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Vicissitudes in the Acquisition of Land: A Case Study


Dhanmanjiri Sathe

After touching on a few issues related to the increasing cost of land in the country and hence input costs, this article examines the case of Maan village near Pune in Maharashtra. There has been a sea change in the attitudes of landowners to land acquisition and compensation. Three phases can be identied in this saga and the landowners are now not only coming up with alternatives, but are also more condent about demanding what they want. They have become business savvy in their dealings with the authorities.

This is a revised version of a paper presented at a national seminar on Interrogating the Indian State organised by the Department of Politics and Public Administration, University of Pune on 24-25 February 2012, and was published as The State and Land in the Seminar Proceedings Series, No 1, titled Democracy and the State in India, edited by Mangesh Kulkarni, 2013. Dhanmanjiri Sathe (dhan.sathe@gmail.com) is with the University of Pune.

ndias politics may seem noisy, chaotic, and at times acrimonious, but if one were to probe beneath its surface, one would nd a certain amount of unanimity on some issues. One among them is industrialisation and the acquisition of land for it. Several major parties across the ideological spectrum agree that India needs to have a high rate of growth and to that end more and more land will have to be converted from non-industrial use to industrial use. The only note of dissent is sounded by some Gandhians and nongovernmental organisation (NGO) leaders (like Medha Patkar) who talk of alternative development. As the rate of growth of the economy has increased, so has the demand for land for non-agricultural purposes, and we can quite correctly expect the demand for land to rise in the future. One would not be exaggerating much if one were to say that this single issue will be a very important test case for Indias political economy and show us the ironies facing the countrys development. In the matter of demand for land, India is quite similar to China, another economy that has a high rate of growth and high pressure on agricultural land. To put Indias case in perspective, in 2005 alone, ofcial data suggest that China had more than 60,000 local disturbances over the issue of land (Banerjee et al 2007). Since then, the Chinese government has not come out with this data. Quite expectedly, the issue of land acquisition is inextricably linked to the compensation package offered to those who part with their land. If the last couple of years have seen more landrelated disturbances, it has also seen substantial increases in the compensation paid. If landowners are to be

