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

2	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.
3.	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 1/3^rdof 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).  #

  

What utility crop insurance of it cannot compensate farmers for his crop losses?

Perpetually at the mercy of nature. 

There is nothing more gruesome for any farmer than to see before his own eyes his lush green standing crop flattened by the vagaries of nature. All his hopes and aspirations from a bountiful harvest are grounded in a matter of few minutes. Not only the crop, but his life too is flattened.

As many as 24 lakh hectares of land in Madhya Pradesh and another 18 lakh hectares in Maharashtra have been hit by a series of frequent hailstorms in the past three weeks or so. Extensive damage has also been reported from parts of Punjab, Haryana, Rajasthan, Uttarakhand, Uttar Pradesh, Karnataka and Tamil Nadu.

It is easy to call this a natural calamity. It is easy for Union Agriculture Minister Sharad Pawar to say crop losses from excessive rain and hailstorm are not unusual, and, therefore, appeal to farmers to show courage. But for millions of small farmers who toil endlessly to tend the crops in the hope that the harvest will feed their families for a few months, all is lost. For those who didn’t commit suicide, such natural disasters push back their household economy by at least three years. Already reeling under debt, life becomes as tall as a mountain for them. They know they have no one to curse except their own fate. This is an agricultural emergency.

With 43 farmers committing suicide in the Bundelkhand region and another 37 taking their own lives in Maharashtra (and still counting) ever since the freak hailstorms with a severe magnitude lashed central India in the past three weeks, the extent of damage caused to the standing crops is all evident. Such has been the severity of the storm that as many as 900 cattle have also reportedly perished.

While Agriculture Minister Pawar says unusual rains and hailstorms are not uncommon and wants farmers to demonstrate courage, he appears more concerned with the damage done to sugarcane. Even before the expert teams have been formed to assess the damage, he has already announced that 15 percent of the standing cane crop has been damaged and has even worked out the loss to the sugar mills. But for the rest of the affected farming community, his advice is to brave this grave loss collectively. A Group of Ministers has been constituted, which is expected to meet next week. 

Although both Maharashtra and Madhya Pradesh each have demanded a Rs 5,000 crore relief package to be provided immediately, the loss estimates will swell by the time estimates flow in from other states. But if past experience is any indication, crop loss compensation is hardly going to be any relief. 

We have had in the past examples of Rs 1 to Rs 20; Rs 95 to Rs 1,470; and Rs 3,000 to Rs 5,000 being provided as relief. After months of waiting, when the farmers get a cheque that is not even worth presenting before a bank, it only shows the contempt and cruelty by which the farming class is treated. I am not expecting the situation to be any different this season. It is a matter of few days before the first phase of polling begins on 10 April and farmers will disappear from the political radar once the election campaigns peak.

It was in 2007 that the world’s largest weather-based crop insurance programme was launched. By 2012-13, it had expanded to 15 states, covering some 12 million farmers. Prior to this, a number of crop insurance schemes were launched beginning 1972. While all these schemes remained almost at the pilot project stage, these crop insurance schemes do not eliminate risk, but only manage to spread risk over time and space. These schemes only provide compensation based on an index rather than the actual damage, and are also based on an average over a demarcated area, often a block, rather than compensate for the actual loss.

I don’t know what utility these crop insurance projects are serving. Way back in 1920, agriculture expert JS Chakravarti had written: “No insurance authority could ever maintain a supervising agency, which would be able to watch and enforce that every insured field receives the required amount of care and attention at the hands of the cultivar. Unless some method is devised by which this great difficulty is minimised, a system of crop insurance would indeed be impossible.” Isn’t it a reflection of our lost priorities that even after 100 years of knowing this, crop insurance continues to be riddled with the same problems and the same level of inefficiency?

I have never understood why crop insurance agencies or companies can’t be made to assess the actual loss a farmer suffers. If every individual can be insured for his life, and that includes people living in remote villages, why isn’t the same system extended to cover crops as well? If an individual house can be insured against theft or fire or a natural disaster, why can’t a crop field be insured in the same manner? Why should the insurance agency be allowed to follow an area approach in the case of crops?
Well, the answer is very simple. The governments are not keen.

Imagine, if the 18 lakh hectares that has been hit by hailstorm in Maharashtra was insured? Farmers wouldn’t have been a worried and harried lot. No farmer would have opted to kill himself. I have a few suggestions on how to achieve this.

First, the government must make it mandatory for the insurance companies to insure all farmers for their standing crops. This can begin especially by making it compulsory for the foreign insurance companies that are lobbying to raise the cap from the existing 26 to 49 percent. These companies should only be allowed to invest, provided they give an undertaking that they would provide individual crop insurance. If they can’t, don’t allow them in.

At the same time, all existing crop insurance schemes should be reworked to achieve the goal of providing compensation based on individual loss.

Secondly, the government must step in to provide at least two-third of the insurance premium. Even in the US, it is the government that provides the bulk of the premium share as specified under the provisions announced under the Farm Bill 2014, which is applicable for another 10 years. In India too, state governments actually end up paying a higher compensation year after year for crop losses than what could have been the premium outgo. At the same time, it will be helpful to seek farmers’ suggestions to make the crop insurance schemes really effective. The State Farmers’ Commissions should be entrusted with the task to come out with models in wider consultations with farmers, civil society and experts.

Somehow we have come to believe that crop insurance based on individual approach is totally impracticable. Unless this feeling is rectified, I don’t see any glimmer of hope for the farmers. It is easy to tell farmers to pick up courage at times of natural calamities but just imagine if ever your own house or company is destroyed in a fire or an unforeseen disaster, would you have the courage to stand the loss suffered? It is difficult to rebuild affected livelihoods unless, of course, the loss is covered through insurance. Farming is no exception.

Published in: Tehelka Magazine, Volume 11 Issue 13, Dated 29 March 2014