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Amendment to the LARR Act, 2013 and the Aspirations of the Rural Youth of India

Tapas Roy ( teaches at the Department of Management and Mechanical Science, St Thomas College of Engineering and Technology, Kolkata. R Jayaraj (rjayaraj@ddn.upes. and Anil Kumar ( teach at the College of Management and Economic Studies, Dehradun. 

India replaced its century-old Land Acquisition Act, 1894 with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. A recent attempt by the government to amend this act to exempt certain sectors from social impact assessment studies and taking consent of landowners before acquiring land is based on the assumption that the landowners in general are opposed to compulsory purchases. This assumption is questionable as landowners of peri-urban locations are generally willing to give land for development projects and the younger generation is unwilling to continue with farming as a livelihood.

The authors are immensely grateful to Sudas Roy (who retired from Indian Institute of Management, Calcutta) for valuable comments on the manuscript, and to an anonymous referee for detailed comments.

In post-independence India the Land Acquisition Act (LAA), 1894 was amended twice, once in 1962 and again in 1984. But it could not meet the aspirations of the high-growth post-liberalisation era. For faster economic growth, land was required for rapid infrastructure growth and industrialisation. China’s economic growth during the late 20th century drew international attention and applause. India wanted to emulate China’s special economic zone (SEZ) policy for faster growth. In 2005, the United Progressive Alliance government passed the SEZ Act, whose rules came into operation in 2006. The objective was to boost exports and economic growth. But in reality, this was used to grab land quickly and at cheap prices for the lucrative housing sector, especially on the urban fringe (Chakravorty 2013: 118). This added fuel to the already blazing fire. “Nearly 200 SEZ (special economic zones) were sanctioned and many of them close to major cities. More than half are being developed by Real Estate Companies” (Mallikarjuna 2014: 56), raising suspicion of making “a quick buck by grabbing land at cheap prices under SEZ Land Acquisition Act” (Mallikarjuna 2014: 56). Land buyers could be the public or private sectors, but formal land acquisition was to be undertaken by government authorities. This had put the state and the landowners on a collision course whenever there was a need for land for private or public projects. The protest movement in Nandigram (West Bengal) where 14 protesters died in police firing drew national and international attention. Around the same time the protest movements over Maha Mumbai SEZ, Vedanta land in Odisha, and Tata’s Singur land hogged the news headlines. The demand to scrap the LAA, 1894 gained momentum. Quick reach and constant scrutiny by electronic and print media spread public awareness, making eviction politically more difficult to execute.

Resistance movements at Singur and Nandigram were the tipping points that led to the end of 34 years of Left Front rule in West Bengal. The strength of the rural backlash became apparent. This brought urgency to changing the century-old Land Acquisition Act. Land Acquisition Bills (Amendment Bill 2007, which lapsed for not being taken up in the Rajya Sabha) or the Land Acquisition, Rehabilitation and Resettlement Bill, 2011 which was lying dormant, suddenly occupied centre stage. With heightened political compulsion, the LAA, 1894 was replaced by Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (LARR) Act, 2013. This bill has made rehabilitation and resettlement of the evicted population a part of the act itself. Compensation amount was quadrupled for agriculture lands. With the Parliament election in sight, the pro-farmer land acquisition bill could muster support of almost all the major political parties. The act was made operational from 1 January 2014 but the story did not end there. Within six months of the new act in place, there were demands for amendments, citing cumbersome procedural requirements causing delay in the process of acquisition.

Demands for Amending the LARR Act, 2013

With the change of guard after the 2014 general elections, the demands to simplify the compliance requirements of the act (including removal of a few clauses) gained momentum. The government worked to simplify the process of acquisition of the act. LARR, 2013 was taken up for amendment before it was even a year old. On 31 December 2014 the act was amended through an ordinance. In March 2015, the ordinance was
replaced with a bill: The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Second Amendment) Bill, 2015. However, the bill was not passed by the Parliament due to a lack of political consensus. There were doubts about its intentions and the benefits it would accrue in improving the investment scenario. Political opponents portrayed this bill as anti-farmer.

