NATIONAL UNIVERSITY OF STUDY AND RESEARCH IN LAW,

RANCHI

Research Project on

“Land Acquisition And Compensation: Alternatives To Monetary Compensation”

Submitted To: Submitted By:

Mr. Utkarsh Verma Harsh Kumar Patidar
Assistant Professor Sem X Sec A
NUSRL Ranchi Roll No. 622
 TABLE OF CONTENT

S. No. Particular Page

No.
1. Introduction 3
2. Displacement: A Traumatic Experience 4
3. Compensation as a consideration 5
4. Thinking behind Cash Compensation: Need of an Hour 7

i. Land in lieu of Land 8

ii. Compensate as a part of developed land 8
iii. Reskilling Programmes as a Facilitation Mechanism 9
iv. Leasing the Land instead of complete transfer 9
v. A Share in the Business Profits 9
5. Conclusion 10

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 Land Acquisition And Compensation: Alternatives To Monetary Compensation

INTRODUCTION

Growth of economy and expansion of cities influences the need for investments as well as
infrastructure expansion. The increasing investment and expansion of infrastructure further
stimulates demand for land for new industrial estates, for services, commercial estates,
communication, and road networks and for transportation corridors.1

Advancement of every society is measured in terms of development of human and natural

resources, and infrastructural development including establishment of various projects to
use the natural resources for the benefit of mankind. Major projects in industrial,
Highways, irrigation and power sectors are always being established in the areas largely
inhabited by private individuals. Each time a major project is undertaken, a part of private
area is acquire for same thereby displacing people from their land. It must be noted
human welfare cannot be completely ignored in the name of development of the society.
Development must reconcile the eco-balance least in such a manner that it may not have
an adverse impact on the life of natives and the existence of ecosystem.

“Acquisition means and implies the acquiring of the entire title of the ex-appropriated
owner, whatever the nature and extent of that title might be. The entire bundle of rights
which were vested in the original holder would pass on acquisition to the acquirer leaving
nothing in the form”.2 The word “acquisition” is a wide concept which is ranging from the
procuring of property or taking of it permanently or temporarily which is not confined only
to the acquisition of a legal title, by the State in which the property is situated.

The state has three inherent powers attached to it viz Police Power, Taxing Power and
Power of eminent domain.3 The power to take property from an individual is entrenched in
the idea of eminent domain. The doctrine of eminent domain states, the government can do
anything, if the act of sovereign includes public interest. The doctrine of eminent domain
authorizes the sovereign to obtain private land for a public use and thereby providing the
public nature of the practice established beyond hesitation. This doctrine is well manifested
by the construction of dams and other public infrastructure in past. Such construction has

1
M.M Cernea, (1993), The urban environment and population relocation, (The World Bank, Washington
D.C., 1993).
2
Choudhary v. Union of India, AIR 1950 SC 41.
3
State of West Bengal v. Union of India, 1963 AIR 1241.

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dominated the need to displace people from their native lands. They continue to be uprooted
even from their hellish hovels by government bulldozers..... The millions of displaced
people in India are nothing but refugees of an unacknowledged war. 4 Some of the recent
examples noted are POSCO’s plant in Orissa and Tata Motors in Singur which need large
tracts of land and hence can only be achieved by displacing people.

With the changing scenario the role of state has also changed. Now the state has taken on
itself, the task of acquiring land for these private investments, colouring it as a “public
purpose.” What has not changed is the plight of people who are being displaced from the
native land. Albeit compensation is paid as a consideration in return of such acquisition, but
the question arises as to the adequacy of amount of cash compensation or whether cash
compensation is even though seems to be fair, let alone adequate, to those being adversely
displaced from their place. Infrastructure growth is taking place at great pace and the price
of this growth is being paid by the displaced people. This prevalent scenario tends to trickle
down the Inclusive growth and also all the other similar slogans are mere slogans only
without any implementation.

Recent development trends induced population displacement that is upheaval of

communities in order to make a way for large dams, industrial zones, transportation routes,
game parks and commercial forestry5 thereby raising concerns of the balance between the
benefits of infrastructural development and the costs and plight of being uprooted.

