1. Role and Importance of the Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act, 2013) in Regulating
Business Activities in India
The LARR Act of 2013: An Overview
This immensely significant reformative legislation enacted in India replaces the old and ill-famed
Land Acquisition Act of 1894. The 1894 Act was widely condemned for the exploitative manner
in which it permitted government acquisition for public purposes, giving rise to land acquisition
with scantest compensation with no provisions regarding rehabilitation and resettlement of the
families being affected. The LARR Act, 2013, thus, came into being to rectify the evils of the
past and to set forth a just and transparent procedure of land acquisition.
The LARR Act, 2013, emerges in the context of rapid economic development in India requiring
large mass-scale land acquisition for the purposes of infrastructure projects, industrial corridors,
and urbanization. The balance between need and protection for landowners and affected
communities is sought in the Act so that land acquisition is fair and transparent and is socially
accountable.
Role of the LARR Act, 2013 in Regulating Business Activities
1. Development with Rights:
The Act on Land Acquisition, Rehabilitation and Resettlement, of 2013, is an act of great
significance because it tries to balance the claims of economic development by the nation
together with those of the land owners and affected communities. Such land is required in
bulk everywhere for setting up industries or for establishing infrastructure projects or
special economic zones. Any acquisition of land will be meant for fairness and
transparency in such a way as to avoid conflicts and civil strife.
For example: One of the largest infrastructure projects in India, the Delhi-Mumbai Industrial
Corridor (DMIC), necessitated acquisition of land over several states in large tracts. The LARR
Act, 2013, ensured that the whole process of land acquisition would be guided by transparency,
fairness in compensation, and rehabilitation packages for displaced families, all aimed at the
minimization of conflicts and delays, thereby smoothing the track for such an ambitious project.
2. Fair Compensation:
One of the primary objectives of the LARR Act, 2013, is to ensure that all land offerings
are done at fair compensation to the owners of the land. LARR Act, 2013, also
recognized that land acquisition should be prone to fair compensation of at least double
the market value in urban areas and four times in rural areas. And, mainly, that is the
right compensation for the loss of land, very significant in terms of public trust in the
land acquisition process.
An example: The provisions of the LARR Act, 2013, were brought into effect in the case
of the Chennai-Bangalore Industrial Corridor project so that the landowners would be
adequately compensated for their land, hence enhancing the confidence of the local
community further and thus reducing protests and litigation.
3. Rehabilitation and Resettlement:
It also provides for a broad range of rehabilitation which encompasses persons who do not own
land but need it for subsistence and resettlement of affected families such as provision of
alternative housing, provision for employment, and provision of monetary compensation. In the
case of businesses, this means that they shall normally take account in their project planning of
the costs of rehabilitation and resettlement, thus ensuring that their projects are socially
responsible.
For example, as mandated in the LARR Act 2013, the POSCO Steel Plant project
contains provisions for rehabilitation and resettlement benefits intended for alternative
housing and employment opportunities for the affected families. Such provisions have
alleviated local community fears and reduced the prospect of conflicts.
4. Social Impact Assessment (EqN):
LARR Act, 2013 makes it binding to carry out a Social Impact Assessment on the project, which
requires an acquisition of land on a massive scale. The SIA surveys on the scale of the impact a
project might generate on either social or economic factors to some concerned communities.
Thus, it makes businesses start to look at the bigger picture of their work and whether or not
direct intervention would reasonably address likely adverse impacts.
Some examples of creating an SIA under the LARR Act 2013: The Narmada Dam project
is one in which a SIA was done under the provisions of LARR Act 2013, where potential
impacts on local communities like displacement and loss of livelihood were traced. The
government along with project developers set out a certain number of things in order to
avoid or lessen the impacts identified after the SIA findings, such as providing alternative
housing and livelihoods.
