Sunday, November 8, 2015

29 Operationalising LARR 2013. Land Acquisition Acts in India-V.

We conclude with a brief comment on the practical aspects of the LARR Act 2013, and the options open before the NDA government and the development protagonists who feel that the requirements are so onerous as to effectively put a stop to any new projects.

The underlying philosophy of LARR 2013 is that the state and the acquirer of private property has a moral obligation to look after the affected persons and communities in the long term, and this has now been made a legal obligation as well. Previously, acquisition was seen as a one-time operation, and once the compensation had been awarded through the due process, good or bad, the transaction was considered a closed deal, and no further obligations resided on the government’s side. The drafters of LARR 2013 apparently felt that the State has a much wider responsibility in ensuring that the project did not leave the affected persons worse off in the long term. In this sense, we may characterize LARR 2013 as a legal form of the strong egalitarian criterion in welfare economics, where a proposed public project is to be passed only if it can generate sufficient surpluses to not only compensate the losers fully in principle, but also has the obligation to effect this in practice. Welfare economics offers a choice of measures to arrive at a just valuation, such as the different consumers’ surplus concepts, and the willingness to pay (to obtain benefits or to avoid losses), and willingness to accept (compensation for losses or forgone opportunities) concepts.

One of the weaknesses of the LARR edifice my well be the absence of a dedicated cadre to carry out the onerous obligations it casts on the administration, starting from the social impact assessment (SIA), and including the subsequent R&R etc. The SIA itself could be made to say anything, as it will require the investigator to draw up scenarios or predictions of what will happen with and without the project. This will be likely to be based on personal assumptions rather than any dependable models. The implementation of the R&R plans would, as already mentioned, be weak in the absence of a dedicated cadre on the ground (a weakness shared with the FRA 2006).

What does LARR 2013 portend in practical terms? Because of the increased number and complexity of processes and the many stages at which public confrontation between project proponents and the public is envisaged, it is likely that acquisition proceedings on the whole will be more protracted, will cost more, and will be more contested and fractious. This may force project proponents, especially in the joint and private sectors, to think twice before embarking on such ventures. This will probably put much more demands on the public sector undertakings and government departments to take up development projects, with private firms receding to the background as service providers rather than proponents. To some extent, this will take us back to the pre-liberalisation days, with its drawbacks of lesser choice of products, perhaps poorer quality of finish and packaging, poorer responsiveness to customer feedback, and perhaps not quite up-to-date technology, but the benefits would be in the provision of a minimum level of services to the public at lower prices than the private sector is wont to charge.

A more serious effect of the LARR 2013 may be the withdrawal of the public sector machinery itself from the sphere of development projects. This is because of the greater personal responsibility of officials up and down the line for the implementation of all the stages and the safeguards. Previously, public servants and government officials were shielded to a large extent by the immunity clause from prosecution for acts done in the course of duty, and the requirement of government sanction for any such prosecution. That immunity now seems to have been withdrawn, partly by court judgements that the government officer no longer has the status of a public servant after retirement, so that government sanction is no longer needed for prosecution; and partly by new laws like the LARR 2013 that make the public official primarily responsible for fulfilling the expectations of the public in respect of the rights conferred by the UPA’s rights-based legislation (Right to Information, Right to Food, Recognition of Forest Rights, Right to Education, Right to Services, Right to Employment, and now the right to fair compensation and R&R under the LARR 2013). The NDA amendment (ordnance) did make it necessary to obtain government permission for prosecution of officials, but this has been vehemently opposed as a dilution of the act (Ramesh & Khan, p.127).

The fact is that the government machinery is likely to simply not be in a position to provide the type of continuing support to livelihoods and to R&R envisaged in the LARR (and before that, in the R&R policy declarations of various government and entities). In fact Sanjoy Chakravorty, who has written a definitive book on the subject (2013), goes so far as to characterize this act as “ unworkable” (Chakravorty, 2015). If the government could achieve all the welfare measures contemplated for all the ‘affected persons’ in addition to the ‘oustees’ of development projects, this could as well have been achieved through all these decades of developmental spending in independent India. The fact is that people do not become better-off directly by such spending, and the R&R efforts will be sure to fall behind targets, and projects will get bogged down endlessly in litigation and counter-charges. So probably the immunity granted as a matter of form to the individual government employee will have to be restored for ‘laches’ or failure to ensure enjoyment of rights by the people. While the enthusiasm and idealistic intents  of the law-drafters like Ramesh and Khan can be lauded, in practical terms these rights are more aspirational than realistic, and to hold individual bureaucrats responsible for their non-fulfilment would appear to be too drastic and may even be counter-productive. Too much scape-goating by watchdog authorities has a dampening effect on the sense of initiative and risk-taking by the average bureaucrat.

A basic weakness in the legal morality of LARR is the acquiescence to the general practice of under-reporting land values, and therefore setting compensation rates at multiples of these bogus reported market-value. This will make every District Collector a party to what is strictly a criminal act of misleading or even cheating the state. If and when people start reporting values closer to the actual money exchanged (perhaps because transactions are being watched and tracked more closely through information technology), acquisition will become prohibitively costly, and moreover may attract adverse comments from audit, and even criminal proceedings against the officials complicit in such actions.  The government departments will, therefore, tend to avoid running after such wild geese, and will prefer to work within the resources that they have already garnered in the past, and hesitate to venture into new expansions.

One positive side-effect of LARR 2013 may be that leaders of development sectors and individual firms decide to use their existing resources  much more efficiently. Scores of examples could be envisaged, and we proffer just a few here. Urban developers, for instance, will find ways of squeezing in more habitation or office units onto a smaller extent of land, by growing vertically rather than spreading horizontally. Many companies may be having excessive land holdings (especially public sector giants and old private companies in sunset sectors), and will surely minimize their requirements of fresh acquired land in future. While community consent may not apply to government projects, the R&R and compensation process requirements would be a disincentive to ask for too much land, especially if there is some leeway in design to enable the project to scrape in under the threshold limits for various requirements that will be fixed by LA Rules or by state governments. One example that comes to mind is the huge campuses required by ministry guidelines to set up central universities, which are difficult to administer and look after, and are immensely inconvenient for their primary clients, the students, who have to walk up and down a few kilometres to get from one office to another. They will probably press the education policy-makers to settle for smaller campuses in future.

A not so happy side-effect may be increased pressure for providing government wastes and forest land, subject to the seemingly lesser costs of compensating only for community uses like fuelwood or grazing, but this will be bad for forest and wildlife conservation.

