Govt Land Barter Deal Dodges The Law, Benefits The Rich

01 Mar 2021 0 min read  Share

Instead of expensive, lawful compensation, about 10 states now offer farmers, landowners a shiny barter deal: Hand over your land, get a smaller plot when the area is ‘developed’. In Punjab, we investigate how developers get cheap land and owners wait years.

Village and city meet at the border of Manak Majra and Mohali/PHOTOGRAPHS BY MRIDULA CHARI

Updated: Mar 2

Mohali: In 2010, vegetable vendor Surjeet Singh handed over the nine-acre farm he and his family owned to the Punjab government’s Greater Mohali Area Development Authority, which hoped to build Mohali’s Sector 88 and Sector 89 on a few hundred such farms.

Instead of buying the land from Surjeet Singh, the government made a barter deal: it would give him property in a neighbourhood with urban infrastructure—to be developed on his land and of many others—in lieu of compensation.

Since 2013, about 10 states, including Andhra Pradesh, Maharashtra, Bihar, Madhya Pradesh, Uttar Pradesh and Delhi, have proposed at least 20 urban, infrastructure, and industrial development projects that offer similar terms to landowners, a programme called “land pooling.”

In 2016, the NITI Aayog praised Andhra Pradesh’s land-pooling policy as an “innovative idea” in view of “legal obligations involved in the land acquisition process”, and called it a “model for the nation” to follow.

These barter deals are designed to be win-win situations.

Developed properties are expected to fetch rates high enough to compensate landowners for loss of land and livelihood, while the government gets land without paying full price, let alone over two-times the price as required by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, or LARR as it is popularly called.

The typical use case of land pooling has been to expand urban areas. Since urban areas inevitably eat into rural lands, it makes sense for the state to attempt to plan the expansion.

But, since 2013, states have used pooling for other purposes, sometimes with success, sometimes not.

Instead of lawful compensation, many states now offer farmers, landowners a shiny barter deal: Hand over your land for ‘development’ and we will return a shop and plot. Instead, as we detail in a two-part series, we found fake or broken promises, as rich developers got cheap land and owners waited years for compensation.

Transferring Project Risk To Original Landowners

In Pithampur, Madhya Pradesh, as the second part of this series explains, the State plans to persuade landowners to barter land that it failed to buy for an industrial project.

In Maharashtra, the government tried to persuade landowners to hand over and pool land for an expressway between Mumbai and Nagpur, but instead had to purchase it directly when they refused.

The farther the land-pooling programme gets from an urban area, the more uncertain the long-term benefits: What should be the price of residential land near an industrial area if it fails to attract industries? If there is a highway, will people in villages far from a city be able to make use of the development promised?

A more basic question: Do people like Surjeet Singh, participating in an older and more established land-pooling scheme, benefit?

I travelled to two prominent land pooling schemes in India: Mohali in Punjab where land pooling is being used for real-estate and urban-infrastructure projects, and Pithampur, where the government is pooling land to expand a major industrial area.

In both, I found land-pooling stacked against landowners, particularly those with small holdings. There was no assurance when they will get developed property back and no guarantee that it would fetch a price enough to compensate the landowner.

In effect, the state transfers the risk of a project’s success to the original landowners. There are no protections for landless and tenant farmers, who comprise 7.41% of India’s rural population, according to a survey by the National Sample Survey Office in 2014.

These concerns are important, said experts, given that land pooling is only likely to increase.

“Given what the price of land is now, land pooling is a huge money saver for the state,” said Sanjoy Chakravorty, a professor of geography and urban studies in Temple University, USA, and author of The Price of Land.

In the first part of this series, we describe how land-pooling schemes around Mohali are beset with chronic delays causing frustration and distress sales of state-issued documents promising compensatory plots by desperate landowners, often to the benefit of real-estate companies.

In the second part, we explore how land pooling places unfair burdens on landless people and small-landholders at the Pithampur industrial area near Indore in Madhya Pradesh.

Surjeet Singh’s Decade-Long Battle

Surjeet Singh’s vegetable cart is at the junction of a busy highway in Mohali, abutting a major gurdwara and hundreds of high-rise apartment buildings. His gentle eyes belie his steely demeanour, especially when he talks about how GMADA broke its promises.

Surjeet Singh, a vegetable vendor, studies documents related to the land he gave up to the government for development.

Other than the cart, Surjeet Singh had an alternate source of income from a six-acre farm in his native village Manak Majra, a few km from the highway junction.

It was this land that he handed over to the State in 2010, as a part of Punjab’s earliest land-pooling programme, which began in 2008, approved by the state cabinet headed by the Shiromani Akali Dal chief minister Parkash Singh Badal.

The Greater Mohali Authority has since launched nine schemes and pooled 2,145 acres—or the size of more than 1,620 football fields—in villages bordering Mohali. Eight started before December 2019, according to an internal powerpoint presentation to the government. GMADA launched a ninth scheme after the presentation was shared with this reporter in December 2019 and it is planning a tenth for industrial areas.