5. Consent Clause:
The clause of consent states that for a PPP project, at least 70% of affected families as
well as 80% in case of a private project will be needed for consensus. This clause gives
the affected people a say in the buyout process, resulting in no conflicts or protests over
the acquisition. The business, therefore, has the onus on them to consult the affected
communities and convince them before land acquisition.
Example: The Mumbai-Ahmedabad High-Speed Rail Corridor that was popularly called
the Bullet Train Project required the consent of up to 80% household for the project
developers as under the consent clause provided by the LARR Act 2013. Trust
appropriately built within local communities was ensured while reducing the potential for
conflict.
6. Transparency and Accountability: The LARR Act 2013 has made provisions for
transparency and accountability in the land acquisition process. It makes it mandatory to
divulge the whole information from the purpose of land acquisition, the scope of land
acquisition, and compensation, thus minimizing the chances of corruption and improving
business ethics.
Example: Any land acquisition process of the Kochi Metro Rail project which comes under the
LARR Act was thus to run transparently, ensuring that the public gets an opportunity to know all
about the compensation details and rehabilitation plans. This would also serve as another avenue
to earn trust among local communities and reduce corruption.
Importance of the LARR Act, 2013 in Regulating Business Activities
1. Reducing Conflicts and Delays:
The LARR Act of 2013 facilitates the mitigation of conflicts and delays in land
acquisition by assuring adequate compensation, rehabilitation, and resettlement. Delayed
acquisitions are a significant cost overruns for business, leading to complete project
failures. The Act, with its simplified roadmap, spells out land acquisition, further
reducing uncertainty for the businesses.
For example, the smooth execution of the Kudankulam Nuclear Power Plant project despite local
resistance could be attributed to fair compensation and rehabilitation of the affected families,
resolving conflicts and delays by ensuring that the negative externalities faced by affected
families were taken care of.
2. Promotion of Business Conducts That Are Assumed:
LARR Act, 2013 promotes socially responsible businesses by making it mandatory to
consider the effects of social and economic impacts in a project. Within a fast
interconnected economy, businesses are now expected to follow environment-socialgovernance (ESG) standards.
For example: Inadequate rehabilitation and resettlement provisions under the then Land
Acquisition Act of 1894 saw more protests and eventually cancellation of Tata Nano project in
Singur, West Bengal. Therefore, the LARR Act of 2013 is set to save such occurrences by
enforcing socially responsible practices on businesses.
3. Enhancing Public Trust:
To Gain Public Trust: The very act is meant to boost public faith in the whole process by
providing effective rights to affected communities in land acquisition. Such public
grievance in the process of land acquisition is harmful, if not disastrous for a company,
since it calls for public condemnation as well as lawsuits.
Example: POSCO steel plant in Odisha was one such example that operated under the provisions
of the LARR Act, 2013, towards generating public trust by ensuring fair compensation and
rehabilitation of affected families, thus diminishing the scope for protests and legal challenges
that would otherwise hinder the smooth flow of the project.
4. Laws on Acquisition of Land:
The LARR Act, 2013, provides an entire legal framework of importance for any
businessman in India. It already legalizes and makes transparent the process of land
acquisition, thereby reducing the litigation aspect of it.
Example: The LARR Act of 2013 thus provides a credible legal framework under which the land
acquisition took place for the DMIC project, thus denying all legal risks to execution of the
project.
International Inspiration for the LARR Act, 2013
The LARR Act 2013 is a product of many such international documents and national best
practices concerning land acquisition, rehabilitation, and resettlement. Internationally, a few of
the most relevant documents are as follows:
1. International Labour Organization (ILO) Convention No. 169-involved Slipperiness
concerning the required consultation and involvement of the affected community/persons
for such acquisition. Hence, the LARR Act 2013 has provided for this in the form of the
consent clause and the SIA provision.
○
Example: As an example, in the Narmada Dam project, consultation and
involvement in the decision-making process have been made obligatory for the
affected communities by law according to the provisions of ILO Convention No.
169.