 Another aspect is that the new types of rights-based legislation, exemplified by LARR 2013, will call for much more detailed operations manuals with copious notes, legal opinions and flow charts to guide the public official as well as the non-official professionals who may be involved as members of expert groups, as assessors and evaluators, and so on. Since each of their actions and decisions will be up for public scrutiny as well as, inevitably, judicial review in a large number of cases, these professionals will have to be very clear about the procedures, methodologies, standards, and so on they are expected to follow and uphold. Their actions and laches may well subject them to not just being over-ruled by higher authorities, but also being hauled up for criminal liability or negligence for failure to do due diligence and so on. As the sphere of action and discretion of the public official shrinks, we may expect a corresponding expansion of the role of the expert bodies and the quasi-judicial authorities and appellate bodies, and of course of the higher courts, as has happened in the forestry sector. The net result of all this is likely to be an evolution of Indian polity to a much more contested, litigious and adversarial form, which seems to be an emulation by the intellectual class of the fashion of “adversarial legalism” in the USA (Fukuyama, 2014, p.473) and generally in the liberal democracies of the west. The difference, of course, would be that in those countries, the state developed before full democracy, so that people are much more conscious of their responsibilities as citizens,  and hence the high costs of transparency and egalitarian decision modes can be absorbed without crippling damage to the fundamental capability of the state. In third world democracies like India, however, democracy seems to have come before strong state formation, so that these niceties and sophistications of liberal western democracy sit like an uneasy veneer over decidedly inegalitarian and illiberal modes of social functioning.

A final consideration we would like to place before the disgruntled industrial sector is that the LARR 2013 probably calls for a basic change in their approach to resource garnering. What galls the dispossessed landholders, especially in hitherto predominantly agrarian tracts, is the windfall gains that the ‘city slicker’ is able to make on their backs. Even tribal communities, who have repeatedly lost possession of their hard-won land holdings for trivial debts incurred to preserve their social prestige and honour in the community, resent their regression to the  role of landless labour in their own homelands (see, for instance, Fuerer-Haimendorf,1979). On the other hand, stories are told every day in cities like Delhi, of how the lowest staff in the city’s offices were beneficiaries of the land boom in the capital region; they come to work in menial positions in their battered Maruti cars from their villages round and about Delhi, to pass the day, but they are actually sitting on crores of rupees of bank deposits after selling their land for property development. True or not, these anecdotes suggest that development proponents, who need land, can think of including rural landowners in some sort of (sleeping!) partnership.

Suggestions that this is feasible are seen in the new Andhra Pradesh government’s ‘pooling’ approach to township building (for instance, see the report in the Economic Times by Sukumar and Kesireddy, 2015). The original landowners will at least have a claim on part of the huge capital gains that will accrue when the developed land is sold on in the distant future, just like any retail shareholder. There may even come a time when the rural landholders themselves may develop aspirations to use their resources jointly for different types of development, designed after their own predilections and their own styles.

The question of the landless project-affected persons will remain, but here also some stake, some realistic hope in a better future at least for the younger generation, would have to be built, along with plans and buildings for the factory or township. It is possible, in this view, that private entrepreneurs will rapidly realize that there are no more windfall gains to be made from acquired land alone, and will come round to this partnership mode of thinking once the unavoidable reality of LARR 2013 and the new rights-based approach pioneered by the UPA sinks in.


Baden-Powell, B.s H. 1892. The Land-Systems of British India. Clarendon Press, Oxford. Reprint, 1974 by Oriental Publishers, Delhi.

Barton, Gregory A. 2002. Empire Forestry and the Origins of Environmentalism. Cambridge University Press, Cambridge, UK.

Chakravorty, Sanjoy. 2013. The Price of Land. Acquisition, Conflict, Consequence. Oxford University Press, New Delhi.

Chakravorty, Sanjoy. 2015. Improving an unworkable law. In The Hindu newspaper, 07 January 2015. (Bengaluru).

Draper, Hal. 1977. Karl Marx’s Theory of Revolution. Vol.I. State and Bureaucracy. Monthly Review Press, New York, 1977. Reprinted 2011 by Aakar Books for South Asia, Delhi-110091.

Fuerer-Haimendorf, Christoph von with Elizabeth von Fuerer-Haimendorf. 1979. The Gonds of Andhra Pradesh. Tradition and Change in an Indian Tribe. Vikas Publishing House Pvt. Ltd. New Delhi.

Fukuyama, Francis. 2014. Political Order and Political Decay. Profile Books, London.

Ramesh, Jairam and Muhammad Ali Khan. 2015. Legislating for Justice. The Making of the 2013 Land Acquisition Law. Oxford University Press, New Delhi.

Somaiah, K.K. (1959). Working Plan for a Portion of the Eastern Deciduous Forests of Coorg (from 1st April 1957 to 31 March 1972). District Forest Officer, Working Plan Division, Mercara, Coorg.

Sukumar, C.R. and Raji Reddy Kesireddy. 2015. Naidu Stirs Up a Storm With Land Pooling. Economic Times newspaper, 6 January 2015.

USDA (United States Department of Justice). 2000. Uniform Appraisal Standards for Federal Land Acquisitions. Interagency Land Acquisition Conference. Published by  the Appraisal Institute, Chicago. Available for download at

28 Comparison with forest legislation. Land Acquisition Acts in India-IV.

We make a brief comparison here with another legislation that originated in British India, the Indian Forest Act (1925) that set aside tracts of forest, along with the post-independence Forest Conservation Act (1980), that put curbs on the states’ powers to divert forest areas for other purposes. The IFA (and its local variants like the Karnataka Forest Act, 1963) provides principally for the notification of areas as Reserved or Protected Forest. This is parallel to the LAA in that it provides for notification of intent under Section 4, but the difference, of course, is that the IFA or the KFA seeks to sequester government land (the revenue ‘wastes’) for environmental and productive purposes, rather than taking over private lands. This last point is however disputed by current social environmentalists’ discourse, that claims even this uncultured land as part of the resource base of the village community. Under their prompting, the polity has legislated to restore some of the control, individually and communally, on these resources back to the community, through the Recognition of Forest Rights Act, 2006.

In the IFA, just as in the old LAA, there is process of enquiry, open hearing of objections and claims, etc., presided over, not by the Collector, but by a specially appointed Forest Settlement Officer (FSO), who should not be a member of the forest service (it is usually a revenue department officer). The end result of the proceedings will be a speaking order, listing out all the persons and their individual rights that have been recognized, apart from the general rights and privileges of the community due to force of long practice or past grants etc. For example, we have before us a revised working plan for the organized forests of Coorg by Somaiah (1959), wherein a “List of rights granted at the Forest Settlement” is given in Appendix II. For Anekad forest, for instance, there is a list of 75 individual names and the number of animals each is entitled to graze in the forest, starting with 3 head of cattle pertaining, to Shivagowda of Attur village. Of course, this settlement was done in 1894 for the Anekad reserve, and the very levy of grazing fees was itself abolished by resolution of the Coorg Legislative Council in 1948 (Somaiah, op cit., p.6-7), so the whole issue of regulating grazing in the forests appears to be a moot one.

