ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Questioning Adequate Compensation for Land

Can there be a better way to frame land acquisition in favour of farmers? Perhaps the value of land needs to be fixed at intervals and projected in a five year step.

Nobody likes acquiring land from the farmer for industry. It has the element of forcible appropriation with no voice for the farmer and appears victimising as it were. The state argues it can acquire, for what it considers as, public interest. Public interest is usually defined as the greatest good of the largest number of people. Unfortunately in the way land is acquired it often looks like the government is furthering corporate interests.

However public interest is hardly served by corporate interests. Most businesses maximise profit for investors of finance capital by acquiring land at throwaway prices. The industry that is based on the land does not create adequate employment but it does shoot up the gross domestic product (GDP) numbers.

The farmer’s interest is not served by paying mere monetary compensation, however reasonable it may look like. The moment s/he loses his property, perhaps the only property she has, her status in society is last. The money she receives does not get her back the social security and status she enjoyed with the prestige of ownership of land. People whose lands are acquired are often relegated to menial jobs which do not help them financially.

Unfair Transaction

One suggestion is often in circulation—let the farmer sell and buy as he wishes. One could adopt regulations like those needed for environmental and social needs. People who demand this, mostly corporates, also demand tax liability, which would reduce the compensation received by the farmer significantly.  However the assumption that there is fair transaction in a free market economy has been proved wrong again and again.

The market value of land to be acquired, as decided by the local authorities, is often erroneous. This is because acquiring land for industry often has the ripple effect of increasing land prices in surrounding areas. This drives up land prices in general. However this speculation over land prices is not sustainable.

Land is the most active ingredient among factors of production and is of ever increasing price and value. Hence the value of land needs to be fixed at intervals and projected in a five year step.

The current practice of land acquisition that requires the consent of 80% of affected farmers is not a fair method. The market value of land keeps changing as investors keep buying and selling for various projects. Therefore the effort should be to discover the “real” price of land. Alternatively if I am an entrepreneur and believe in equity, I would approach a land owner with a partnership deal. One thing is clear—the farmer is instinctively a good manager, as she manages uncertain factors of agriculture and still produces food for herself and the market. However one may need introduce them to the language of the modern enterprise, thus ensuring they always get fair value for their property.

Reframing Land Acquisition

What is the monetary share that the farmer receives for investing her land in the enterprise? It is the future value of land minus the current market price that must be given to her immediately to manage her own personal affairs until the said enterprise gives her returns. Thus if and when an enterprise folds up, and the land is sold, for  discharging the liabilities, the owner of the land gets his proportionate share in the proceeds. Thus farmer never loses her ownership just as the capital invested continues to be owned by investors.

The farmer would not be allowed to withdraw her land as such during the life of the enterprise once joined. In the event of her exit half way, suitable compensation on the basis of asset value prevailing at the time would be paid for severing her ownership title to the land. It would be win-win for all parties when the industry ceases for whatever reason. Enterprises have been getting land almost free from the state, which fold up half way on false pretext, dismissing thousands of workers with no or meagre compensation but the owner of the enterprise reaps huge profits on land value.

A better way to frame the debate on land acquisition is this—farmers have invested in an enterprise rather than “giving up” land. It should be emphasised that the peasant should not become a peon in the enterprise but would become a proud part owner. She should be encouraged to become an entrepreneur. The other dependants on that land like agricultural labourers would then continue to work for the industry that would better their economic standard.

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