Up Front

Progress in India: New Legislation to Protect Persons Internally Displaced by Development Projects

Michael M. Cernea

On September 26, 2013, India adopted a historic new bill which, for the first time, addresses internal displacement caused by development. The long name chosen by the lawmakers for this bill sounds almost like a manifest: The Right to Fair Compensation and Transparency in Land Acquisition, Resettlement and Rehabilitation Act(LARR).

The new bill abolished India’s century-old Land Acquisition Act (LAA) of 1894, based on coerced land acquisition through the state’s power. That act also wrongly de-coupled such acquisition from its dire effects – impoverishment and human upheaval. Moreover, the LAA was also completely silent on the recovery of those victimized by dispossession of land and property.

In stark contrast, the LARR institutes not only novel rules for acquiring land, but also legislates the obligation of the project which causes the displacement to resettle affected communities and enable their recovery. The LARR also provides, for the first time, a measure of protection of the human rights of internally displaced persons (IDPs) – rights trampled upon and denied to them in previous displacements. The LARR also sets forth new economic entitlements for IDPs, and new entitlements to information and consultation on the changes that displacement imposes on their work, income and entire existence.

For these and many other reasons, India’s historic new law deserves praise, international recognition and support in its implementation.

A bitter saga

What made the adoption of a new law indispensable? The answer is embedded in India’s tragic narrative of mass displacements. Violent expropriations under the LAA brutalized, impoverished and devastated the livelihoods of tens of millions of farmers. Jairam Ramesh, India’s Union Minister for Rural Development, stated bluntly: The old law was draconian and led to the impoverishment of livelihood losers.” Another perverse macro-effect of that law was to turn the state itself into the “displacer-in-chief.” The state distorted the eminent domain principle by expropriating land not only for projects of public interest but also for private-for-profit projects, thus acting against vital interests of its most vulnerable citizens. Arbitrarily-set, puny compensation rates for land and homes were in a constant “race to the bottom:” the lower the compensation, the higher the hidden externalization of project costs on the people displaced, and the deeper their impoverishment. Tens of millions were left landless, homeless and jobless. Impoverishment became destiny for most development-caused IDPs: families which were in dire poverty even before the “development projects” became poorer. Only a small segment of those displaced were “rehabilitated.”

Staggering magnitude of displacement

The Indian government has constantly refrained from publishing regular aggregate displacement statistics at the national level, although project-by-project basis data exists.

The merit of lifting the curtain from the tragedy of India’s “oustees” belongs undoubtedly to India’s community of social scientists and to the country’s powerful networks of civil society organizations (CSOs). In my view, India has the most advanced scholarship and the largest research literature on development-forced displacement and resettlement (DFDR) in the world. Its sociologists and anthropologists (but, regretfully, only very few of its brilliant economists) have produced numerous books, case monographs, and issue-focused studies on displacement, the overwhelming majority of which have incisively revealed the pathological outcomes of DFDR. To throw empirical light on the magnitude and effects of DFDR, an Indian scholar who is also a Jesuit priest, Walter Fernandes, has engaged in a heroic quest: to collect, compute and publicize the data on the true scale of displacement in India, on a state-by-state basis. In the two-thirds of India’s states that he has covered so far, Fernandes and his teams found that between 1950 and 2005, over 65 million people were internally displaced by development projects; the overwhelming majority of these 65 million were worse off than before displacement. Further, Fernandes documented that only about 33 percent of these IDPs “…have been resettled in a planned manner. For the other two-thirds [over 40 million] there is no evidence of planned resettlement.” [1] Many ended up in the slums surrounding New Delhi, Kolkata and other cities.

Displacement breeds resistance and political instability

The magnitude and catastrophic consequences of displacement have triggered growing resistance by those affected. A pan-India social movement opposed to displacement has snowballed over the last four-to-five decades. The traditional Indian civic disobedience gradually morphed into violent opposition, armed clashes, and political instability. Places like Narmada Sardar Sarovar in Gujarat state, Kalinga Nagar in Odisha state, Singur in West Bengal, among others, became landmarks of epic opposition to the State. Farmers’ and tribal people’s defense of their lands succeeded in delaying for years – or stopping altogether – some major state or private projects. The hardening political and physical opposition to compulsory displacement played a direct role in the decision of India’s leadership and political class to replace the anachronic LAA. Yet the formulation of the new law was a long and tortuous process, actively opposed by private industries with vested interests in the status quo and by a large part of India’s officialdom. Two government-proposed draft national policies (in 2004 and 2007) were met with withering public critique for their bias favoring vested interests. It took six more years of difficult negotiations, criticism by CSOs and scholars, but also strong counter-lobbying by industry and some states, long parliamentary debates, and dilution or retreats on some positive key draft provisions, before the two houses of India’s parliament adopted the LARR in September 2013.

A new political economy?

What makes the 2013 Law so vastly different from the LAA? Most of the LAA’s core content was replaced with different basic principles. Looking beyond specific details, we find in the LARR a deliberate attempt to put into place the building blocks for a different political economy of land acquisition and resettlement.