For the jungle tribes (Kurubars and Yerwars) it is stated that although nothing is placed on record about the rights enjoyed by them, they are “as a matter of course allowed to be tenants at the will of the forest department”, and those “who prefer to remain in the forests and work for the department” are given “land for cultivation free of assessment together with the concession of free grazing for their cattle” (op. cit., p.8). Each forest settlement award is expected to have a similar list of rights and privileges, which are reproduced in some of the older working plans for the convenience of the forest administration.

From the present topic’s point of view, it is noteworthy that the Forest Act gives government the power to ‘extinguish’ those of the rights for which no claim was put forth (Karnataka Forest Act, Sec. 9), “unless, before the final notification under section 17 is published, the person claiming them satisfies the Forest Settlement Officer that he had sufficient cause for not preferring such claim...” and so on. Section 10 of the KFA also provides that claims for shifting cultivation should be recorded and submitted to the government with the FSO’s opinion “as to whether the practice should be permitted or prohibited wholly or in part”. In any case, “The practice of shifting cultivation shall in all cases be deemed a privilege subject to control, restriction and abolition by the State Government”. Land portions against which claims are made may be deleted from the notification, or they may be acquired as provided by the land Acquisition Act, 1894 if admitted wholly or in part (Sec.11). Under Sec.13, if the FSO finds it “impossible” to admit certain rights in the interests of maintaining the forest, “he shall direct payment by the State Government”  of compensation determined in accordance with the applicable provisions of the LAA, 1894 (Sec.15). Further sections deal with appeals, notification of final award, revisions, etc.

One of the strengths of the framework of forest law was its clarity and finality. A very important part of the whole system was the follow-up measures in terms of survey, demarcation, organisation into blocks and compartments, drawing up of working plans, and custody of a trained and coherent force on the ground. However, the weakness of the British colonial system was the discounting or down-playing of the dependence of the village communities, especially tribal. The colonial government also had a constant struggle to come to terms with practices that were deemed to be damaging to the forests, like shifting cultivation, uncontrolled grazing by huge herds for commercial reasons (which we term livelihoods today), and rampant fuelwood and timber cutting, occupation of good forest  for cultivation, and so on.

After independence, industrial needs were placed on top, leading to excessive exploitation and neglect of ecological interest as well as of the relationship with local communities. The revised forest policy of 1988 made suitable course corrections, placed ecological conservation as the top priority, followed by needs of local community, and also gave a basis for the participatory or joint management with the people on the ground that has now become a nation-wide movement with over 125,000  village forest committees jointly taking care of over 28 million hectares of hitherto degraded forest.

The Recognition of Forest Rights Act (2006), popularly referred to as the ROFR or FRA, introduces a changed scenario. The village community has now has the power to decide its own rights in the forest without reference to the forest settlement proceedings or the forest notification. Obviously, there is still much ambiguity on many aspects of this landmark rights-based legislation made by the UPA government. However, it appears in retrospect that the FRA 2006 was a sort of pre-run for LARR 2013, in that the community has been given a decisive say in the disposal of land resources.

The weakness of FRA 2006 in comparison with the older IFA or KFA, is that  now the solidity  of the administrative structure in the form of the forest department etc. has come undone, leading to apprehensions that the forests will again become a no-man’s land, a proprietor-less commons. The community will have neither the time nor the structure to look after such extensive resources, nor will the forest department have a say. Thus, an aspirational legislation made with the best of intentions to safeguard the livelihoods of the poor may well become an exercise in futility due to neglect of the huge institutional effort that is required post-award of the forest rights.

Much the same weakness may well stymie the LARR Act 2013 as well, as there is no institutional set-up to implement the ambitious R&R component, or even the social impact assessment in any meaningful way. Some of these aspects of the practical side of the land acquisition process will be discussed in the concluding section.


Somaiah, K.K. (1959). Working Plan for a Portion of the Eastern Deciduous Forests of Coorg (from 1st April 1957 to 31 March 1972). District Forest Officer, Working Plan Division, Mercara, Coorg.

27 Discontents with LARR 2013 and amendments proposed, 2014. Land Acquisition Acts in India-III.

We now come to the practical problems perceived in the LARR act by the successor government (termed the NDA) and the amendments proposed. In a revealing aside, Ramesh & Khan (2015, p.70) confess that the LARR (2013) law was drafted “with the intention to discourage land acquisition”, by adding all these onerous obligations, and thereby moving to a situation where “land acquisition would become a route of last resort” (ibid.). This reminds us of the diversion of forest under the Forest Conservation Act 1980, where left to themselves, the forest authorities would usually have no intention of making it an easy process (one industrialist was reported to have said in frustration that even the environmental clearance could be got, but forest clearance was almost impossible). It also brings up the interesting question of what other options are available in practical terms if a project requires large chunks of land.

There were analogous discontents with the LARR 2013, prompting the new NDA government to propose some amendments in December 2014, and imposed these through the ordnance route as the opposition parties refused to let it be passed in the Rajya Sabha, which stirred a huge hornets’ nest that effectively paralysed Parliament through the monsoon session of 2015. By August, the impasse was given a respite by the government deciding to backtrack on the amendments, and the whole bill being deferred to the winter session of 2015.

Ramesh & Khan (2015) criticize the NDA government’s amendment ordnance in the following terms (op. cit., p. 124). The press releases prior to the ordnance made it appear that there were only two significant proposals in it. One was the extension of the compensation and R&R (Rehabilitation and Resettlement) requirements to the exempted acts listed in Schedule IV, which Ramesh & Khan term as making a virtue out of a necessity, as the original LARR act had itself made this mandatory after the lapse of one year. The other was the exemption given by new Section 10A to certain categories of projects from the more onerous requirements of consent and social impact assessment. Ramesh & Khan criticize this exemption as being worded in a vague manner, for instance, “infrastructure projects (including PPP projects)”, which was not defined precisely anywhere), and which would in effect nullify all the progressive measures and safeguards to affected persons intended in the 2013 act. They make a plea that a fair trial should be given to the existing LARR 2013 act, instead of trying to dilute its effect by such amendments.

Seeing the mood of the people and the stiff resistance to the amendments, the NDA government finally seems to have decided to backtrack and defer consideration of the amendments to the winter session 2015. Further, on closer examination, it seems to have been realised that at least one of the enhanced requirements – that of consent by a large majority – has not been made mandatory for purely government undertakings. Defence, national security and natural calamities have anyway been, in effect, exempted under the applicability of the ‘urgency’ clause. Perhaps the government has decided to go along with the LARR 2013 for the present, as any dilution of the requirements in respect of other categories (such as PPP projects and private sector, however high they may come on the national priorities) may give the NDA an undesirable anti-poor image, to the advantage of the opposition parties.  