The scheme that took Surjeet Singh’s land launched in 2011. The Authority promised to use half of that pooled land for roads, public schools, healthcare and parks, and the other half for residential and commercial plots. Landowners were promised plots measuring 20% of the land they had pooled. In the meantime, they would also get a “subsistence allowance” for a maximum of three years.

Surjeet Singh, who was to get Rs 31,500 as annual compensation, agreed to the terms because he thought that it would be a good investment to own high- value commercial and residential land in Mohali city. The amount increased with interest to Rs 52,800 by 2018-19. GMADA has promised annuities starting at Rs 25,000 for later pooling schemes.

Nothing went by plan or promise.

Vague Promises, Endless Runarounds

It took the Greater Mohali Authority three years to even issue “letters of intent” promising the residential and commercial plots. The letter did not say when the state would deliver these plots.

Surjeet Singh began making rounds of the Authority office where, he said, officials told him that the project was delayed because they did not have the money to develop the neighbourhoods.

In 2015, the authority opened auctions for commercial sites on the pooled land. An 18-acre commercial plot was auctioned to Hero Realty Private Limited for Rs 181 crore, at Rs 10 crore per acre, according to documents in this reporter’s possession.

In 2015, the Greater Mohali Area Development Authority auctioned a group housing site at Sector 88 in Mohali for Rs 181 crore. GMADA gave the company two payment options. Pay Rs 181 crore up front, or pay Rs 231 crore in installments by 2026, the document says later.

But Singh still had not received his plot of land.

I visited GMADA’s estate office, which allotted land to landowners, to seek comment, but the officials concerned were not present. Arina Duggal, land acquisition collector of GMADA in February 2020 said she was not authorised to comment when and referred me to Rajesh Dhiman, additional chief administrator, who was also unavailable. Later they did not respond to calls to their landline offices or to an email questionnaire.

The GMADA continued the annual subsistence allowance to cover the delay, but stopped payments around 2015, said Surjeet Singh. In 2018, his patience ran out. He gathered other landowners from his village and wrote letters to the Authority, before filing a suit before a sessions court over the defaults. The court ruled in favour of the landowners. GMADA has challenged the ruling in the High Court, Surjeet Singh said, and the case is ongoing.

Eventually in 2019, Surjeet Singh was allotted a residential plot. He got commercial land too in March 2020, not in the sector where his land was but on another outskirts of Mohali.

The authority demanded Rs 900,000 as additional fees from him, because his corner plot measured about 56 sq ft more than the area he was eligible for. They later agreed to waive the fees in June 2020.

“We gave away more than half our land for free, but they are still charging us development fees,” Surjeet Singh said in December 2019. “We have to follow their timeline, but where did they deliver our plots on time to us?”

Long Delays Are Common

Delays and uncertainty are a feature of land-pooling schemes across India.

In Gujarat, only 40% of town planning schemes that began between 2000 and 2016 were completed, according to this report from the World Resources Institute. Some schemes took more than 10 years to complete. In 2019, Madhya Pradesh had to cancel 84 land-pooling schemes in the peripheries of its cities after they failed to take off.

At Amaravathi in Andhra Pradesh, the government ran perhaps the most well-documented land pooling scheme to build the state’s new capital. The scheme stalled in 2019, after the government cancelled the proposed capital. Though construction has now restarted, landowners who gave up fertile paddy fields may never see the high prices they hoped for their developed plots.

A common feature of land pooling is that it is often not governed by any law, as in Punjab. It is a scheme that each state government can tweak or change by mere executive order to suit its interests, or those of others.

There are no benchmarks on how much land and cash compensation are given to those who give up land.

In Pithampur, the government promises to return 20% of the area of the pooled land to the owner; Delhi promises to return 60%. For cash compensation, Punjab offers a minimum three-year annuity as a subsistence allowance while MP offers 20% of the value of the compensation. The Greater Mohali Area Development Authority has amended compensation with every new sector it builds.

Land-pooling programmes appear to renege against the protections offered by the LARR, the land acquisition law of 2013.

Reneging On The Law

The LARR repealed a previous colonial legislation that allowed states unbridled powers to acquire any land and took away the government’s unchecked powers to acquire private lands at throw-away prices.

Other than promising at least twice the land’s market rate as compensation, the law provides a timeframe for land acquisition. No project can go ahead until compensation is paid and rehabilitation of displaced persons is completed.

The LARR also says that, besides land-owners, those living off the land must be compensated and detailed how this might be done.

A recent Punjab government land-pooling document justified the programme by describing the 2013 Act as “tedious and complex”, one that “consume[s]a lot of time and is often subject to enhancement of compensation”, which would result in an “unaccounted huge liability” to the state government.

Since 2008, the Greater Mohali Area Development Authority has presented land pooling as an alternative to land acquisition, even before the more complex 2013 acquisition act was adopted. With the new act, however, the authority made its reasoning for using land pooling instead of acquisition more explicit, as in this 2018 document.

Even in land-pooling schemes, Punjab applies the 2013 Act but only up to Section 19, which deals with social-impact assessment. The subsequent sections, related to compensation and rehabilitation, are ignored.

The government used to acquire around 20,000 to 30,000 hectares each year for city expansion across the state, said Sucha Singh Gill, head of the Centre for Research in Rural and Industrial Development in Punjab.