Major Issues Sought to be Addressed by the Amendment

The land acquisition amendment bill, 2015 attempts to handle the following issues. It seeks to include land for private hospitals and private educational institutions within the definition of public purpose. It sought to exempt five categories of projects from the requirement of (i) social impact assessment, (ii) restrictions on acquisition of multi-cropped land, and (iii) consent clause for both private projects and public–private partnership (PPP) projects. The five categories are defence, rural infrastructure, affordable housing, industrial corridors and infrastructure, including PPPs where the government owns the land. The bill seeks to exempt any period when a court has given a stay on the acquisition while computing the five-year period for retrospective effect. Private company mentioned in LARR, Act 2013 was changed to private entity to include companies, corporations, and non-profit organisations. Provisions for compensation, rehabilitation and resettlement under other related acts (National Highways Act, Railways Act, etc) were to be made in consonance with the LARR Act.

Excluding the last one, the stated objective of the amendment is to cut short the delays in the process of acquisition arising out of social impact assessments or consent clauses in the five categories of the project. The terms used for the five categories in the amendment are broad-based and the scope of benefit of exclusion can be passed on to a larger segment of investment destinations.

Issue Left Out in the Amendment

Rural India is not a homogeneous block. Dependence on land varies. This was addressed in the LARR Act, 2013 by introducing a sliding scale for payment of compensation depending on the distance of the acquired land from urban areas. This was to be used as a multiplier in the computation of paying compensation (Section 30(2), first schedule, LARR Act, 2013). The absence of a clear definition of urbanisation for the purpose of this act and the absence of guidelines for designing the scale have created confusion and conflicts (Panjabrao Ganpatrao Borade v The State of Maharashtra and Others, 2015). The act had left the decision of designing the sliding scale to the state governments. Faced with protests and legal challenges, state and central government agencies were switching over to a flat four times the average market value for compensation, thereby defeating the spirit and rationality of the act to pay compensation based on a sliding rule. This quick-fix solution has made agricultural lands bordering urban centres gainers by twice as high as on the urban side. “This is not only absurd but also violates a basic principle of land markets—that land closer to urban centres is more expensive than land further away” (Chakravorty 2013: 181). The amendment did not attempt to address this inadequacy.

Objective of the Present Study

Removing the social impact assessment or consent clauses from the five categories of projects is aimed at bypassing the involvement of landowners in the decision-making to avoid delays. Probably the amendment was based on the assumption that the farmers were generally unwilling to part with their land and eminent domain should be used for involuntary sales. This is an understanding which is influenced by past confrontations between the landowners and the state, but most of those confrontations were case-specific and were driven by case-specific anomalies. Even the sensational Singur judgment by the Supreme Court (Kedar Nath Yadav v State of West Bengal, 2016) in the civil appeal 8438 of 2016, had referred to non-compliance of the procedural requirements of LAA, 1894 to dismiss the state order on acquisition and not the sovereign’s right to eminent domain. Further, an independent study was carried out by Anusha Nath et al (2013) to identify “What really happened in Singur” during the failed land acquisition for the Tata Nano car factory. They identified inadequate/irrational compensation as one of the major causes of peasant protest at Singur. The government’s compensation offers were approximately equal to the reported market values of the acquired plots on average. A substantial number of farmers were however under-compensated relative to market values and joined the protest movement.

An earlier study by the authors of this article attempted to profile the “willing” land givers in the Indian context (Roy et al 2013). The study was conducted between July 2011 and June 2012 during the post Nandigram/Singur period in West Bengal, which revealed that over 61% of landowners were willing to give their land for industry. Thus, to portray the farmers generally as against industrialisation and unwilling to part with their land for industry might be an oversimplified assumption.