given a fair deal, this would have to increase by how much, this would depend on specic situations. The Government of India passed the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 in August 2013 and it came into force from 1 January 2014. As per this Act, the compensation paid to landowners will rise, making the Indian economy that much more costly. It has been found that the capital cost of land for new corporate projects worked out to 1.8% of gross xed asset value in 2003, and it increased to 2.9% in 2008 (Kakani, Raghu Ram and Singh 2008). A higher input cost affects two sections. First, producers producing for the domestic market, be they national or multinational. Since the Indian economy is still fairly closed, producers will be able to pass on the higher cost of land to domestic consumers mainly middle-class consumers who will have to pay more for goods such as TVs, cars, two-wheelers, and so on. In such a case, the prots of companies will not fall. The second category is exporters, who may or may not be able to pass on higher costs to foreign buyers as there is erce competition in international markets. They most likely will not be able to pass on the higher cost, and will see their prots dip. Thus exports could become slightly less attractive, decreasing their rate of growth. This could affect Indias overall foreign exchange position; decrease the rate of growth of jobs, and so on. There are a plethora of factors that affect export performance and the direction it will take cannot be predicted. Further, as compensation increases, housing and infrastructure projects will also become more costly, making the Indian economy that much more costly. On the other hand, if land prices become very high in an area, buyers will go to cheaper places. This would most likely be backward places, and this could bring about a better spread of economic activity. Thus the objective of regional diversication could be achieved to a
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certain extent, albeit unintentionally (Sathe 2011). From a macroeconomic perspective, land and labour will most likely become more expensive in India in the future. While this is expected and well documented in the case of labour, it will be a new development in the case of land. In China at least until now they have kept land costs low. Possibly we could develop the idea of land intensity of various economic activities, on the lines of labour intensity and capital intensity. While the implications of increasing costs are one side of the story, the other side is how landowners will be compensated. There are many deciencies and aws in the Act mentioned, which have been pointed out by experts. Further, we do not have any experience of how this law will be implemented. In addition, one-time compensation still leaves out the issue of future appreciation of land. Even if an acceptable compensation is paid now, landowners feel cheated if the future appreciation accrues to the intermediary (be it a government or private entity). It is in this context that the case study gains importance. The Story of Maan We have conducted a case study of Maan village, which is around 20 kilometres from Pune in Maharashtra. The story of Maan begins with the establishment of an information technology (IT) park in the adjacent village of Hinjewadi. The land was acquired in 2000, after the Mumbai-Pune expressway was built and the project was called the Rajiv Gandhi Infotech (RGIT) Park Phase I. All the land was acquired by the Maharashtra Industrial Development Corporation (MIDC), which is the industrial development arm of the state government. However, in the rst phase, only 100 acres of grazing land ( gairan) were acquired. Of this, 20 acres were occupied by the people displaced from the Kasarsai dam, so that land was not affected. Effectively, none of the farmers lost any agricultural land and hence there was no problem in Hinjewadi. The RGIT Park Phase I now has around 20 software companies, including Infosys and Wipro.
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The MIDC reached Maan village when phase II began. Maan has an area of 5,200 acres and, as per the 2001 Census, a population of 4,500. In phases II and III, 2,981 acres were acquired by the MIDC. In both phases, the compensation paid was Rs 6-6.50 lakh per acre. Plus, for an additional payment, a house of 200 square feet was also given. However, Chandrakant Rakshe, a landholding villager, said in an interview that at that time they did not understand the importance of land. They wanted to help the government, thinking that some of them would get jobs and that development would help them all. But their attitude changed as they saw the MIDC selling the same land to private companies for Rs 8-9 crore per acre after providing just some infrastructural facilities such as roads. So a problem arose when the MIDC wanted to acquire land for phase IV, which was earmarked for biotech rms. Under this phase, 1,150 acres are to be acquired and Rs 40 lakh per acre has been promised to landholders, a substantial increase from the Rs 6-6.50 lakh per acre in the earlier phases. In all the phases together (II, III and IV), there will be a loss of 80% of the land in Maan village and only 1,069 acres will remain with the villagers. The notication of phase IV came in August 2004 and Anant Vazarkar, who is the coordinator of the Maan Bachao Action Committee (MBAC), says, We woke up. On 26 January 2005, the gram sabha passed a resolution that acquisition of land would be opposed. The action committee was formed on that day. At the same time, then Chief Minister Vilasrao Deshmukh participated in an exhibition in the US and non-resident Indian (NRI) buyers booked the land, something that was, quite rightly, resented by the landowners. On 1 March 2006, acquisition ofcers came to the village and began to measure the land, but they could not nish their job because of the tense atmosphere. On 7 March 2006, MIDC ofcers, acquisition ofcers, and 3,000 policemen came to the village. The members of the MBAC tried to prevent them from measuring the land and were arrested for obstructing government work. There
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was a police ring in which two people were injured. Agitations against the land acquisition were held again on 9 March 2006. On these two days, there were 3,000 policemen in the village indicating the importance the government was giving to the issue. As a bargaining tactic, Sharad Pawar, union minister for agriculture, announced that if the villagers refused to give their land, the government would declare it a green belt, which would, in effect, condemn the villagers to holding the land as agricultural land. Social activist Patkar and former prime minister V P Singh visited the village to show their solidarity with the villagers. Vazarkar said that not a stone was thrown at any of the glass buildings of the companies during the agitation. This shows that the villagers knew the difference between targeting the government and targeting the companies. They have had to face harassment such as water not being released regularly from the Kasarsai dam. But the supply of electricity has improved and it is now available for 23 hours. The ceasere, as Vazarkar described it, lasted for six years. Suddenly, on 28 December 2012, the cases against the villagers were opened and summons were served on 2,500 plus 11 villagers (of which four were elderly women and two are the young men who were injured in the police ring). The villagers were accused of attempting to kill the police and MIDC ofcers and obstructing government work. It was claimed that 250 policemen were injured. It seems charge sheets were led in November 2007, but no one in the village was intimated or arrested. They did not even know that there were such charges against them till 28 December 2012. In mid February 2013, all these people were summoned by the court, but only a few went. The villagers claim that the government is now arguing that the 2,500 plus 11 people were absconding for six years. In this context, an unexpected issue has come up. How does an accused villager prove that he or she was in Maan during the six years (ration cards and electricity bills do not prove that he was not absconding)? Interestingly, a case
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has not been lodged against Vazarkar, who says his presence at his Mumbai ofce can be easily proved since he is a government servant. The villagers accept that they threw stones at the police and MIDC workers, but this was in a response to the ring by the police at the peaceful demonstration. They state that the agitation was in no way planned. When the villagers saw that someone was measuring land, they spontaneously came together as by then they had lost faith in government and learnt that they were about to be offered an unfair deal. When there were agitations after the police ring, neither the sitting member of Parliament (MP) nor the member of the legislative assembly (MLA) visited Maan. After the summons were served, the MBAC met Supriya Sule, the MP for Maan. Her response was, If you want development, then land is required. This is right, but it raises a clichd question, Whose development? The MBAC also met Deputy Chief Minister Ajit Pawar (and the guardian minister of Pune district) and Home Minister R R Patil. Patil said in the rst meeting that the government would withdraw the cases, but in the second said that the legal process must take due course and that the accused should apply for bail. So the issue has not been addressed to the satisfaction of the villagers. The people of Maan suspect that Sule and Ajit Pawar (Sharad Pawars daughter and nephew respectively) have privately acquired a sizeable section of land in Ghotawade, a nearby village. That land does not become valuable until Maan develops, and this could explain the renewed interest in Maan. The village is now rife with rumours about what will happen next. It is feared that the protesting villagers will be jailed. The sessions court and the high court have not granted bail to any of them. The villagers say that this is an attempt to terrorise them and divide them. Six years has made a lot of difference. As Vazarkar put it, a boy who was 12 years then, is now 18-19 years old and he may be more aggressive and worldly wise than his father. The demands of the landowners have undergone a sea
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change and one can say that a great deal of clarity has evolved in last one year. The landowners have become very market savvy, and say that they want to build housing complexes in the area and rent out the apartments. They have seen realty giants such as DLF, Quardan, and Raisoni Park build apartment complexes in their vicinity and rent out apartments, earning money running into crores. It is claimed that the current rent is Rs 15-20 per square feet. We want to develop our area on our own is their mantra. Landowners Options The villagers say that they do not want any companies in the village, only residential complexes. However, there may be a few problems. First, the important question is whether the landowners have the necessary skills to develop the area. If they sublet the job, their monetary returns could suffer. Second, though Maan is quite close to Pune, it is not a part of Pune, yet and there is no local, public transport between Pune and Maan. Will there be adequate demand for the apartments in such a situation? Punes housing demand overowing to Maan is not a realistic scenario. This could be a problem for the villagers in the short run, and their nancing needs will have to be adjusted to suit it (if this idea really goes ahead). Faulty nancing of housing projects traps landowners in another sort of indebtedness. As is well known, behind the increasing prices of real estate in any Indian city, there is also stagnation and possible slumps in the real estate industry. Unless pockets are deep, developers can run into problems. So things may not turn out to be as upbeat as perceived by the landowners now. A second option that the villagers are working on, though not in a big way, is to take the path of Magarpatta city (another part of Pune), where the land has been leased out for 100 years to companies and residential complexes. The landowners collect rent. As the situation stands now, the landholdings earmarked for phase IV have their 7/12 utara (land record) stamped, which means that they are going to be acquired. But, on the ground, the land has not been acquired.

