Dear members,
With the Indian summer in full bloom, scorching heat is pervading throughout the country and has pushed behind glimpses of the pleasant weather witnessed earlier due to the erratic climate. A similar scene is perhaps being enacted in the political spectrum that has suddenly become very heated.
Even though the Loksabha passed the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015 [the LARR (Amendment) Bill, 2015] on 10th March, 2015, the debate over it seems to be continuing putting the ruling NDA alliance in a tight spot. An extremely unfortunate and sad incident of the death of a protestor has further vitiated the atmosphere.
My discussions about this grave issue with few CA friends made me realise as concerned citizens that we need to understand the issues involved in the greater detail and its impact the nation’s economic development.
The land acquisition process hitherto carried out under the Land Acquisition Act, 1894 has been viewed as unfair, bureaucratic and inadequate. As per reports, over 50% of the land acquired between 2006 and 2013 for SEZs lie unused. The CAG in its report has commented that the land appeared to be the most crucial and attractive component of the SEZ scheme and listed many cases where the land acquired was sold off or put to other uses.
The Land Acquisition Act, 1894 empowered the Government to acquire land for ‘public purpose’ as the justified reason for the acquisition of private lands, but provided inadequate safeguards against forced acquisition or for proper resettlement and rehabilitation. The phrase ‘public purpose’ was not explained properly in the act, and its determination was entirely left to the Executive. Various studies have established failure on the part of the State machinery in showing any empathy towards the rural people who lose lands and livelihood.
Given increasing discontentment, the Government adopted the National Rehabilitation and Resettlement Policy, 2007 and initiated the process to amend the land acquisition law and provide for effective safeguards and adequate rehabilitation and resettlement. This process culminated in the enactment of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 [the LARR Act, 2013]. This 2013 law required the compulsory consent of the landowners – 80% for private projects and 70% for public-private partnership projects. It also made the Social Impact Assessment (SIA) necessary for all projects with very few exceptions. This 2013 law has been perceived to have made the land acquisition process extremely difficult. It has been blamed for stalled projects and labelled as a roadblock to the development.
The land issues coincide with the severe crisis faced by the farmers. A study by the Centre for Study of Developing Societies (CSDS) conducted last year has reported that given an option, over 60% of farmers would prefer to migrate to cities as that would give them access to better education, health and employment avenues there. They cited reasons such as inadequate income, bleak future and stress, for giving up farming.
Despite a significant growth India has witnessed in last two decades or so, it continues to depend significantly on agriculture. The 4th Annual Employment and Unemployment Survey Report for 2013-14 published on 7th January 2015 estimates that approx. 47% persons (all India) are employed in the primary sector consisting of agriculture, forestry and fishing.
A research report by McKinsey published in February 2014 states that there are too few job opportunities outside the farm sector, a factor that limits the economic opportunities available. It estimates that a faster shift of labour from farm to non-farm jobs (matching China’s pace) could have lifted 10 crore more people above the Empowerment Line, a line marginally higher than the Poverty Line, from 2005 to 2012.
Amartya Sen, the well-known Nobel Laureate in economics, opines that prohibiting the use of fertile agricultural land for industries is ultimately self-defeating. He further argues that in countries such as Australia, the US or Canada, where agriculture has prospered by increasing productivity and efficiency, only a very tiny population is involved in agriculture. When people move out of agriculture, total production does not go down; rather, per capita income increases. Sen makes a case that for the prosperity of industry, agriculture and the economy, India needs industrialisation.
The above discussion brings us to the conclusion that the creation of job opportunities remains an important goal for any government. Increasingly, this goal is becoming more challenging. The Economic Survey for 2014-15 avers that there has been a decline in long-run employment growth in the 2000s relative to the 1990s along with a decline in the employment elasticity of growth.
In order to address the challenges of reviving the limping economy and push for the creation of jobs, the present NDA Government brought this 2015 amendment to the LARR Act of 2013. It attempts to make the land acquisition less onerous and thereby to ease the cost of doing business in India.
The amendment mainly exempts projects in five categories such as defence and infrastructure from the mandatory consent provision. It also permits the government to exempt projects in these five categories from the requirement to conduct a Social Impact Assessment and certain restrictions on the acquisition of irrigated multicropped land and other agricultural land.
Past bureaucratic hurdles, inordinate delays and abuse of law have resulted in the widespread reservation in the masses against the land bill. As a result, there is widespread opposition to vesting of any additional discretionary power. It is imperative that the present Government to manage the tightrope walk well and navigates this piece of crucial reform through the legislative process. It is equally essential for the Government to improve urgently the governance and infuse confidence amongst the suffering lot. Let’s hope the promises made and expectations raised by the NDA Government will come true.
On the other front, the issue of applicability of MAT on foreign companies is getting vexed. The tax administration seems to be further drifting from the coveted objectives of predictability, stability and certainty so vehemently espoused in the reports of the Tax Administration Reforms Commission (TAR C).
Talking about summer heat, this is also the time for exam fever. I hope all of you whose children have appeared for school/college examinations are now breathing easy and that the children will fare very well in the exams. Best wishes to those children appearing for their CA examinations.
As I am about to complete writing this page, the news of the devastating earthquake in Nepal and also parts of India, one of the worst in recent times, has deeply saddened us. It is a grim reminder of the mankind’s frailty against the fury of nature. At the same time, the human race continues to come together, show resilience to rise again and recover. Let’s direct our prayers and thoughts to the brave people of Nepal and help them in any way we can.
Once again, I look forward to receiving your feedback and views.
With warm regards,