During our interactions with the rural population in earlier studies of 2011–12, we had noticed that there were differences in the perception between the landowners and their children on the impact of land-use change on their lives. The study had also revealed that the younger population preferred salaried jobs as livelihood rather than farming even though the family might own agricultural lands. Among the surveyed population, the children in general had formal education and were better informed. The wave of consumerism had also touched them and the demand for urban comfort and affluence was on the rise. The agricultural economy had grown at 1.87% during 1994–2005 and 4.27% during 2005–12 as against the growth rate of the non-agricultural economy of 7.93% (1994–2005) and 9.21% (2005–12) (Chand et al 2017). This had increased the rural–urban economic gap. This along with rural literacy had increased pressure on urban migration (Kumari 2014). In spite of the reality check showing uncertain and non-remunerative agriculture returns, parents in rural areas of India felt that land was a more dependable asset and a symbol of social status. To the youth, land is an asset which appreciates in value but cannot be a preferred source of livelihood.

Taking a cue from there, the current study was designed to map the differences in the response of the landowners and their children in a hypothetical situation of land being acquired by the government for industry. The objective of the study is to understand what the rural youth wants today as their livelihood. This may be used as a proxy parameter to understand their attitude towards the “taking” away of their land by the government. The study also aims to find out if the children’s responses are universal or are dependent on their location and other socio-economic aspects. The difference in the perception between the parent and the child on the impact of land-use change (from agricultural to industrial) on their lives and livelihood may be used as an indicator of the evolution that is taking place in rural India.

Demographic Changes in Rural India

In the National Sample Survey Office (NSSO) 64th round survey, it was found that rural-to-urban migration has increased by nearly 5 percentage points in 2007–08 compared to 1999–2000, that is, up from 34% to 39%. This was a confirmation of declining job opportunities in the agricultural sector accompanied by the “pull” for better economic opportunities in the urban sector. This is also visible in the income distribution in rural India. Income sources during the last two decades have changed. India has “95.8 million cultivators for whom farming is their main occupation (Census 2011). Down from 103 million in 2001 and 110 million in 1991” (Sainath 2013). The distribution of average monthly income per agricultural household from
different sources is given in Figure 1.

Along with their livelihood shifts, the communication revolution and structural changes in economic policies have aided a significant shift in the thinking and aspiration of the rural population. Rural teledensity has reached 52.43% (TRAI 2017) and is targeted to touch 70% by 2017 (Digit 2015). A study reveals that TV ownership in rural India has overtaken urban India since 2011 (IANS 2015). With the mobile phone and TV network reaching far inside rural India, the dreams of the
rural youth are changing at a rate which was never witnessed before. At the same time consumerism has also spread its wings. Rural demand has increased. India’s rural economy is the key growth driver of domestic consumption of two-wheeler sales (Ghosh 2016). Bullock carts are less visible than motorbikes on the village roads. Alternate use of agricultural land has led to huge appreciation of its value. Land taken for infrastructure or industry has driven land use change in the vicinity and the price appreciation but there is no attempt to map its impact and how that is affecting the attachment of the rural people with their land. Understanding this is important since this may ultimately determine the way India wants to transform.

India occupies 2.4% of the world’s land area and supports over 17.5% of the world’s population. This has made India one of the most densely populated countries in the world. The All India Report on Agriculture Census 1991–2000, reveals that as many as “61.2% of holdings accounted for only 17.2% of the total operational holdings” in 1995–96. The average size of operational holding has declined to 1.15 ha in 2010–11 as compared to 1.23 ha in 2005–06, confirming further fragmentation in ownership (Agriculture Census Division 2014a). A good percentage of the land has been under litigation. All these together make land assembly virtually impossible for any medium to large projects without government intervention.