Politically, the LARR’s fundamental change is to give farming families the previously nonexistent legal power of prior consent to (or refusal of) land acquisition, albeit with serious limitations.

Economically, the major change is to partially replace administrative coercion for land acquisition with market transactions (for at least 70 to 80 percent of the affected families) and to channel vastly increased financing to those left without land or livelihoods.

These two mutually reinforcing changes are to be implemented and monitored through the law’s “third leg,” which is, essentially, a new nation-wide institutional architecture for DFDR, to be created immediately.

These changes represent genuine progress. They reflect a major shift away from India’s obsolete previous political economy of non-market coerced land acquisition and deliberately under-financed resettlement, although this shift is still incomplete.

This new political economy relies on the following three building blocks:

  • Empowerment: The empowerment of farming families through the right to prior consent to land acquisition, which will apply to land acquired for  two sub-categories of projects: private company (PC) for-profit projects and public-private partnership (PPP) projects. It does not apply, however, to state projects for the public good, for which the state maintains its forced expropriation approach by invoking  eminent domain law. The right to “prior consent” creates valuable new room for farmers to also negotiate directly with  private corporations for higher prices and, very importantly, to also negotiate for better relocation and recovery conditions. Thus, landowners’ “willingness to accept” the selling of their land may be influenced and fairly secured by the private acquirer’s “willingness to pay” higher land-prices and also to commit to secure better resettlement and recovery conditions to the affected families. The LARR states:

“…the acquisition of land for private companies (PCs) [requires] the prior consent of at least 80% of the affected families…For public-private partnership projects (PPPs), the prior consent of at least 70% of the affected families is now legally required” (emphasis added).

  • Financing: The LARR substantially changes the economics of resettlement and rehabilitation by legislating a quadrupling of compensation rates to four times the market value of land in rural area and to twice the market value in urban areas. Each family also stands to receive a “solatium” payment in addition to compensation, equal to one time the market value of land, a cash allowance for transportation to the new site, a monthly cash food allowance for 12 months to prevent food insecurity risks in the first year after displacement and other cash grants. Taken together, this will amount to a considerable financial infusion not only into affected families’ resources, much exceeding compensation payments granted in the past, but also into India’s agriculture and rural economy altogether.

  • Building institutional capacity for improved resettlement and rehabilitation: The LARR mandates the incorporation of resettlement and rehabilitation in each main project causing displacement. At first sight, this inclusion seems to have only modest relevance, but, in practice, it actually stands to have far reaching effects: it re-couples resettlement and rehabilitation with the main project’s objective, design and budget, thus placing responsibility for successful recovery on the very project that displaces people and its owners. At the macro scale, the act mandates the creation of a radically new macro-institutional architecture at the national level and at each state level for implementing the LARR law itself. Other relevant provisions of the new act support the changes outlined above, for instance:
    • An ex-ante social impact assessment (SIA) will be carried out by competent specialists for each project causing displacement to determine ab initio the extent of adverse impacts on all affected families and the extent of prior consent;
    • A distinct “Resettlement and Rehabilitation Plan” (or “Development Plan”), informed by the SIA, will be elaborated for all families displaced by the main project;
    • The landless laborers whose livelihoods depend on the land being acquired – and thus lose not land but jobs and sustenance – will be given compensation and also resettlement and rehabilitation assistance;
    • India’s tribal populations (Adivasi) and scheduled castes (Dalits) are given specific entitlements and their lands are protected through more exacting legal provisions;
    • Transparent information for, and mandated consultation with, the affected families. For example, the SIA findings, the draft resettlement and rehabilitation plan, and other documents will be made available to the IDPs in their languages;
    • The basic human right to housing is recognized for IDPs: the development project will provide ownership of a house-plot and house to each family at the relocation site; for displaced urban families, the LARR mandates a defined size of built area;
    • The family title to the land-plot and house will be written in the names of both the husband and wife;
    • Widows and single young adults “…of either gender with or without spouse or children or dependents” are to be treated as a separate family with respect to entitlements;
    • Systematic monitoring is to be instituted on how displacement, relocation and recovery unfold
    • As a cumulative goal pursued through all the above provisions, the LARR aims to reduce displacement size and the amount of condemned land.

In spite of fundamental changes in principles and approach, the LARR also contains some serious limitations to some of the key new provisions that diminish its transforming power. As Ramesh commented in acknowledging the counter pressures to the content and adoption of the new law, “This is not the best act. But it is a good act…a progressive act.” The limitations of this act will be discussed in part II of this article.

[1] Walter Fernandes, “India’s Forced Displacement Policy: Is Compensation up to its functions?” in vol. M. Cernea and H. Mathur, eds. Can Compensation Prevent Impoverishment? Reforming Compensation through Investments and Benefit Sharing (London-New Delhi: Oxford Univ. Press. 2009, pp. 180-207).