DISPLACEMENT: A TRUAMATIC EXPERIENCE

Displacement means and includes physical eviction from a land and the expropriation of
productive land and other assets to make possible an alternative use.6 Displacement of a
group deprives people of many things, some of which are considered to be fundamental to
their lives including and not limited to homes, productive assets, livelihoods, familiar
environments to which skills and practices have been attuned, community networks, and a
sense of local belonging.7 If displacement is not undertaken correctly then it would proved to
be traumatic for the individuals. Multiple meanings have been attributed to the land by

4
Arndhati Roy, “The Greaer Common Good” Outlook, May 24, 1999.
5
DoloresKoenig,"Toward local development and mitigating impoverishment in development-Induced
displacement and resettlement, final report prepared for ESCOR R7644 and the research programme on
development induced displacement and resettlement."(Refugee Studies Centre, University of Oxford, 2002).
6
T.E. Downing, LII Avoiding new poverty: Mining-Induced Displacement and Resettlement (International
Institute for Environment and Development, London, 2002).
7
Amartya Sen,Social Exclusion: A Critical Assessment of the Concept and Its Relevance(Paper prepared for the
Asian Development Bank (processed), (1997).

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the different class of Individuals. For a farmer it is the asset that provides him the food and
livelihood. It enables him to utilise the major or generally the only skill that he possesses
that is working on the land. The piece of land is inherited by him from his ancestors and can
be passed on to the next generation and hence provides security to several generations. The
most significant importance of land is that it is marketable and in times of distress, serves as
collateral. However, it must be borne in mind that the displaced individuals though being
landless are also not immune to such traumatic experience. It can’t be assumed that they do
not own land and so it would seem that displacement will not affect. The land bestows
economic opportunity the landless in rural India to work in other people’s land. And this
relationship is not simply a one-time transactional one but has a history and complex social
dimensions. So, when the landless are displaced, they have to start all over again, a process
that is filled with uncertainty and even greater vulnerability, competing with other landless
people who are already resulting in wage conflicts and a race to the bottom. People living in
rural areas are dependent for livelihood on several natural resources along with land. They
keep cattle (cows, buffaloes, goats) for milk and dung. Various trees are also grown by
families in the vicinity of their farmland and house plots which act as sources for providing
fruits, wood, herbal medicines, and shade. All these resources are destroyed when they are
displaced.8 Deprivation of land and job causes economic deprivation. The displaced persons
loose access to their income. The farfetched consequence of that would be turning their
children into child labourers in order to earn an income thereby filling the financial deficit.
More than that children lose access to schools and to supplement the household income
go for doing odd jobs, either the household jobs or the industrial labourers. The fundamental
feature of forced displacement is that it causes a profound unravelling of existing patterns of
social organisations of a particular group of individuals. Displacement for the landless would
therefore considered to a lose-lose situation.

COMPENSATION AS A CONSIDERATION

When the acquisition of any private land is done by the state for public purpose, the state is
bound to pay compensation. As sanctioned by the Land Acquisition Act, 1894,
Compensation had to be based on historical cost plus a solatium, but it must be noted that
the concept of replacement cost was unknown. The compensation amount was not a

8
M. Asher and A. Kothari, “Unsettling: The Reality of Resettlement in Orissa” 14(6) Down to Earth 40, 2005.
9
W. Fernandes, “Power and powerlessness: Development projects and Displaced Tribals”41(3) Social Action
243-270 (1991).

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negotiated sum, but a figure fixed by the government officials under certain rules. This
method of compensation led to the two-fold dissatisfaction with the Act. First, on the part of
the people on the grounds of the quantum of compensation, the delays in payments,
corruption amongst the officials dealing with the matter); secondly, on the part of the
government because of the delays in land acquisition because of challenges and litigation
thereby raising implementation of the projects in question.9

To fill the lacunae, National Rehabilitation and Resettlement Policy, 2007 was introduced in
order to promote least displacing alternatives and also to ensure adequate rehabilitation. This
policy also endeavour to facilitate harmonious relationship between the government and
affected families through mutual cooperation where displacement has occurred on account
of land acquisition.10 However, to undo the wrong that is being committed from past and
continues perpetually and to ensure fair compensation and Transparency in Land
Acquisition, Land Acquisition Rehabilitation and Resettlement Act, 2013 was introduced.
This act laid down rules for granting compensation, rehabilitation and resettlement to the
affected persons in India. The Act has provisions to provide fair compensation to those
whose land is taken away, brings transparency to the process of acquisition of land to set up
factories or buildings, infrastructural projects and assures rehabilitation of those affected.11

In contrast to the optimistic objective foreseen by the drafters of the act, at one point of time,
compensation for displacement was in the form of a job in the venture for the development
of which the acquisition and displacement was caused. However, as technology became
more sophisticated, this is no longer an option because the number of jobs shrunk and also
because the technical requirements have increased beyond the capacities of those displaced
social groups.