Study Design

The study was conducted to map the landowners and their children’s response in a hypothetical situation of government acquiring land for industries. The study was a descriptive cross-sectional primary research based on a sample survey to understand how children see farming as their preferred livelihood along with the parent’s willingness to part with their land when the government wants to acquire their land for industry. The respondent’s residential location, landholdings, their education, caste, religion, etc, were also noted in relation to their responses. The study was conducted by the researchers and in some places by trained investigators and they met the parents and their wards together to get their views through personal interviews. The choice of the village and the household within the village depended on factors like accessibility, maintaining some balance in representation in terms of the respondents’ education, landholding, dependence on agricultural income as a percentage of total income. In the Indian context caste and religion are considered to have some bearing on the family’s attachment to their land. During sampling, efforts were made to keep some balance in the representation of various castes and religions of that locality. In India the size of landholdings in different states varies significantly. While deciding the location this was kept in mind so that the views of both the rich and marginal peasants can be put together to study its impact. Sampling locations and their states were chosen accordingly. Purposive sampling was used so that different profiling parameters remain present in a representative portion to facilitate statistically valid analysis and interpretation. The survey was conducted between January 2015 and March 2016 among the landowners and their wards. During the survey period the amendment to the LARR Act, 2013 was placed in Parliament. No significant change in survey responses was noticed due to this and thus, for the purpose of this study we ignored its impact.

Study Locations

The survey was carried out in the eastern and western parts of India covering three states, three districts and four locations to know the willingness of the landowners to part with their land for industry in relation to their wards’ aspired occupations for their livelihood. Out of the four chosen locations, two were from West Bengal in the east and one each from Haryana and Rajasthan in West India. Respondents are rural residents with varying degrees of exposure to urban life. Of the four locations, two are closer to urban centres and land use change has already started taking place, making way for industries. The other two locations are more rural and the people interviewed were primarily dependent on agriculture. The locations are:

East–West Bengal: (i) Murshidabad district—in and around Jangipur (rural Murshidabad) area: Number of respondents—67 (population rural, with family income primarily from agriculture); (ii) Murshidabad district—in and around Farakka—close to Farakka Barrage and National Thermal Power Corporation (NTPC) power plant: Number of respondents—46 (population semi-urban, with family income supplemented by agricultural income).

West Rajasthan: (i) Alwar district—Laxmangarh area: Number of respondents—61 (population primarily rural, with family income primarily from agriculture).

West Haryana: (i) Rewari district—in and around Bawal industrial area: Number of respondents—33 (population semi-urban, with family income supplemented by agricultural
income); Total number of respondents—207.

Here, the number of respondents includes both the parent and the son. Among the 207 parent respondents there were 204 fathers and three single mothers. For the purpose of the study we have clubbed the single mothers’ responses along with that of the fathers.

Data Collection

As mentioned earlier, purposive sampling was used. Haryana and adjoining Rajasthan have a larger presence of rich and middle-income peasants. The average size of operational landholding for all social groups in Haryana is 2.25 ha and in Rajasthan it is 3.07 ha. On the contrary, the average size of landholding in West Bengal is one of the lowest in India. In West Bengal it is 0.77 ha, while the all-India average is 1.15 ha (Agriculture Census Division 2014b). The survey locations were chosen from Haryana and Rajasthan on one side and West Bengal (two locations) on the other. This was done to get a representative feedback of both the rich and marginal peasants. In the LARR Act, 2013, agricultural land was classified for compensation on a sliding scale with a multiplying factor of one at the urban–rural boundary and two at the remote rural locations. In the survey, respondents’ locations were also chosen keeping this in mind. Locations were both from urban–rural boundary (Farakka in Murshidabad district of West Bengal and Bawal of Rewari district of Haryana) and also from primarily rural locations (Jangipur in Murshidabad of West Bengal and Laxmangarh in Alwar district of Rajasthan). In our attempt to study the rural youth’s aspired livelihood in different socio-economic environments, we interviewed them along with the landowners from both socio-economic backgrounds.

It is generally perceived that caste and religion have some bearing on the attachment of the people with their lands. While choosing the area in the selected locations, this factor was also kept in mind. The religion and broad caste break-up of the surveyed population are as mentioned in Table 1.