Consequently, the farmers who own these lands cannot mortgage them to get loans from banks, making life hard. Meanwhile, the value of the remaining 20% of land has risen sharply. There are very high amounts being offered for it, but the gram sabha has passed a resolution that no more land is going to be sold. The question remains about what will happen if someone actually decides to sell his or her land. The population of the village now is around 7,000-8,000, of which 3,400 are voters. The villagers say that there are a lot of people who stay in Maan and work outside, mainly in Pune. So families that have rooms to rent earn between Rs 5,000 and Rs 6,000 per month per room. On the other side, there are poor migrants from Rajasthan and Bihar who work on construction sites at very low wages. Villagers say that they have made Maan unclean. According to newspaper reports, about 50% of the children in the village go to English-medium schools. We observed ve beauty parlours in the village. The following are some of the important issues that have cropped up. (1) A severe problem is that many families jointly own land. Even if the compensation seems apparently high at a particular stage (Rs 6-6.5 lakh per acre in 2001), if a piece of land has eight or nine owners, each family may end up getting only Rs 80,000. We interviewed some families that have had such experiences in 2001. Thus joint ownership has important implications from the point of view of the compensation package. A sum may seem reasonably high for an acre, but if there are too many owners, as is often the case, each family ends up getting a meagre monetary compensation. (2) It was a matter of great anger and frustration among villagers that in spite of earlier promises, hardly any jobs had been given to them. There seem to be two reasons for this. The rst one has to do with the type of employment available in the companies. The companies directly employ only highly skilled workers. For relatively unskilled and lowskilled jobs such as cleaning, security, catering, and gardening, contracts are
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handed over to outside agencies. Since the latter have not acquired land, no employment conditions can be imposed on them. A look at the kind of companies that have come up and are expected to come up in Maan shows that the demand for unskilled and low-skilled workers will be limited. For example, even if a company or agency decides to employ a villager as a security guard, he will need to have a minimum knowledge of English and the ability to use some electronic equipment, and so on. So possibly only a young person can be trained and employed. Second, the villagers claim that the companies do not want to hire local people as they are more demanding and get into arguments. Besides, disputes are likely to trigger the involvement of local politicians, which the companies do not want. So they prefer migrant labour. Even if a local person gets the job of a security guard, he would get a wage of Rs 5,000 per month, which is not enough to support a family. (3) Discussions with villagers revealed that they had little faith in the government. They stated that they would rather sell their land to private parties directly than to government agencies. With the recent plan of building residential apartments themselves and renting them out, the villagers have lost whatever little interest or trust they had in the government. However, at this stage, buyers prefer that the government acquire the land and transfer it to them as it would save them a lot of money and headache. (4) It has become difcult to get agricultural labourers in Maan. Vazarkar did not till his land in 2011 because he could not get enough workers. Though the working age population does not get employment in the new companies, they do get other kinds of non-agricultural work, which is a result of development in the area. Examples include driving autorickshaws, working as assistants in sundry shops, working in car repair garages, transporting goods, and so on. The income from these jobs is higher than what they would earn as agricultural labourers. (5) The sense that we got in the course of our interaction with the villagers is that they feel that they should not lose
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all their land. While they are aware of the benets of developing/selling their land, having no land at all makes them feel very vulnerable. As one woman put it, If you have some land, you will not starve. This may not be true if the land holding is small (and most holdings are), but this is the perception. During earlier eldwork done by the author (Sathe 2007) in Avasari Khurd, a village in Nashik district, it was found that the farmers are very nervous about parting with all their land. They liked to keep at least a small part of it, at least for their peace of mind. (6) The media has been criticised for the manner in which it has covered the issue of land acquisition in general. It is claimed that the electronic media has tended to sensationalise the issues. The villagers were very happy with the attention they have received a few said that but for the media they would have been killed. Conclusions One of the most interesting revelations of this study is that landowners have shown themselves to be able to respond to the changing situation. They have been coming up with alternatives that show a willingness to engage with the market in a condent way. The story of Maan has unfolded in three phases. In the rst phase, the landowners believed that by giving up land, development would come to their village. They were not particularly unhappy with the monetary compensation, but they were hoping for more in terms of employment and so on. The village was quite backward,