Ramesh, Jairam and Muhammad Ali Khan. 2015. Legislating for Justice. The Making of the 2013 Land Acquisition Law. Oxford University Press, New Delhi.

Tuesday, November 3, 2015

26 Need for change and the new LARR Act, 2013. Land Acquisition Acts in India-II.

Jairam Ramesh, the minister in the UPA-2 government who steered the new law, while admitting that such a law is indispensable in the modern world, still says that the way it has been applied over the years has “served to make acquisition a cannibalistic and inhuman process” (Ramesh & Khan, 2015, p.4). It is therefore necessary that we understand the grounds of this indictment and the perceived remedy in the 2013 Act.

Deficiencies perceived in the old LA Act

Ramesh & Khan (op. cit., p.7 et seq.) cites some of these perceived defects in the 1894 law (as amended):
1)      Lack of distinction between acquisition for a State purpose and for a private enterprise (the words “or for a Company” were inserted in Sec.4 by the 1984 amendment). Of course, it was noted above that private companies were included only to the extent that they were undertaking work that is likely to prove useful to the public, but according to the authors, a liberal interpretation led to the opening the “floodgates” (quote from the Parliamentary Committee report, Ramesh & Khan, op. cit.).
2)      Lack of attention to livelihoods and rehabilitation of persons displaced from their land by such compulsory acquisition (Ramesh & Khan, p.9, quoting from a court judgement).
3)        Time lapse from notification to declaration under Sec.6 was reduced from 3 years to 1 year in the 1984 amendment, and award to subsequently issued within 2 years after Sec. 6  (Ramesh & Khan, p.10), failing which the acquisition proposal would be deemed to have lapsed.

The new (LARR) legislation, 2013

The previous government (known as the UPA-2 from the label United Progressive Alliance adopted for the second term of the coalition of parties under the umbrella of the Indian National Congress) was marked by a vigorous championing of rights-based legislation, and therefore the amendment to the Land Acquisition Act also came to be couched in the language of enforceable rights: the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act of 2013, which is popularly called the LARR act or bill. Instead of tinkering with or modifying the erstwhile LAA, the LARR act should be seen as a completely different piece of legislation. The important features that make this such a departure from the past are as follows (see Ramesh & Khan, p.11):
1)      It addresses compensation for acquisition of property AND the consequences of displacement, meaning rehabilitation and resettlement for displaced families.
2)      Much reduced discretion to the authorities (Collector etc.).
3)      Fairer compensation.
4)      “Consensual acquisition for a clear public purpose” (ibid.).
5)      An “effective appellate mechanism” (ibid.).

Briefly, the new Act (LARR, 2013) seeks to achieve these by the following mechanisms and institutions:
1)      Rehabilitation and Resettlement (which was entirely lacking in the old LAA) has been mandated strongly: not just for the land losers, but for all others in the locality that would have been pursuing their vocations in myriad ways. One of the ways in which attention is sought to be focused on these issues is the mandated Social Impact Assessments, which contain a long list of matters to be investigated and costed.
2)      District Collectors (no doubt subject to pressure from around and above) had “almost unbridled authority” (op. cit., p.13) to rule on what is a ‘public purpose’, but this has been more narrowly defined now. Similarly there is less discretion on rates of compensation, taking possession, or calling on ‘urgency’ to do away with due process.
3)      Because land purchasers (and sellers!) under-report the consideration in cases of actual transactions,  the “market-value” would capture only a fraction if the authorities went by the recorded and registered land deals. Of course, the Collector cannot avoid doing this; so, recognizing the reality, LARR 2013 provides for compensation at a multiple of the so-called market-value. This formula also “completely removed the discretion of authorities” (ibid.).
4)      There has to be a consent from at least 70% of the “affected families” (in the case of public private partnership projects) to 80% (in the case of acquisition for a private company); interestingly, any such expression of consent is not required “if the Government is acquiring lands for its own, use, hold and control” (sic., op. cit., p.28). The other innovation is that the ‘urgency’ clause restricted to national defense and natural disasters. “The definition of public purpose has been circumscribed” (op. cit., p.12): this is one of the matters that the Social Impact Assessment is supposed to address, “…whether the proposed acquisition serves public purpose” (op. cit., p.16, 17), and the affected persons are expected to contribute decisively to this analysis (p.18). The SIA will be examined by an Expert Group and then decision taken by the authority concerned.

It is not feasible to go into all the details here, but one other facet can be taken up: the understanding of what is a public purpose. Ramesh & Khan (2015) say that it has neither  been defined in the older law, nor have courts chosen to circumscribe it (op. cit., p.23). The resolution of this was to reference a circular of the Finance Ministry (dated 27 March 2012) which had “laid out what in the eyes of the Government constituted ‘infrastructure’ “ (p.24). The outcome is a long list (Ramesh & Khan, p.25-26) covering items like national defence and security, infrastructure, agriculture, industry, and so on. The question really then becomes, what is not included in the list that should have found a place. Keen analysts will no doubt be able to  suggest items, but it appears on a cursory look that the one significant subject that is omitted would be the environment and biodiversity conservation. Perhaps it was felt that private land would not need to b acquired for these (belying the US experience, for one), or that they were well served by other laws like the Environmental Protection Act, Indian Forest Act, Wildlife Preservation Act, and the Forest Conservation Act.

The other important subject is that of Rehabilitation and Resettlement, R&R. There are already examples of national and state-level R&R policies or laws, as well as sector-level policies and practices followed by concerned industries like Coal India Ltd or the NTPC (Ramesh & Khan, p.63), and the best practices have reportedly been put together in the LARR act, and these components would be especially important for those who were not the primary landowners but whose livelihoods would be affected. The R&R part of the law is sought to be made effective by requiring its completion before possession is taken by the acquiring agency.

Another point to be noted is the clauses concerning retrospective application of LARR 2013: cases where final award had already been made under LAA 1894 would not be reopened, but in other cases where proceedings were still on would have to be completed under the new act, as would cases where a majority of persons had not yet received or accepted the compensation under LAA 1894. But it was also recognised that provision would have to be made for action taken under certain other laws; such laws would be exempted from the onerous conditions of LARR 2013, “at least for the time being” (op. cit., p.121). There is a baker’s dozen of such exempted laws listed in Schedule IV of the act, including the Atomic Energy Act 1962 and the Coal Bearing Areas Acquisition & Development Act 1957. However, it is required that all these acts would also be brought in consonance with LARR 2013 in respect of compensation and R&R within a year, that is by 31 December 2014. This was sought to be done, ironically enough, by the Amendment Bill 2014, which was issued as an Ordnance by the present NDA government. (To be taken up in the next post)


Ramesh, Jairam and Muhammad Ali Khan. 2015. Legislating for Justice. The Making of the 2013 Land Acquisition Law. Oxford University Press, New Delhi.