The youth interviewed along with the head of the family were between 16 and 35 years of age. The choice of the village and the households within the village depended on getting a balanced representation of different religious, ethnic and caste groups residing in that locality. Thirty-six respondents were Muslim (primarily from West Bengal) and 72 were Jats (from Haryana–Rajasthan) who are generally the farming community in those localities (Table 1).

Study Findings

Willingness to part with the land showed different trends, depending on the location’s urbanisation level rather than the size of the landholdings. The average size of landholdings of people interviewed in Haryana and Rajasthan were 3.4 ha and 2.85 ha respectively. In spite of similar larger landholdings, they did not display the same pattern in their “willingness” to part with their land. Similarly, Farakka and Jangipur (rural) respondents, the size of whose average landholdings were 1.5 ha and 1.4 ha, did not show the same trend. It was rather the urbanisation level that made the difference in their “willingness” to part with their land. People interviewed in Rewari (Haryana) and Farakka (West Bengal) were from peri-urban locations. In their response they showed similar trend in their “willingness” to part with their land. Seventy-seven percent of the landowners from peri-urban locations expressed more willingness to part with their land subject to receiving adequate compensation. Respondents from primarily rural locations also showed a similar trend in their “unwillingness” to part with their land, irrespective of the size of their landholding. Rural Murshidabad (Jangipur) in West Bengal and rural Alwar (Laxmangarh) were less willing (51%), as given in Table 2.

However, there is no difference in the trend among the younger generation to say “no” to farming as their preferred livelihood, between the two locations. Young people of rural Alwar (Laxmangarh) and rural Murshidabad (Jangipur) were equally reluctant to accept farming as their livelihood as their counterparts of Rewari and Farakka who were closer to urban life (Table 3).

The above analysis is indicative of a slow but steady shift among the aspirations of the rural population. Seventy-eight percent of the rural young say “no to farming” as their livelihood and aspire to join the industrial workforce and the service sector. This is significantly higher than their parents who are “willing landowners” but are ready to part with their land for industry, especially in rural locations. This may be interpreted as the change that is coming and needs to be managed by enabling the younger generation and creating opportunities in these sectors. It is necessary that the shift is understood and appreciated. Interestingly, the landowners’ willingness to part with the land in peri-urban locations was higher at 77% compared to 51% in rural areas. This may be due to the presence of an active land market and the landowner’s expectation of getting four times his reserve price in the event of government acquiring land for industry. Various reports on the farmers’ responses, when government was acquiring land in Sanand Industrial area of Gujarat, confirm this perception.

Rural youth’s overwhelming reluctance to accept farming as their livelihood, especially in deep rural areas is counter-intuitive. Attempts were made to find factors that had influenced the children’s decision to say no to farming as their livelihood. Based on discussions with the rural people, a few parameters were identified and information related to those parameters was also collected during the survey. Based on this, the hypothesis of children’s “willingness” to accept farming as their livelihood was tested using binary logistic regression.


Children’s “willingness” to accept farming as their livelihood is a function of a dependent binary variable and it is highly correlated with the following socio-economic and demographic parameters. The parameters considered form the contextual influences on the children’s willingness to farming. Respondents here were primarily the parents excepting those of the “Children’s willingness to farming” when the respondents were the children. The parameters are: (i) Caste/religion, (ii) respondent’s preference for alternate land in exchange as a better option during acquisition to sustain their livelihood (indicating respondent’s lack of confidence in migrating to alternate livelihood), (iii) parent’s education, (iv) children’s education, (v) agricultural income as a percentage of total income (significant when more than 30% and non-significant when less than 30%), and (vi) size of parent’s landholding in bigha (one-third of an acre).