Even Narmada award12 passed by the Apex Court after relying upon the objectives of the act
and attempt was also made to give a life to the act was not implemented in strict sense. The
award tends to revolutionalise compensation practice by offering land for land but
astonishingly went back on its promise and offered cash compensation, claiming there
was not enough land.

Acquisition of land from a farmer can be well substantiated from an analogy i.e. taking

9
Satish Chandra Gupta v. State Of U.P., 2016(4) ALJ 658.
10
National Rehabilitation and Resettlement Policy, 2007.
11
Rehabilitation and Resettlement Act, 2013 (Act 30 of 2013).
12
Narmada Bachao Andolan v. Union of India, [2000] 10 SCC 664.

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away the computer and internet connection from an IT professional and asking him to
work.13

As of now, whenever we utter compensation, it is quite clear that we are considering

‘Monetary compensation’. Though prompt cash compensation seems to be adequate for a
point when Acquisition took place but a microscopic view suggests the other way around.
Various negative consequences attached to the cash compensation can’t be ignored. Given
the fact that the compensation amount is credited is to the man whose few pieces of land
actually are jointly owned and he spends the amount on all the so-called good things like
cars, TVs, music systems, alcohol and it disappears quickly. The sudden cash in their hands
gave many the false impression of healthiness. The farfetched consequences is, Gambling
and drinking increases to an unprecedented level. 14 Even more tragically, it leaves his wife
and children, who at least had access earlier to cultivate their land, far worse off than before
for absolutely no fault of their thereby resulting in poverty.15 Without adequate training on
how to manage a large lump sum payment, people may spend the money quickly and
unwisely, or may be fooled into investing in fraudulent schemes.

Cash compensation as the only means of rehabilitating displaced people is a half-baked

response to the problem of the poor who are being displaced for the promotion of public. It
shows a complete lack of understanding the thread of livelihood of the helpless man with his
land. Public purpose clearly has lost the purpose and has completely ignored the fact that the
public also includes the family getting displace and not merely the subscribers of the benefit
of a particular infrastructure.

THINKING BEYOND CASH COMPENSATION: NEED OF AN HOUR

The Land Acquisition Acts and policies have failed to foresee the practical problems
associated with the cash compensation and emphasised only on the payment of cash as
compensation. The Act omitted to mention a mechanisms providing of an alternative
site/land in lieu of property acquired and the compensation is merely fixed in
accordance with the provisions of the Act.16 However, in the current scenario, the policy
makers are obligated to think beyond the mere cash compensation. Some of adequate

13
Shankar Venkateswaran, “Looking beyond Cash Compensation”, 42(22) Economic and Political Weekly,
2050-2051 (2007).
14
M.Q. Zaman, “Land Acquisition and Compensation in Involuntary Resettlement”, 14(4) Land and
Resources(1990).
15
P. Sainath, Everybody Loves a Good Drought, (Penguin, India, 1996).
16
M. Anjaiah, S/O Mallaiah v.The Government of A.P., 2007(1)ALD 211.

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alternatives to the long practiced cash compensation are enumerated below.

i. Land in lieu of Land

Providing suitable alternative land may be difficult in the light of current population
pressures on the land but many owners and occupants generally prefer to receive land as
compensation rather than money. This principle is termed as ‘land consolidation’ and being
followed in developed countries like the USA, UK, Denmark, etc. 17 Providing suitable land
has various benefits attached to it. It can help to reduce objections to the process and reduce
the overall costs of compensation also. Apart from that it is a fact that land is an inheritable
asset which can provide income to different generations and ensures sustainability. The
government can ensure that the new location sites are better in terms of soil quality, or in
irrigation facilities, or availability of resources or in connectivity. These sites would make it
easier for land losers to accept the compensation and relocation and leave of the old site
happily.18 Having satisfied with new sites they will never opt for violence and agitation
against the government which is happening in tribal states of Chhattisgarh etc. currently. To
purchase similar land elsewhere from the monetary compensation or to find new ways to
earn a living is quite difficult. Land for land is a possibility, but if the Narmada experience
is any indicator, it will be another case of promises never kept. The Narmada experience
also manifested that even where land for land was provided, it ended up being a very
unsatisfactory experience, as it adversely affected the social capital that existed between
people in the same village with the particular land which is acquainted.19

ii. Compensate as a part of developed land

This option should not be considered as an alternative to monetary compensation but