its land market was underdeveloped, and land prices were low. So whatever changed seemed to be for the better. The second phase began in 2005 when the landowners understood the value and importance of their land. Knowledge about this made them unhappy with the deal that they had got. Now, it is possible that they would sell their land if the compensation is Rs 1 crore per acre instead of Rs 40 lakh. Since that is not on offer, they have decided not to sell their land at all. Now, in the third phase, they have come up with the idea of developing the land themselves and earning a rent from it. This will retain ownership of the land and get an income in the form of rent. The rent will not only be high, it will be adjusted for ination, making their future secure. Plus, all future appreciation of land will accrue to them. Though there are a few problems with this arrangement, they are not insurmountable. From the point of view of the economy, replicability may not be possible (as land is required for industries and infrastructure projects and not just for housing). But Maan village seems to have found an answer for itself.
References
Banerjee, A, P Bardhan, K Basu K, M D Chaudhari, M Ghatak, S Guha, M Majumdar, D Mookherjee and D Ray (2007): Beyond Nandigram: Industrialisation in West Bengal, Economic & Political Weekly, Vol 42, No 17, pp 1487-89. Kakani, R K, T L Raghu Ram and Tigga Nutan Singh (2008): Insights into Land Acquisition Experiences of Private Business in India, Working Paper 08-11, XLRI, School of Business and Human Resources, Jamshedpur . Sathe, D (2007): When Farmers Form a Company, Economic Times, 17 October. (2011): The Political Economy of Land and Development in India, Economic & Political Weekly, Vol 46, No 29, pp 151-56.

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