This acquisition of land has slowed in conjunction with the real-estate slowdown, an indication that real estate might have been the driving motive for acquisition. Some of this acquisition was done through land pooling, he said.

In Pithampur, the Madhya Pradesh government is using land pooling to build a new industrial zone near Indore, at a site where it had been unable to acquire land for 10 years, according to this reporter’s findings from Pithampur. In Delhi, the state is using land pooling to expand the suburbs of the national capital, passing on the responsibility of basic town planning and development to individual landowners and commercial players.

Government, Companies Benefit

What do landowners like Surjeet Singh do when they cannot wait for developed plots? They sell the Greater Mohali Authority’s letters of intent to property dealers, such as Ranjit Singh.

New houses are coming up in Aerocity, all along the western edge of the highway that runs between Mohali in the north and Zirakpur to the south in Punjab, ten years after the state launched a programme to pool land in that area. The state had promised to return the land in three years.

Ranjit Singh has an office along the Aerocity highway. On the western edge of the highway, new houses are being built on plots that GMADA allotted to landowners only a few years ago under its Aerocity land pooling scheme.

On the eastern edge of the highway, three- and four-storey residential houses have already been built. Nearly every building on the highway has a real-estate office on its ground floor.

Ranjit Singh said he has been buying and selling plots in the Chandigarh area for two decades and splits his time between multiple real-estate offices in Mohali.

In the Aerocity project, letters of intent for commercial plots are “very valuable”, Ranjit Singh said, with a letter promising allotment of a 180-sq-foot booth fetching up to Rs 50 lakh. Dealers expect the booth to be worth Rs 4 crore after it is allotted.

GMADA does not pay annuity to either the original landowner or the buyer after the letter of intent is sold.

“Landowners find it difficult to sell plots so they sell it to people like us,” Ranjit Singh explained. With their contacts, real-estate dealers can expect to sell plots for double the rate they bought them for.

“We have lots of local customers, but we also have some investors still, and people who travel from outside and need a place to stay in Mohali,” said Ranjit Singh. Multiple dealers confirmed his account.

Projects like Aerocity also show how delays often benefit real-estate developers.

Aerocity was Mohali’s oldest land-pooling scheme, beginning in 2010. It consists of prime real estate in the Mohali-Chandigarh area with plots on both sides of a highway running south of Mohali.

The Greater Mohali authority allotted residential plots only in 2015. The commercial plots are still not allotted.

Even as desperate landowners sold their letters of intent to dealers, in 2012 the Authority approved a similar residential-cum-commercial scheme adjacent to Aerocity.

The project, called the ‘Super Mega Mixed Use Integrated Industrial Park’ or IT City, was proposed by Janta Land Promoters Private Limited (JLPL), one of the largest developers in Mohali, owned by Kulwant Singh, a former Shiromani Akali Dal politician and Mohali’s mayor between 2015 and 2020.

The state government paved the way for the project, according to documents I have reviewed. Approvals were fast tracked. The state did not censure the project for beginning construction without an environment clearance. It got a senior forest department official to declare that the project was not at the border of a bird park, after a junior official in the same department flagged it.

It was only after JLPL began selling its apartments and plots that the Greater Mohali Authority started allotting land in Aerocity.

All real estate dealers in Mohali have maps of the Tricity area of Mohali, Chandigarh and Panchkula in their offices. This closeup of a map with one dealer shows JLPL’s IT City in blue, perpendicular to the Greater Mohali Area Development Authority’s land pooling project, Aerocity in green. The Punjab government cleared permissions for IT City to develop, even as GMADA’s Aerocity project languished.

There are no signs that the Punjab government is taking these issues seriously.

Aerocity and Sector 88-89, both near JLPL developments, have faced long delays. GMADA has returned land to owners in as little as one to five years in land pooling schemes in Medicity and Ecocity in the New Chandigarh area to the north of Mohali.

The authority continues to pool more land in Mohali for new schemes. The latest is Aerotropolis, a scheme planned between Aerocity and Chandigarh airport. In 2020, it promised land-owners who pool their lands 1,100 square yards of plots for industrial use.

Leaving Out The Marginalised

The land-pooling schemes leave out landless farmers and marginalised communities.

Punjab has the highest proportion of Dalits among India’s states, almost 32% of its population. Only 3.5% of them own agricultural land, with most of it owned by Jat Sikhs and Hindus.

Land pooling ends up consolidating the land holdings of rural elite and dominant caste landholders.

“What does land pooling have to do with any of us?” asked Jaspreet Kaur, a landless agricultural worker living in Bakarpur village outside Mohali where land has been pooled for Aerocity. “In the end, this is a matter only for large landowners.”

“It has no place for non-landowners,” said Gill of the Centre for Research in Rural and Industrial Development in Punjab.

First Of A Two-Part Series. Read The Second Part Here:

Rich, Upper-Caste Land Owners Will Benefit Most In MP Land Scheme

(Mridula Chari is an independent journalist. She conducted research for this article as a policy researcher with Land Conflict Watch, an independent network of researchers studying land conflicts, climate change and natural resource governance in India.)