2. UN Declaration on the Rights of Indigenous Peoples- which implies that indigenous
peoples exercise control over lands and territories and resources. Such rights are made
operational by the LARR Act, 2013 as it ensures compensation and rehabilitation to
affected communities.
○ Example: Thus, the LARR Act, 2013 ensured that rights of indigenous
communities, in case of the POSCO Steel Plant project, were well protected in
conformity with principles of UNDRIP.
3. World Bank Safeguard Policies:
As part of the safe-guarding principles that the World Bank has laid, dealing with
involuntary resettlement, the three provisions in question would include fair
compensation and rehabilitation, and resettlement of those affected communities. These
principles have now been codified in the LARR Act, 2013, which, in turn, sets the
benchmark for land acquisition processes to be ensured in a socially responsible manner.
Example - The affected communities from the Chennai-Bangalore Industrial Corridor
project were paid adequate compensation and paid further rehabilitation under the
provisions of the LARR Act, 2013 and as per the World Bank's safeguard policies.
Key Issues and Cases under the LARR Act, 2013
1. Delay in Land Acquisition: It is one of the major problems in the LARR Act, 2013, i.e.,
the delay that has resulted in the slow social impact assessment process and consent of
the affected families. Such delays act as injury to the business because they lead to cost
overruns and project failures.
Case Study: The Mumbai- Ahmedabad High-Speed Rail Corridor (Bullet Train Project) was
significantly delayed because of land acquisition problems related to the LARR Act, 2013. This
project required a large tract of land acquisition for the purpose, and the consent of the affected
families and SIA for that took a lot of time, which became the main reason for the delay.
2. Compensation Disputes: The provisions are for "fair remittance," but there have been
instances in which landowners entered disputes regarding sums to be paid, which gave rise to
litigation and, thus, subsequent delays in completion.
Case In Point: Even, as in the case concerning the POSCO Steel Plant in Odisha, the failure to
arrive at consensus on how much it would pay landowners also resulted in lawyers' involvement
and delays in completing the project.
3. Rehabilitation and Resettlement Problems: The rehabilitation and resettlement measures in the
LARR Act, 2013, have been criticized for inadequate provisions in some cases. In reality,
affected families have often been found complaining regarding the inadequate provision of
housing, employment opportunities, and other effective benefits.
Case Study: Affected families around the Narmada Dam complained that they were not resettled
and rehabilitated adequately, which turned protests and legal battles out of it.
4. Exceptions for Certain Projects: LARR has been criticized for exemptions for projects on
defense and national security in the applicability of the Act. This raises apprehensions about
transparency and accountability.
Case Study: The provisions of the LARR Act, 2013 were exempted for the Koodankulam
Nuclear Power Plant project in Tamil Nadu and resulted in protests and legal challenges from
affected communities.
2. How Can the LARR Act, 2013 Be Improved? Lessons from Other Countries
Introduction to the Need for Improvement
The introduction of the Act, the Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation, and Resettlement, into the statute books in 2013-signifies a long step
in the mantle of surpassing the colonial Land Acquisition Act, 1894. Much still remains to be
done to make this Act more effective and just. It is useful to study the examples of other
countries to throw light on how the LARR Act of 2013 can be improved.
Facets of Improvement in LARR Act, 2013
1. Streamlining Land Acquisition Process: Among the loudest cribbers about the LARR
Act, 2013, are the long years it dragged on for most of its projects to postpone. Such as
the last part of the procedure involving conducting a Social Impact Assessment (SIA) and
obtaining the consent from affected families, which can be carried out for several months
or years. Put this right, amend the Act, and the entire process of land acquisition shall
become seamless protecting, as much as possible, the rights to communities affected.
○ Example from China: In China, land acquisition is a fairly streamlined process,
whereby the government is entirely responsible for acquiring land for public
purposes. It has also drawn criticism because of the so-called lack of transparency
and accountability with regard to lack of independent inquiry involved. These
would therefore be such balanced measures to enable India to streamline the
process while ensuring that affected communities are adequately consulted and
compensated.
