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

02 Mar 2021 10 min read  Share

Started by the Congress, continued by the BJP, a government scheme promises equal benefits to those who give up land for an industrial area. Our investigation found poor owners bearing the greatest risk, landless and tenant farmers excluded and rich, upper-castes, Hindu and Muslim, most likely to profit

Land owners from Kali Billod village near Indore have been seeing industries, such as the one in the background, slowly creep closer to their village. They believe that effluents are polluting their soil/PHOTOGRAPHS BY MRIDULA CHARI

Indore: “Once the government removes us, I will have nowhere to go.”

There was resignation in Sardar Singh’s voice—an elderly landless farmer living in Chaydipura, a hamlet in western Madhya Pradesh (MP) near the state’s most-populous city—as he explained how he was about to lose his only source of livelihood: a five-acre farm, which he rented from an Indore-based landowner for more than a decade.

In 2019, Singh’s landlord decided to give up the land in a “land-pooling” programme—a part-cash, part-barter deal that offers owners who surrender farm or other land a smaller, developed plot in exchange—that the MP government announced to expand the Pithampur industrial area near Indore.

The 3,000-acre area—roughly six times the size of Nariman Point, Mumbai’s downtown business district—is largely responsible for Indore’s rise as MP’s commercial hub. The government now wants to expand the industrial area and make it at least five times larger.

That will require farmland from nearby villages, such as Chaydipura.

But the government is not acquiring the land under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, or LARR, which prescribes compensation at least two times the market rates to owners and several benefits to tenant farmers, such as Singh.

The MP government is instead taking over land under a pooling programme, which gives owners 40% of the land’s sale price in cash and a developed plot in the expanded industrial area when completed.

But as at least 10 states dodge the law and use land-pooling schemes instead, countless Indians like Singh are left out of the process, in a fast-urbanising country where 12% of agricultural households lease land for farming and 52% of small and marginal farmers are tenants.

At Pithampur, we found land pooling also disadvantaged small and marginal landowners, who own 0 to 5 acres respectively and comprise nearly 90% of India’s landowning farmers. They must wait several years to receive developed land. There is no legal deadline, and they risk getting plots at poor locations.

Read The First Part Of This Series:

Govt Land Barter Deal Dodges The Law, Benefits The Rich

In the first of our two-part series on land-pooling schemes, we found authorities in Mohali, Punjab, delaying compensation to landowners in a decade-old pooling scheme. In the second part, we explain how land pooling excludes landless and tenant farmers, forces consent from owners and offers the best developed land to dominant land owning communities, who are typically upper-caste Hindus.

Residents of Chayidipura near Madhya Pradesh’s most-populous city, are afraid the government will take away their land and renege on promises of future compensation. They want the state to pay them up front for the loss of their small holdings.

Acquiring Land Too Expensive: Official

The MP land-pooling scheme is operated by the Madhya Pradesh Industrial Development Corporation. Kumar Purushottam, then the head of the Corporation’s Indore division told Article 14 that he needed to keep up with growing demand for industrial land but acquiring land under the LARR would prove to be “too expensive”.

“In this year only, I have allotted more than 500 acres of industrial land, so with the present rate of industrial demand in this region, we should add at least 500 to 600 acres per year,” he said during an interview in December 2019.

Under the LARR, it would cost Rs 2 crore per acre to acquire the land and another Rs 1 crore per acre to develop it. This would require Rs 1,500 crore per year, which would make leasing it to industries too expensive.

“For industries, the price of land should not exceed 5% to 10% of project cost,” said Purushottam. “In my industrial areas, if I acquire land under the 2013 act and then give it to an industrialist, it will cost double the price of what we are offering today.”

So far, for the first phase, around 150 landowners have agreed to give up about 1,500 acres of land. The state distributed the first round of compensation cheques in the first week of January 2021.

Apart from the area around Pithampur, the MP government wants to develop another 30,000 acres through land pooling, expanding the scheme to the cities of Dewas and Ratlam.

Although the government is not using the LARR, it has promised compensation equivalent to the law, which in Madhya Pradesh is 200% of what is called the land’s “circle rate”, on which fees, such as stamp duty, are calculated. The circle rate is lower than the market rate and substantially lower for agricultural land.