supplementary to it. In this, a landowner can be given option for higher compensation or a
relatively lower compensation but along with part of developed land. This may be kind of
forced participation in development process. For e.g., if the land is acquired by the
government for constructing a market complex, then a shop can be given to the land owner as
a compensation for him to carry some business for his livings. Similarly, if the land is
acquired for residential purpose, then a house or flat can be given to him. However, this form
of compensation can be given in limited case and cannot be provided where land is acquired
17
Soumyananda Dinda, ‘Land Acquisition and Compensation Policy for Development Activity’ available
athttps://mpra.ub.uni-muenchen.de/83453/1/MPRA_paper_83453.pdf> last accessed on 08/05/2021.
18
S. Chaudhry, ‘Land Acquisition Laws and Practices in Karnataka with a focus on the Compensation in
Acquisition of Land for the Companies and Urban Layout’ Fiscal Policy Institute, NLSIU, Bangalore.
19
Mohammed Asif, “Land Acquisition Act: Need for an Alternative Paradigm”, 34(25) Economic and Political
Weekly, 1564-1566(1999).

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for industrial purpose but only where a different individuals are provided rights over part of
it.

iii. Reskilling Programmes as a Facilitation Mechanism

Technology provides limited opportunities for people skilled in agriculture or being engaged
traditional method of farming. So, if the land is acquired from individuals who were they are
self-employed or otherwise, they become unemployed. In such scenario a reskilling
programme would rescue them by generating employment or be a supplier of goods and
services to the companies. This is a unique opportunity of the industrial displacement.20 They
can be provided the training of the same machineries and technology which are being used in
the industry going to set up in the land. They can be trained in other laborer work as well.
This will ensure them an employment and help the industry with a trained labour.

iv. Leasing the Land instead of complete transfer

Another alternative to the compensation is the limited transfer of rights to the corporate. The
farmers are not required to sell the land but to lease out to the company. The benefits that
this alternative renders is the ownership of the land remains in the farmer’s favour as well as
he draws a regular income in the form of lease rent which, if made out in the name of
husband and wife, can overcome some of the concerns indicated earlier in this article. Some
institutional forms which can ensure a fair deal for both the lessor and the lessee and this
is worth pursuing.21 But the another aspect of this alternative can’t be overlooked, as it failed
to take care of the interests of the landless who, are perhaps the worst off economically and
socially. Off course this by itself is not a viable option but is certainly a part of solution.

v. A Share in the Business Profits

Industrial displacement offers an opportunity that has never been offered. Giving displaced
people a share in the profits earned by the corporate is an obvious answer as it seems to
address most of the benefits that land offers, especially if the shares are owned jointly by the
husband and wife. This is not a new idea conceived rather the partners of change, Tata Steel,
when talking about compensation for people displaced by its Gopalpur plant has discussed.22

20
Shankar Venkateswaran, “Industrial Displacement: Looking beyond Cash Compensation”, 42(22) Economic
and Political Weekly, 2050-2051(2007).
21
Michael M. Cernea and Hari Mohan Mathus (ed.), India’s Forced Displacement Policy and Practice:
Is compensation upto its functions?, 181-207(OUP, India, 2008).
22
Walter Fernandes, “Rehabilitation Policy for the Displaced”,39(12) Economic and Political Weekly, 1191
–1193 (2004).

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Clearly, it was an idea ahead of its time because it was never implemented but it made a lot of
sense. Of course, these shares will have to be of the existing company that is promoting the
SEZ, as the SEZ itself will take time to be up and running and the displaced person needs
income right away. The negative impact of this option is that the fortunes of the displaced
will be closely being linked to the fortunes of the company and hence this can be proved as a
double-edged sword.23 Prima facie people think that shares in Tata Steel are a safe bet this
might be not true for many other companies.

CONCLUSION

If we are emphasizing on development, then we have consider the holistic development that
is the development of every people of every sections of society and not merely to improve
the world ranking on Development index. Economic development without human
development is meaningless. Development cannot be real until the benefits reach those who
pay its price. Human development cannot be achieved in an economy where despite the
rapid growth in the economy, the benefits belong to the rich and burden and cost falls on
those at the periphery, where loss of cultural identity as collateral damage is an issue. If
growth with a human face is to mean anything, rehabilitation of displaced persons must
mean that people being displaced take their rightful place in the center of the “public
purpose” for which they are being displaced. On the threshold of the seventh anniversary of
the Republic it may appear incumbent to remind the authorities the Dharma of governance.

23
Smitu Kothari, “Developmental Displacement and Official Policies.” 11(5) Lokayan Bulletin, 9-28 (1995).

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