Feb 26, 2015

Land Acquisition: Will farmer get a compensation of 4 times the market value?

For the past few days the government has been at pains to explain that farmers will get a compensation of four times the market value of the land that is acquired under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013, popularly referred to as Land Acquisition Act.

Amid protests by farmers and civil society groups, the controversial Land Acquisition Amendment Bill 2015 to replace the contentious ordinance was introduced in Lok Sabha on Feb 24. It does not make any changes in the compensation clause in the 2013 Act that promises four times the market value of the land in rural and two times in the urban area for farmers whose land is acquired for industrial purposes.

Although the 2013 Act has still not been implemented, and an amendment is being sought on hypothetical fears expressed by the industry, I decided to find out whether the 2013 Act that the previous UPA government had passed would really provide four times the compensation to farmers whose lands would be acquired. Considering the widely prevailing impression in the social media that farmers were being adequately and fairly compensated for their land and so those who opposed the new law were ‘anti-farmer’ it became even more important to look at how the law would translate in reality whenever it is put in practice.

To understand this, I take you back to Section 26 of 2013 Act. It provides for determination of market value of land by Collector, stating: The Collector shall adopt the following criteria in assessing and determining the market value of the land, namely:-
(a) The market value, if any, specified in the Indian Stamp Act,1899 (2 of 1899) for the registration of sale deeds or agreements to sell, as the case may be, in the area, where the land is situated; or
(b) The average sale price for similar type of land situated in the nearest village or nearest vicinity area; or
                  (c)  Consented amount of compensation in the case of acquisition of land for private        
                         companies or for PPP 

It also explains in sub-section (1) that the average sale price referred to in clause (b) shall be determined taking into account the sale deeds or the agreements to sell registered for similar type of area in the near village or near vicinity area during immediately preceding three years of the year in which such acquisition of land is proposed to be made.
(1) The market value calculated as per sub-section (1) shall be multiplied by a factor to be specified in the First Schedule.
The First Schedule
Factor by which the market value is to be multiplied in the case of rural areas
1.00 (One) to 2.00 (Two) based on the distance of project from urban area, as may be notified by the appropriate Government.
In the case of urban areas
1 (One)

An informal group of eminent citizens in Chandigarh, comprising senior lawyers, senior journalists, retired bureaucrats and others have been examining various agricultural laws from time to time. As a member of this citizens group, I requested former Agriculture Secretary (Punjab), Capt S S Dhillon and senior advocate of the Punjab & Haryana High Court, Joginder Singh Toor, to help dissect the legal provisions of the 2013 Act.

As you know sale deeds are generally executed by the sub-registrar or Tehsildar under the Indian Stamp Act 1899.  Generally the collector rate is ½ or 1/3rd of the prevailing market price.  If the market price is Rs 25 to Rs 30 lakh per acre, the collector rate is Rs 8/10/12 lakh. Taking the average of 3 years and multiplying it by a factor of 1 or 2 in rural areas. This discretion is left to the land acquisition officer. Even if he takes the maximum factor of 2, the value of land will be twice the collector rate.

In addition, the final award will include a ‘solatium’ (as specified in Section 30) equivalent to 100 per cent of the compensation amount.
The farmer therefore will either get a compensation equivalent to the prevailing market price or a maximum of twice the prevailing market price (if a factor of two is applied).  #


yshmishra1 said...

Why does the collector's rate is half or one third of the market's rate?? Is there any provision for it?? Kindly help me to understand the issue better. Thank you

Anonymous said...

Colletor's rate is half because people under report the selling price to save on stamp duty.

Anonymous said...

states like Andhra Pradesh have fixed the multiplying factor and 1 for urban land and 1.25 for rural land, thus effectively negating the benefits of the amended act to the farmer.

shri said...

if my land cost is 12 to 15 lack per guntha how collector take price for compensation

Anonymous said...

In maharastra state the multypying factor for rural areas is 3.5 but in andrapradesh it is 1.25.why this difference between the states even though law is made in parliament as it is applicable to entire india.