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Land acquisition Act, eco-clearance not chief reasons for stalling projects

By Venkatesh Nayak*
A big question that is begging a credible answer today is – why is the National Democratic Alliance (NDA) government hell-bent on road rolling amendments on to the land acquisition law without even implementing it despite vociferous opposition from several quarters?
Several spokespersons for the government and the political parties which support it have repeatedly said that the amendments to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act (LARR Act), enacted by Parliament in 2013, first promulgated as an Ordinance, and repromulgated because they could not get the approval of Parliament last month, are necessary to arrest the slowing down of the economy and breathing life into the stalled development projects. The mainstay of this argument has been that the process of acquiring privately owned land for developmental projects laid down in the LARR Act is too cumbersome and requires simplification.
The state of the economy reported in Parliament by the Government in the form of the Economic Survey 2014-15 (ES14-15), a day before tabling the budget in February 2015, pointed out that the stalling of a large number of projects in the public and the private sector was the primary reason for the slowdown that the Indian economy was experiencing. However, detailed data on such projects was not annexed to that report. Official spokespersons repeatedly argued that the amendments to the land acquisition law were necessary to pull up the economy out of the nadir it had reached. After reading ES 14-15, I sought granular data from the Ministry of Finance under the Right to Information Act, 2005 (RTI Act) out of sheer curiosity. The Ministry of Finance moved with exceptional speed and provided a list of projects within less than a month of receiving the RI application and surprisingly without demanding any additional fee.

Major findings from an analysis of the data about stalled projects obtained through RTI

(1) The list supplied by the Ministry of Finance contains a total of 804 projects that have been stalled as of February 2015 for a variety of reasons across 24 states and two union territories. Maharashtra, with 125 stalled projects, topped the list followed by Gujarat (63 projects), West Bengal (55 projects), Karnataka (52 projects) and Telangana (52).
(2) The private sector projects (78%) outnumber the public sector projects planned by the Central or State Governments, or public sector enterprises or local municipal boards and autonomous authorities (22%).
(3) Only 8% (66) of the 804 projects are said to have stalled due to land acquisition problems. If the data provided under the RTI Act is an accurate reflection of the state of affairs, the argument that the slowdown in the economy is due to land acquisition projects becomes a busted myth – not on the basis if any biased analysis – but s simple count of the reasons provided in the last column of the attached list.
(4) Of the 66 projects stalled due to land acquisition issues, only 11 (1.36% of 804 projects) directly relate to the well-being of the disadvantaged or less affluent segments of society such as slum rehabilitation projects or construction of budget housing projects or a bus stand (which few affluent people use). So the proposal to amend the LARR Act to waive the requirement for taking consent of the village assembly in the areas where land is to be acquired for providing affordable housing for the poor will affect a minuscule number of projects. Therefore, the justification tomtommed for the amendment becomes untenable.
(5) Ironically, on other hand, at least 145 of the stalled projects (18%) are for the affluent and the rich as they are projects involving the construction of shopping malls or elite hotels and resorts (4 and 5 star), multiplexes, elite residences and villas, golf courses and a racing track. Another 25 stalled projects are about setting up townships – nothing in the list provided by the Ministry of Finance indicates which segment of society they are intended to benefit. Ten of the 66 projects are stalled due to land acquisition problems are in this elite category. However, it must also be said that the list of 804 projects also includes power generation, airport construction or expansion, road and railway expansion, pharmaceutical, textile, software and SEZ projects amongst others. Mining projects for coal and uranium amongst other metals are also part of the stalled projects list.
(6) Of the total of 804 projects the list mentions “Others” as the reason for the stalling of 19% of the projects (153). Reasons for stalling are simply not available for 15% of the projects (121). Taken together the projects for which reasons for stalling are either unspecified or simply not available amount to more than a third of the total number of projects (34%).
(7) A very high proportion of projects that remain stalled (38.8%) are due to unfavourable market conditions or lack of funds or promoter interest or raw material or fuel supply problems. Several of these projects are owned or promoted by some of the biggest industrial houses in India and a handful of foreign ownership. If one is interested, one may compare this list of Indian business houses with the list of corporates that made large sized donations to the leading national and state level political parties on the Political Party Watch segment of the website of the Association for Democratic Reforms (ADR).
(8) Lack of environmental clearances account for a mere 4.2% of the stalled projects whereas lack of clearance from the state governments amount to 11.8% of the total. It looks like the regulatory regimes have contributed to only 16% of the stalled projects. So the license-inspector raj also does not appear to be a major contributor to the stalling of the 804 projects, if the dataset is accurate.
So it is neither land nor the regulatory regime that appears to have contributed to the stalling of the developmental projects. One is reminded of the slogan that characterised the Presidential campaign of Bill Clinton in the USA during the 1990s — “It’s the economy, stupid”.

Some hard questions to which the RTI document does not provide answers

(1) For how long have these 804 projects remained in stalled condition? The RTI reply does not throw any light on this issue. Perhaps RTI users in the States might like to seek this information by demanding this information from the State and Central Governments through RTI applications.
(2) Are there only 804 projects across the country that have been stalled and none other, or is this only a sample of a larger universe of stalled projects?
(3) Of the 804 stalled projects the total monetary value of just 300 projects (37%) is said to be Rs 18.13 lakh crore (USD 287.42 billion where 1USD=INR 63.07) when they were reviewed at a recent meeting held by the Ministry of Finance. What is the total value of all 804 projects? The RTI data does not mention monetary value against all projects.
(4) The data that the Ministry of Finance provided under the RTI Act does not appear to be data that it has generated itself. The ES 14-15 clearly states that the figures are based on inputs provided by the Centre for Monitoring Indian Economy (CMIE). CMIE is a private sector business information company. What measures were taken to cross-check the veracity of the database that they provided the Ministry before it was inserted in the Economic Survey? Or is the database itself created on the basis of information gleaned from government records? Most importantly, if more than a third of the projects have been stalled for reasons unspecified or unknown, how can such incomplete data be used for reporting on the state of the economy to Parliament without making an effort to verify the claims contained in the database?
Ideally, the Government of India should have volunteered this information under Section 4 of the RTI Act in order to inform the citizens of India about the nature and magnitude of the problem. The Ministry of Finance earmarked the RTI reply — “for RTI purpose” – while sending it to me.
The data and analysis can help form one’s own conclusions to debate the need for the amendments to LARR Act in an informed manner.

*Programme Coordinator, Access to Information Programme, Commonwealth Human Rights Initiative, New Delhi

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