Sunday, November 1, 2015

25 Land Acquisition Acts in India-I. Eminent domain and the colonial LA Act

Land acquisition is not a new phenomenon in India, but it has become a highly contentious political issue of late. At the heart of the matter is need to find a balance between the aspirations of the development protagonists and the interests of the present land holders and others dependent on the existing configuration of natural resources and economic  inter-relations. These latter tend to be the poorest in the society, marginalized both economically and socially (by the centuries of operation of an unyielding caste system), and therefore highly vulnerable to such shocks as could be taken in the stride by better-off groups.

Principle of ‘eminent domain’ and forcible acquisition

The debate has been pitched in terms of forcible acquisition in the public interest, and how to define the public interest. However, there is an underlying and deeper question on whether any action can be taken on the basis of what is known as ‘eminent domain’, or the overall power of the State with regard to the citizens, under which the ‘taking’ of private property also comes in.

The State, whether in a democracy or other form of government, does pass various laws to control actions of individuals and groups. In a democracy, however, there is an underlying understanding that any individual liberties (such as are guaranteed in the Constitution) will not be curtailed unless there is a very significant public, or collective, cause or benefit. In other words, the State cannot take from one group in order to benefit another group. This is of course a narrow concept of ‘public interest’, but too broad an interpretation would allow the state, i.e. the government in power, to bend the law in favour of a particular group or even individual, by dressing up the cause for action as serving some national interest. The support to private entrepreneurs, for example, is projected as the State’s duty to keep the economy moving. This sort of reasoning can justify the taking of private property and common resources (water, soil) from some sections (e.g. the rural poor) and transferring them to the industrialists. No doubt the economy develops through private enterprise and private capital, but the question is, how far should the State use its power as ultimate owner of the nation’s resources, in favour of what are after all individual commercial players.

Individual rights have been historically over-ridden in countries that were run by personal dictatorships, and ironically even in advanced states which claimed to be socialist or people’s dictatorships. In modern liberal democracies, however, the dominant power of the State has been moderated by the need to follow a prescribed process to come to a decision that a certain cause is in the public interest, and to accomplish the ‘taking’ in a transparent and equitable manner (by giving a reasonable compensation for the resources taken by the State). In the USA, the acquisition of land is also termed ‘condemnation’ (this does not imply any prejudicial finding against the state of the property in question). The judicial ruling  (quoted in the website of the Environment & Natural Resources Division of the US Department of Justice (, is that eminent domain “appertains to every independent government. It requires no constitutional recognition; it is an attribute of sovereignty”. However, the Fifth Amendment to the US Constitution declared that “…nor shall private property be taken for public use, without just compensation”. There is therefore a whole judicial machinery for the appraisal of the just value in acquisition proceedings, and the “Federal courts have generally found that just compensation is measured by the market value (paid in money) of the property at the time of the taking” ( Accordingly, the Appraisal Unit of the US Justice Department annually reviews about 350 to 400 appraisal reports for the guidance of the judicial officers. The prescribed standards are provided in the so-called “Yellow Book” developed by the land acquiring agencies of the federal government,  the Uniform Appraisal Standards for Federal Land Acquisitions, and the Uniform Standards of Professional Appraisal Practices of the Appraisal Foundation in the United States. The 2000 edition of the Yellow Book (published by the Appraisal Institute, Chicago “in cooperation with” the US Department of Justice) is available for download at

The US courts have upheld the right of government to acquire private real property in a variety of cases, e.g. for transportation (communications), water supply, construction of public buildings, defence readiness, and most of all, for establishing public parks and setting aside open space, preserving places of historic interest and natural beauty, and protecting environmentally sensitive areas.

Land acquisition and eminent domain in India

The position of eminent domain has been a subject of intense investigation and discussion in India since colonial times. The problem arose because private property had apparently not been clearly recognized and codified in traditional Indian administrative and jurisprudential systems. In any study of the Indian land tenure system(s), however, it becomes evident that there is a whole range of situations and arrangements that can be given different labels to be comparable with tenures obtaining in the more advanced home countries (Britain or Western Europe). It is often assumed that the ruler has total propriety rights on all property, and in fact even the great political writer Karl Marx held that traditional Indian land tenure epitomised the ills of  “oriental despotism”, and that the emancipation of the suffering masses would not be realised unless the system of private property titles were developed (see Draper, 1977). Under such circumstances, the argument was put forth that the British colonial government also inherited this absolute proprietorship of all land and property once they took over the territorial jurisdictions of the Indian rulers or chiefs, big or small, whether by military conquest or by agreement:

Baden-Powell, for instance, after an exhaustive multi-volume survey of land tenure in India (the first volume of which he incidentally dedicated to Dr.Dietrich Brandis, the founder of the forest service in India), has this to say:

“There can be no doubt that in the latter part of the eighteenth century, when British administration began, the different native rulers who preceded us, had asserted rights as the universal landowners. That being the case, our Government succeeded, legally, to the same claim and title”. (Baden—Powell, 1892, Vol.I, p.216)

Land Acquisition Act (LAA) 1894 (as amended)

This of course was a ground for issuing the first official Land Acquisition Act, 1894 in British India (which we will refer to as the LAA). This Act, with periodic amendments, served the country even after independence, until it was replaced by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act of 2013, one of the flagship legislations achieved under the UPA-2 government (Ramesh & Khan, 2015), known popularly as the LARR Act. The LAA 1894, as modified up to 01 September 1985, with the most significant excerpts from the amendments of 1962 and 1984, is available on the web at

The LAA (1894) follows the pattern that will be familiar to those who have dealt with the Indian Forest Act (indeed, the IFA itself can be seen as another vehicle for the sequestration, rather than acquisition, of a sizeable chunk of land and natural resources or uncultivated revenue ‘waste’ (which may not necessarily be wasteland in the literal sense). These lands were partly used as village commons, and the remoter tracts were part of the royal domains. In any case, they were not in private hands, but it called for some accommodation of traditional uses and compensation for some interests when the State proceeded to take possession of them for an overarching public interest (the preservation of the vegetation, and with it the soil and water balance of the country, which would be termed environmental conservation today; see Barton, 2002).  The intent to acquire land in the LAA 1894 is first notified (even the section number, Section 4, is the same for the parallel section to notify intent to form reserved forest in the IFA), then the parcels measured and marked out, a detailed hearing held, and a decision arrived at by the authorised official (the District Collector).  There is provision for appeal to the Court, and guidelines on arriving at the compensation to be paid.