For the Pithampur pooling scheme, the industrial development corporation will pay 40% of the circle rate in cash at the beginning of the process. The state will also allot developed land whose circle rate value equals 160% of the circle rate of the original land.

In other words, landowners will receive an area about the size of 20% of the land that they had pooled.

To make these deals, the Corporation is empowered by the Madhya Pradesh Investment Region Development Act, 2013, which closely resembles the Gujarat Special Investment Region Act, 2009, a law that permits a state authority to plan towns and pool land in government-approved or “notified” regions.

The MP Act similarly allows government agencies, even those that are not state departments, to get land from landowners directly and develop and operate townships in notified regions. This keeps development a step removed from any internal monitoring process.

Every political party prefers land pooling because it cuts development costs. The Pithampur project was started by the Congress party in 2019, which at the Centre had passed the LARR. The BJP government continues to use it.

The contracts between the government and landowners in Pithampur appear unfair to the latter: Each outlines how much money and land owners will get in return for giving up their land.

But the contracts do not say when the developed land will be returned; the cash component is based on the government’s circle rates, which as we said are always lower than the market rate; landowners cannot go to court; and can complain only to a specific tribunal.

Locking Landowners Into A Bad Deal

This is how the Madhya Pradesh government has tried to lock the landowners into a bad deal: If the state acquired these lands under the 2013 acquisition act, each landowner would have received two times the prevailing circle rate of agricultural land as compensation in cash.

Residents of villages in the Pithampur pooling area near Indore regularly visit the Betma tehsildar’s office to enquire about the fate of their land.

In 2010, the government announced that it would acquire the land under the 1894 acquisition act. This froze the land use. If landowners wanted to sell, they would have to sell under the table at lower rates, instead of in the open market to potential industries. Landowners challenged the acquisition order with more than 200 petitions in the Madhya Pradesh High Court. The High Court dismissed the petitions in 2012. People appealed the decision and the High Court ordered all parties to maintain the status quo of the land.

If the government had acquired the land three years later under the 2013 acquisition act, each owner would receive at least Rs 68 lakh per acre in cash, according to circle rates in Ranmal Billod, which is the panchayat, or village-level headquarters, of Chaydipura.

Purushottam said the state spends about Rs 1 crore to “develop” an acre of land. For every acre it acquires under the LARR, it is left with 90% of the land to lease after building roads and other amenities.

This means the government spends Rs 1.68 crore per acre of its money to develop and lease out an acre of land, which it would have to lease out over the first year to break even.

With land pooling, it pays 20% of the compensation, or Rs 13.6 lakh per acre, in cash. This is not enough to buy an equivalent area in the nearest village outside the planning area. So, the State gives the owner the remaining 80% in the form of a developed plot.

In the long run, once it gains possession, it makes little monetary difference to the government whether it acquires or pools land. In the short term, it reduces the immediate cost to the state exchequer by around Rs 40 lakh per acre, after calculating development costs and land returned to the landowner.

For landowners, the risk is multiplied manifold by several factors.

Manufacturing Consent

Chaydipura is a hamlet dominated by landless and marginalised communities, who mostly own a few acres of land and rent other land in informal tenancy arrangements. Some have no land, and most have agreed to surrender what they have to the land-pooling scheme.

No government official had visited the village to seek the people’s consent in February 2020, according to several locals. “You are the first person outside the village to come to us,” said 72-year-old Jangram Rathod.

Jangram Rathod in his wheat field in Chaydipura village near Indore.

In the case of Pithampur, the state first created a coercive atmosphere by locking the land use for 10 years with its order to acquire that land. Large landowners, almost all upper-caste Hindus, have tenants who farm the land.

Chaydipura’s people rattled off the same list of names of Brahmin and Bania large landowners, Hindu and Muslim: Joshi, Mantri, Sheikh. None of these landlords work the land that they own, they said.

They have a monetary incentive to convert their tenancy incomes into income from housing projects for new industries that will come up there. They in turn used their influence, said locals, to intimidate and coerce smaller, socially weaker and marginalised landowners to join the pooling scheme.