2. Strengthening Rehabilitation and Resettlement Provisions: The LARR Act, 2013 does bring
up some provisions on rehabilitation and resettlement, but has been thus far more than once
without really accepting the responsibilities such provisions could include. It might add
components for alternative housing, job opportunities, and benefits to further improve the
rehabilitation and resettlement components.
○
Example from Brazil: The Statute of the City (2001) in Brazil deepens comments
on relinquishing such territory to the communities affected by this phenomenon,
putting special emphasis on giving decent housing and other infrastructure to such
communities. These provisions could be infused into LARR Act, 2013 from the
lessons learned from Brazil, towards a more holistic policy for rehabilitation and
resettlements.
3. Facilitate Transparency & Accountability:
The points of emphasis in LARR Act 2013 is cast done with readmit regulations about
transparency and accountability which further got met with situations marred by corrupt
practices or negligence during the land-acquisition process. An amendment of the Act for
introducing much stricter penalties against violations and making all the information on the land
acquisitions fully available to the public would strengthen the Act.
○
An example could be cited from South Africa: All information on expropriation
and acquisition of land in South Africa comes under the blanket stipulations of the
Expropriation Act of 1975 publication before the public. Such provisions could
also be replicated in the LARR Act, 2013, for India.
4. Addressing Some Included Exemptions for Certain Projects:
Certain exemptions are provided to projects-including defense and national security projectsunder the LARR Act, 2013. Thereby raising fears about absolved incidences of accountability
and transparency under the Act. An amendment may be carried out in such a way that its exact
limits do as regards the nature of the projects in question would not matter.
○
For example, in Canada, they have an Expropriation Act wherein all expropriated
projects regardless of the same type of projects are equally treated such that none
can be deprived of their entitlement rights. Maybe, India would do well to adopt
the same approach: do not exempt any particular project under LARR Act, 2013.
5. Enhancing Community Participation:
Even though the LARR Act 2013 does provide for community participation, there exists
considerable scope for increasing participation by affected communities in the acquisition of
land. Therefore, the Act might be amended to include the mandatory provision for the
consultation of affected communities at every stage of land acquisition, involving the initial
planning and culminating in full implementation.
○
Example from Australia: As per the Native Title Act, 1993, indigenous
communities in Australia are consulted and involved in decisions affecting land
acquisition. India could take a leaf from Australia in terms of improving
community participation under the LARR Act, 2013.
6. Addressing Compensation Disputes:
Though the Act stipulates fair compensation, in practice, certain instances have occurred
whereby landowners challenged the compensation amount, leading to prolonged litigation and
therefore delay; the Act might be amended to provide for a more transparent and objective
mechanism for determining compensation so that disputes will become almost unlikely.
○
Example from Germany: In Germany, the Federal Building Code
(Baugesetzbuch) provides an open and accountable mechanism of determining
compensation, which is based on market value cognizance of lands. India could
learn things in compensation dispute resolution from such legislation.
Conclusion
Considered a big step in ensuring Tamil influence, the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act,
2013), is, however, deficient in many respects. This leaves much scope for improvement so that
the law may turn out to be more effective and equitable. This could also be addressed with the
help of the experiences gained from countries around the globe, which can certainly improve the
application and strength of the LARR Act, 2013. Thus, the Act might prove more successful in
balancing the need to economically develop the whole nation with the protection of rights in
affected communities by streamlining the process of land acquisition, ensuring rehabilitation and
resettlement provisions strengthened transparency and accountability, exemptions from certain
projects, increased community participation, and addressing disputes over compensation.
REFERENCES
https://rural.nic.in/
https://legislative.gov.in/
https://indianexpress.com/
https://www.chinadaily.com.cn/
https://laws-lois.justice.gc.ca/
https://scholar.google.com/