One of the interesting issues is the definition of “public purpose”, which is to include the provision and development of village-sites, town and rural planning, including schemes intended for later disposal of the developed land by lease, assignment, or outright sale “with the object of securing further development”; providing land for a “corporation owned or controlled by the State”; provision of land for residential purposes to the poor or landless persons etc., provision of land for educational, housing, health, slum clearance, scheme etc., land for “any other scheme of development sponsored by Government or with the prior approval of the appropriate Government, by a local authority”; and for locating a “public office”, but “does not include acquisition of land for companies” (presumably, apart from those State corporations referred to above). The second interesting point is that any person “interested” in the notified land may file objections, but only those persons are recognised as interested parties “who would be entitled to claim an interest in compensation if the land were acquired”, so apparently the Act at this stage did not envisage taking on board objections in the broader public interest.  

The third matter of interest here is, of course, the basis of arriving at the compensation value, contained in Section 23, “Matters to be considered in determining compensation”, and Sec.24, “Matters to be neglected”. Thus, the Court (or the Collector in the first instance) should “take into consideration” 1) the market-value of the land on the date of notification, 2) damage to any crops, trees at the time of taking possession by the Collector, 3) damage due to severing of the land, 4) any other damage  at the time of taking possession, 4) damage at the time of taking possession, to any other land, or his earnings (Italics added), 5) reasonable expenses for change of residence, if called for, 6) any loss suffered due to diminution of profits between notification and taking possession. In addition, the Court was also to award an amount calculated at 12% of the market value “so calculated” from the date of notification to the date of award of the Collector or the date of taking possession, whichever is earlier. A further sum of 30% on “such market value” was to be added “in consideration of the compensatory nature of the acquisition” (this is what is sometimes termed the “solatium”, i.e a payment to assuage the injured feelings of the awardee.

Of the matters that should not figure in the Court proceedings, the interesting item is “any increase to the value of the land acquired likely to accrue from the use to which it will be put when acquired”, or equally any such increase to any other land of the awardee; apparently, the Act did not entertain any desire to make the awardee a partner in any capital gains that would accrue due to the later use.  This would be a major sticking point in recent years, when erstwhile owners have tended to get enraged at the windfall capital gains enjoyed by downstream beneficiaries. Interestingly, this is also indicated in the US Uniform Appraisal Standards (“Yellow Book”, 2000, p.18 and footnote 52): “The use to which the government will put the property after it has been acquired is, as a general rule, an improper highest and best use. It is the value of the land acquired which is to be estimated, not the value of the land to the government. If it is solely the government’s need that creates a market for the land, this special need must be excluded from consideration by the appraiser.” Further on, the Yellow Book (p.19) provides the basis of assessing market value, that is by support from “confirmed sales of comparable or nearly comparable lands having like optimum uses.” If these are not available the “development approach” can be used (ibid.).

Another matter of interest is the separate chapter in the LAA 1894 on “Temporary occupation of waste or arable land” (Part VI). Even for such purposes, the Collector is to give notices and decide compensation to anyone having an interest in such land, subject to appeal to the Courts. At the expiry of the period of taking over, the land will be restored and additional compensation paid for any damage to it.

Part VII of the original LAA provides for “Acquisition of Land for Companies”. Here the company has to first get consent from the government for the acquisition of the required land, for the purposes of building dwellings for the workers, or for the construction of some work, that is “likely to prove useful to the public”; and enter into an agreement with the government for the cost of the land to be acquired, etc. However, a further clause states that land acquisition for a private company can be agreed to only for one of the purposes, i.e. providing dwelling houses for employees.

We will next deal with the perceived shortcomings of the older LAA (1894 amended in 1962, 1984).


Baden-Powell, B.s H. 1892. The Land-Systems of British India. Clarendon Press, Oxford. Reprint, 1974 by Oriental Publishers, Delhi.

Barton, Gregory A. 2002. Empire Forestry and the Origins of Environmentalism. Cambridge University Press, Cambridge, UK.

Draper, Hal. 1977. Karl Marx’s Theory of Revolution. Vol.I. State and Bureaucracy. Monthly Review Press, New York, 1977. Reprinted 2011 by Aakar Books for South Asia, Delhi-110091.

Ramesh, Jairam and Muhammad Ali Khan. 2015. Legislating for Justice. The Making of the 2013 Land Acquisition Law. Oxford University Press, New Delhi.

United States Department of Justice. 2000. Uniform Appraisal Standards for Federal Land Acquisitions. Interagency Land Acquisition Conference. Published by  the Appraisal Institute, Chicago. 

Wednesday, October 28, 2015

24 The fear of corruption. Managing the Compensatory Afforestation Fund in India-III

The fear of corruption

In the final analysis, what is troubling the public (which is also the brunt of the article by Bhargav and Dattatri), is that the forest department (and, by implication, all government) is irredeemably and terminally corrupt, and is not fit to be trusted with public resources. This, of course, is a terribly one-sided and jaundiced view, and belied by the very fact that so much forest is still surviving, that India is one of the very few third world countries to have stabilized its forest cover, that it has still the world’s largest populations of tiger, elephant in the wild, and so on.

Foresters tend to think that the forest reservation system introduced by the British is to be thanked (or blamed, if you are a social environmentalist) for this, but wildlife enthusiasts would probably claim that it is all because of their Sisyphean efforts. There is obviously a little truth in each of these claims: thanks to the wildlifers, the country was persuaded to set aside natural habitats as wildlife sanctuaries and national parks, that are now some 4% of the total land area (and 20% of the forest area), with all the benefits to the fauna and flora mentioned above. 

On the other hand, it is the reservation of forests that has allowed the 20% or so of forest cover to survive, especially in the upper catchment areas of our rivers, thanks to the Indian Forest Act and some other forward-looking colonial legislation like the Punjab Land Protection Act 1900 (enforced in the lower Himalayas in both India and Pakistan), and the wildlife and environmental protection acts. 

It can also be accepted that the post-independence National Forest Policy of 1952 erred too much on the side of commercialization of forest operations and alienation of the forest-dependent communities, especially tribals, and the strenuous efforts of the social environmentalist and activists have contributed to the adoption of a revised policy (1988) that is much more suited to a tropical, poor country like India. Surely this revised policy would have been applauded by that arch-conservator, Dietrich Brandis, who set up the Indian forest department and inspired the foundation of the US national forest system and the US Forest Service under its founder-chief, Gifford Pinchot, in the same period at the end of the nineteenth century.

The whole discussion becomes obviously futile if one starts from the assumption that the states are all corrupt beyond redemption, that the central government is toothless and ill-intentioned, and so on. None of these assumptions is totally nonsensical, but they are not completely true either, and if extended to other sectors, would demand the closing down of  the Indian government and the withering away of the Indian state, which some social activists seemingly look forward to. 

