesn’t define the title of the property and the extent of rights of all owners. There is a high possibility of disputes and litigations,” he says.

Many experts feel the focus should be to improve the health of the land record system. Nayyar says it is crucial, especially at the level of the states, for land titles to be clearly defined to enable the functioning of the market.

However, Kumar points out NCAER’s LRSI index shows only a few states have updated cadastral maps, which are a critical part of land records to locate and define land ownership. “Having updated and accurate land records will have far-reaching effects in ensuring the delivery of government welfare benefits, easing the function of market transactions, and increasing consumer confidence.”

Prasad says restrictions on acquisition or leasing of agricultural land, conversion of land from agricultural to non-agricultural purposes, and domiciliary restrictions on land acquisition depress land prices. “We need to focus on creating a free market for land in India,” he says.

Puri suggests a probable solution is the implementation of a unique identity number or UID to help streamline and organise the country’s outdated land record system. “It will bring in greater transparency and help attract foreign investors for whom lack of proper land titles is a deterrent.”

While the Centre brought in the LARR Act, 2013, to safeguard the rights of landowners from archaic laws, experts say its stringent provisions created several problems in land acquisition, causing further delays in development projects.

Land acquisition being a concurrent subject, states have considerable leeway in shaping how land is acquired by the government.

To bypass the stringent provisions of the LARR Act, states have over the years watered down its provisions in state-specific laws. For instance, there are substantial differences in the definition of ‘Public Purpose’ under the central Act and in many of the state Acts. Similarly, in calculating the compensation for land acquired, some states have fixed the multiplying factor for rural land at a lower threshold than prescribed by the central Act.
According to Vatsal Gaur, associate partner in HSA Advocates, the government can use the pandemic situation to revisit the LARR Act and focus on resolving the conflicts between the central and the state Acts.

“One way to do so is for the Centre to limit the scope of the definition of ‘public purpose’ to public projects like roads, social sector projects, railway projects, and hospitals,” he says. While the Centre may detest from acquiring land on behalf of the private sector, states can decide policy on local infrastructure, acquiring land on behalf of private institutions and PPPs.

“This has the effect of reaching a compromise on central and state relations with respect to the acquisition of land,” he suggests.

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