Caste/religion, parent’s education and children’s education were used in an ordinal scale, whereas respondent’s preference for alternate land and agricultural income as a percentage of total income were converted in binary scale and the size of the parent’s landholding in bigha was retained as continuous variable data. The hypothesis was then tested using binary logistic regression analysis for its test of significance affecting the children’s willingness to farm. SPSS (Statistical Package for the Social Sciences) software was used to test the significance. The results of the regression analysis are as follows:


“B” in the table above is the coefficients in the log-odd units to indicate the relationship between the independent variables and the dependent variables, where the dependent variable is on the logit scale. The sign of the coefficient (B), whether positive or negative indicates the relationship. The result indicates that children’s “willingness” to accept farming as their livelihood and the family’s dependence on agriculture income are statistically significant and are negatively related. This may be interpreted as the children’s response to the uncertainty of agricultural income. Probably the children are not keen to accept the fluctuations in income. However, there is no such trend visible when the children’s willingness to farm is viewed in relation to the size of the landholding of the owners. The correlation is weak and it may be due to the fact that the children’s willingness to farm or not may be more related to the income flows rather than the income potential of the landholding. This has made the parameter regarding the size of landholding statistically non-significant.

The education of the landowners and that of the children with relation to the children’s willingness to farming shows an opposite trend. It is found that the landowner’s education level has a negative influence on their children’s willingness to accept farming as their livelihood but the same is not true when considering the children’s own education level. However, the statistical significance of these parameters is low and conclusions remain tentative. Similarly, factors like “religion and caste” are also statistically non-significant and thus can be ignored. It may be concluded that other than the family’s dependence on agricultural income, all other variables being statistically insignificant, can be ignored. Thus, the original hypothesis which considers the intuitive parameters as independent variables influencing children’s willingness to farming, stands rejected.

It is apparent from the above analysis that future rural India wants to migrate to urban centres and this is not a localised syndrome. From the deep rural to peri-urban fringes, the youth want change. It is the task of the policymakers to provide the right platform for migration.


The LARR Act, 2013 needs amendment but the objective of the amendment should be to have more dialogue between the rural people and the government. It is not true that the majority of landowners are against the change in use of their agricultural lands for industry. It is widely understood that agriculture cannot absorb more workers and nor is it the preferred livelihood of the rural youth. The rural youth want to migrate to industry and service sectors. This requires development of more industries and more land use change. The amendment looks at this change as agriculture versus industry, whereas it is agriculture to industry. The transition needs greater involvement and participation; not alienating the rural population. Alienation will only delay the process.

It is also important to note that rural India is not a homogeneous block. Major differences exist in the land market. The multiplier of four times the current market value for compensation apparently assumes the price of remote area lands where the market is still thin and not active but this is not true for a large part of India’s agricultural lands, which are closer to urban fringes. The land markets there are more
active and the prices are closer to the landowner’s reserve price. Giving four times the fair market value may make the land easily available for industry, but this is bound to have its impact on the investment scenario. Incidentally, this was not even a part of the discussion in the proposed amendment, apparently due to the fear of its political fallout as being anti-farmer. In the process, the amendment has ignored another stake holder—the taxpayers, who foot the bill. To quote from Epstein “money raised to finance compensation is a ‘taking’ from the taxpayers, who have received ‘in kind’ compensation in the form of benefits from the public project” (Epstein 1985). Hence, there should be a balance between the compensation paid to landowners and the loss incurred by payment of higher taxes. The variable sliding scale in the original LARR Act, 2013 had apparently tried that but this is getting lost under the pressure for a quick-fix solution. There is a need to define
this in its correct perspective which the amendment should do before it is too late.

Rural India is changing. Understanding this is important to manage its growth. This article is a pioneering piece of research and it makes an attempt to fill the gaps in research and proposes ideas for further studies to understand what our own people want. Any amendment made to LARR Act, 2013, should support the aspirations of the people.

India is a large country with a population of 1.25 billion. Sixty-eight percent of India’s population lives in villages. There are wide variations in their living and livelihood. Expectations from life also vary. Social customs differ. Any projections based on samples taken from two regions with limited sample size may not be able to reflect pan-Indian aspirations. However, the study may be considered as a small step towards understanding and appreciating what India’s new generation wants. This will help to frame national policies which are in sync with the needs of the future generations.


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Updated On : 10th Aug, 2018


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