The rest of us, who do not subscribe to these agendas, will have to continue striving with the existing state and its instruments (and a less than pure and innocent citizenry, as well!), to the best of our limited capabilities and ability to look into the future. We take recourse to the fact that there are so many levels of supervision and oversight in the states: the successive checks and counterchecks at the executive levels, the state planning and voting of budgets, the annual reports and legislative discussions, the watchdog committees, the project review and evaluation processes, internal audit, the accountant-general’s audit, and so on. Unless there is widespread complicity at all these levels, a major scam cannot take place. We comfort ourselves with the thought that all of us, commoner and prince, intellectual and layman, alike are probably going to be proven wrong in the long run. The imminent demise of the forests and squandering of the Compensatory Afforestation (CA) fund is one such prediction that is unlikely. However, as reiterated below, greater consultation of academics and NGOs may be incorporated in order to arrive at a consensus on what to do with the funds (especially the discretionary NPV portion).

Procedural suggestions

 Having said this, there are a couple of obvious potential pitfalls that the ministry may need to exercise due diligence about. One is that (as already stated) this Bill proposes to make the States the recipients and custodians of the amounts in credit and to be received in the future, which of course is a reversal of the Court-induced consolidation at the Centre. The SC order of 26-09-2005 deliberates at length on why the State governments cannot lay claim to the NPV payments, which are related to national and global environmental interests, and declares that the public trusts doctrine behoves us to protect the rights of future generations as well, and therefore the CAMPA funds “have to be used for regeneration of eco-system and the same cannot be handed over to any State Government on the premise that ecology is not property of any State but belongs to all being a gift of nature for entire nation” (SC order dated 26-09-2005, Dutta & Yadav, 2011, p.323). As such, the shape of the regular CAMPA was supposed to be got approved by the Court through the  CEC, and it would be expected that the ministry would have done this before finalizing the new proposal. If it does so, there may well be a different viewpoint on the need to divest the centre of the accumulated balance as well as the responsibility of administering the account, unless the central government can convince the Court that sufficient and strong safeguards have been built in to keep strict controls on what the amounts can be spent on. 

If however the Court is still not convinced of the desirability of divesting the management of the funds to the states, then it would be necessary for the central ministry to accept the primary responsibility to take care of the account, and in that case the central CAMPA would have to be strengthened in many ways, with proper financial and accounting staff to maintain the integrity of the account, as well as sufficient qualified technical staff and supervising officers of the forest service to keep watch on the effective utilization of the resources in the states and to do periodic monitoring, impact assessment, and render qualified and informed advice to the national governing council. In the states as well, it may be possible to set up a wider overseeing mechanism with greater involvement of local ecologists and environmentalists to ensure that the natural forests are not negatively interfered with in the name of restoration and improvement. That, perhaps, may serve to assuage the fears expressed by the authors quoted (Bhargav and Dattatri, 2015) to some extent. 

One final point is also made, as an afterthought: why at all do we need to pass a legislation to give effect to the CAMPA? After all, the Supreme Court has been emphatic that the CA and NPV payments do not amount to a tax, but rather should be looked at as a fee for the environmental services that have been consumed by the project concerned. The enabling legislation is the Environment Protection Act or the Forest Conservation Act. The bill as such will probably excite a lot of opposition, as forests and the FCA especially have come to be seen as among the most hated manifestations of the colonial yoke and of central authority, and the state governments are smarting under their impositions. On the other hand, the ministry needs to give a proper shape to the Fund and the mode of managing and utilizing it, providing the states a measure of freedom and a modicum of financial sources that should help to salve their wounds a bit. A serious consideration may be given to the option of tabling a Resolution instead of putting a Bill to vote. This would have the added advantage of providing an easier means of making such changes as may be required by the passage of time or the further orders of the Court in the near future.

Downloadable pdf version:


Bhargav, Praveen and Shekar Dattatri (2015): Sowing the seeds of a disaster. The Hindu, 29 July 2015, p.11 (Bangalore).

Dutta, Ritwik and Bhupender Yadav (2011). Supreme Court on Forest Conservation. Third Edition. Universal Law Publishing Co., New Delhi.

Government of India (2004). Handbook of Forest (Conservation) Act, 1980. Ministry of Environment & Forests, New Delhi.

Ramesh, Jairam (2015). Green Signals. Ecology, Growth and Democracy in India. Oxford University Press, New Delhi.

Monday, October 26, 2015

23 Delegating the CAMPA fund to the states, and the prophecies of doom. Managing the Compensatory Afforestation Fund in India-II

Apprehensions about the proposed CAMPA structure

We now come to the basis of the apprehensions that the new bill, if passed, will result in the wholesale squandering of the corpus. There are two aspects to this imputation: one, that the money will be used by  the states for all sorts of inappropriate things like huge buildings or expanding facilities for headquarters, once the vigilance of the centre and the SC is relaxed; and second, that the moneys will be misappropriated by making bogus accounts without any work in the field. We consider these two aspects here.

The CA portion, as well as the monies collected for specific works like catchment area treatment or PA improvement, are more or less tied funds that cannot easily be diverted into foolhardy activities by the states. Obviously, the NPV portions are not tied to particular sites or models, and are therefore available as a discretionary fund, and here is where the apprehension starts that the forest departments will tend to use them for all sorts of things that will not serve the purpose of compensating for the ecological damage occasioned by the development (non-forestry) projects, or worse still, will come up with all sorts of flashy proposals to impress the political masters and fritter away the money. Of course, forest departments are not all so reckless, but still there is a germ of realism in this fear, as we see often that governments and politicians like schemes that are out of the ordinary, seemingly innovative and even revolutionary (such as bringing back the cheetah), which will catch the public fancy and hence be likely to drain away the discretionary funds. On the other hand, the NPV portion affords a golden opportunity (to use a well-worn cliché), for the department to address many of the gaps which have plagued it in the past in carrying out its responsibilities effectively. As the present minister has stated in the Proceedings of the 5th meeting of the NCAC on 24th November 2014, para 7 (see, states should not see CAMPA funds as a convenient replacement for the regular forestry budgets. The SC has also taken into account such apprehensions and provided specific guidance on how the discretionary CAMPA funds (essentially the NPV component) should be used (in the SC order dated 29-10-2002): “Besides artificial regeneration (plantations) the fund shall also be utilized for undertaking assisted natural regeneration, protection of forests and other related activities” (Dutta & Yadav, p. 212), and as already stated above, the government notification has also followed this lead.