On 7 January 2021, state chief minister Shivraj Singh Chouhan distributed the first round of compensation cheques to 121 landowners in the pooling area. Chouhan also gave appreciation letters to large landowners, including Jagdish Joshi, Purushottam Mantri and Mohammed Ejaz Sheikh, whose names came up multiple times in discussions.

“The problem with land pooling is that there is no legally established procedure to gather consent,” said Preeti Sampat, an assistant professor at Ambedkar University, who has studied land pooling in Gujarat.

The state creeps in until the reluctant ones too are left with little option but to cave in and give up their land.

Large swathes of this agricultural land in Pithampur, near Indore, are likely to be converted for industrial use after the government persuades all owners to hand over their land in exchange for a smaller, developed plot later.

No Relocation

“In a few years, nobody will be able to grow any chana, wheat, or any other food crop,” said Durgesh Rathod, who owns around four acres of land in Kali Billod, another village in the pooling area, and has declined to participate in the land pooling scheme. “We will have to sell this land sooner or later.”

In the normal course, said Durgesh Rathod, farmers would be willing to have their land acquired because pollution from Pithampur’s existing industries had gradually seeped towards the villages. The government said they could always continue to be farmers, just not here.

“Those who want to continue farming can use that 20% [of the total compensation] cash to go 10 km away and buy a new plot of land where the rates are lower,” said Purushottam of MPIDC.

That logic made no sense to the small landholders.

“We will have to leave our village entirely to buy new land,” said Harisingh Rathod, 68, a resident of Chaydipura, who had agreed to give two acres of land to the pooling programme. “But because everyone will know that we have just received so much cash from the government, they will not sell to us at a low rate.”

Landowners considering handing over their land to the scheme said that the nearest village they could move to would be Mohna, a few kilometres away. But with Rs 14 lakh per acre in hand, they would be able to buy only half an acre of land for each acre lost.

Several locals alleged large landowners had visited the villages to engineer consent from small landholders whose lands are in the middle of larger tracts. An official in the MPIDC, speaking on condition of anonymity because of the sensitivity of the issue, acknowledged it was taking the help of big landowners to “aggregate” lands from small landowners. He provided the number of Jagdish Joshi, a lawyer in Indore, who he said was a landowner who supported the scheme.

Joshi told me that land pooling was a better deal for landowners than the previous attempt by the state in 2011 to acquire lands under the colonial Land Acquisition Act, 1894. The acquisition was challenged in court, but the notification under the old law prohibited people from selling their lands or putting them to non-agricultural use.

“At least land pooling ends the impasse,” said Joshi.

But the people of Chaydipura feel coerced. “They are large landowners. How can we say no to them?” asked Harisingh Rathod. If their land turned industrial, it would not, in any case, be possible to farm on small plots in the middle, he said.

Under Madhya Pradesh’s land-pooling scheme, landowners are allowed to choose the plots they get in exchange for giving up land; but those who part with more land get higher priority in the selection. Not all plots have the same value.

In the MPIDC contract with landowners, the State promises to give first choice of land to the landowner with the largest pooled property. Small landowners will be saddled with locations of low value. They may not have the patience or ability to wait for years for the value to rise.

“If someone acquires 10,000 acres of land, that is a large area and that entire area won't see the same kind of appreciation in value,” said Sanjoy Chakravorty, a professor of geography and urban studies at Temple University, USA. “It depends on where you get the allocation. Some areas are likely to do very well, some may not do well at all.”

“Who on earth knows what land value will be after it is delegated for industrial use?” said Chakravorty, who added that value is not driven by market but industrial demand.

“What happens when a one-acre landholder is discussed in the same breath as a 15 acre landholder?” Chakravorty said. “Their calculations differ, their risks differ, and their power to act on the same outcome differs.”

Chakravorty said that land pooling also exposes landowners to market risk and depends on an increase in land prices that is not always guaranteed.

“We don’t know how to go about building on those plots nor do we even have the money to build anything,” said Ranjit Rathod, another Chaydipura resident who has four acres of land. He said the deal felt as if the government was taking their land and returning it in a poorer condition.

Hum bewakoof thodi hai (We are not stupid),” said Ranjit Rathod.

(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.)