How these guidelines are translated into operational items is, of course, open to debate. The institutional set-up available for this so far has been for the states to submit their annual plans to the ministry, where they are put up to the National CAMPA Advisory Council (NCAC). This governing body, chaired by the minister,  has representatives of the state forest departments (in the old notification dated 23-04-2004, it was the PCCFs of 6 states, one from each Region, by rotation), as well as independent experts or civil society members. This is the watchdog committee that issues overall guidelines, as well as passing the annual operational proposals of the states. For instance, looking at Agenda item iv, p.3 of the proceedings of the 5th meeting of the NCAC on 24th November 2014 (op. cit.), reference is drawn to a list of items which the states have been “dissuaded from incurring”, which are stated to be mainly “in the nature of administrative and recurring expenditure”; still, the states were pressing “hard” for permission for some at least of the items “which were meant for protection, and for upgrading the skills in the Forest Department through e-initiatives to better subserve the purpose of monitoring of ongoing activities” (ibid.). In my experience, what the states would dearly like to use these discretionary (NPV) funds for, would be to strengthen the infrastructure and facilities, reach wages and provisions, vehicles and communications, uniforms and arms to the watchers in the field, rather than only afforestation. Such knotty questions of what is reasonable are always before the officials in the ministry (who have to provide their best guidance to the minister). The NCAC has decided, in the instance quoted, that out of the NPV funds allocated in the annual plan,

“…not less than 70% should be earmarked for the following core activities which include forest regeneration – ANR, plantations, implementation of Working Plan prescriptions, forest protection and conservation measures, and management of notified protected areas. In addition, upto 5% may be used for applied and need based research; and upto 10% may be used for communication/ ICT and capacity building and training programmes. […] The Committee recognized that, keeping in view the sanctity of CAMPA funds (emphasis added) and the necessity  to approach any demand for their use with the utmost care and caution (emphasis added), not more than 15% of the allocation to the State out of the NPV component could be allowed to be used for items hitherto placed in the category of items of work on which States are dissuaded from incurring expenditure.”

Knowing the right thing to do

Of course, there can be many divergent views on what is worthwhile and what amounts to “colossal mistakes” as the authors (Bhargav and Dattatri, op. cit.) call the forest clearance decisions of the government and the afforestation activities of the forest department. The model of forest restoration termed ANR (Assisted Natural Regeneration), for instance, is seen by some as a good departure from the “mindless tree planting” of the past (ibid.), but others have criticized it as leading to indiscriminate weeding and cleaning of the undergrowth (to ‘assist’ natural seedlings or coppice shoots of tree species to establish themselves) at the cost of a host of food and medicinal plants. Another example is the improvement of water and fodder in the forests for wildlife which is frequently urged with the best of intentions to reduce man-animal conflict (endorsed by the environment minister as well, see the 08-06-2015 datelined article at, but such measures have been criticized in the past by wildlife experts as interfering unduly with the existing habitat and artificially boosting population growth rates, which will have overall negative impact. 

Bhargav and Dattatri, on their part, have said (op. cit.) that the main activities needed to be funded are “to consolidate large Reserved Forest blocks, PAs, and the creation of wildlife corridors”, and “natural restoration or regeneration of degraded forests”, which can be achieved by just the “appropriate protection measures like trenching, fencing and fire prevention”, after which the degraded forest “will then recover through a natural process at a very nominal cost”. This sounds a magical formula, but anybody who has tried it (forester or NGO, government of private) will have found out how difficult it is to actually maintain protection over the long periods required (who will protect the fence itself!), how many enemies there are: weeds, fire, cold, heat, rain, dry spells, termites, herbivores, idle graziers swishing their sticks, trampling, pests and pathogens), and how disheartening the picture of an untended regeneration plot is to the forest staff, the village communities, and to the eye in the sky that everyone wants to monitor the process. 

The picture is even more uninspiring when we insist on planting local hardwoods, which usually show only some 10% survival, while the more hardy exotics like Acacia auriculiformis invariable show much higher survival rates, say 80%, which is the reason that the department plantations are able to pass muster by combining both and reporting a respectable overall average.

This brings me to the last part of the apprehensions, that the money will all be squandered as the entire Rs.35,000 crores are distributed like largesse. That however is not my understanding. The NCAC will still be in overall control of the way the funds are spent, by making the broad policy directions, while the annual operational plans will be duly approved by the executive committee of the NCAC (the state proposals being passed previously through a similar two-tier state CAMPA set-up). After all, that is how the funds are being deployed even now; merely by making the states the primary account holders, it does not mean that they will have a freedom to dispose of the moneys without waiting for the central ministry’s green signal.

My concern, however, is that the major change, which is that the CA and NPV payments should go directly into the state CAMPA accounts, needs to be cleared in principle by the Supreme Court,  especially as it has been so emphatic in establishing the national interests involved (see above). There is the clear direction that any new arrangement will be cleared through the Supreme Court: even in the 5th NCAC meeting of 24 November 2014 cited above, agenda item viii, while conceding the need to exceed the 1000 crore annual limit imposed by the SC, on account of inflation, and opining that the cap should not apply to the CA component, which after all was a pre-condition of the FC clearance itself, the NCAC has only instructed the ministry to file an application before the Supreme Court for clarifications in the matter, rather than issuing orders suo moto

In the present case of the CAF bill itself, it is not clear whether it has been passed through the SC scrutiny (which would entail examination by the CEC); it will be advisable to do so before subjecting it to a vote in Parliament to avoid any unpleasant surprises.

It would be a mistake if anybody assumes that the CAF bill will give a green signal to open the floodgates; in any case even the forest departments will not be able to deal with such a huge influx of funds all of a sudden. On the other hand, it is also true that deployment of the CA portion has been badly delayed, so much so that even the lands originally identified for CA may in many cases be no longer available (as they are in scattered locations, not part of the regular beats of the forest staff). So there is also a case for increasing the annual allocations, without assuming that they will be squandered away. However, the main motivation of the CAF legislation is to make the process of the states getting their funds less laborious and time-consuming, because in the annual cycle of budgeting and accounting that we are required to follow, the funds reach so late that the time-bound operations of sowing, raising nurseries, planting and so on are thrown completely out of rhythm, contributing to poor performance.

In the third and final segment, some general remarks will be made on the attitude to corruption.

Downloadable pdf version:


Bhargav, Praveen and Shekar Dattatri (2015): Sowing the seeds of a disaster. The Hindu, 29 July 2015, p.11 (Bangalore).

Dutta, Ritwik and Bhupender Yadav (2011). Supreme Court on Forest Conservation. Third Edition. Universal Law Publishing Co., New Delhi.

Government of India (2004). Handbook of Forest (Conservation) Act, 1980. Ministry of Environment & Forests, New Delhi.

Ramesh, Jairam (2015). Green Signals. Ecology, Growth and Democracy in India. Oxford University Press, New Delhi.

Sunday, October 25, 2015

22 Managing the Compensatory Afforestation Fund in India-I. Background and the need for a bill,

Various reports in the news media have confirmed that the long-awaited Compensatory Afforestation Fund (CAF) bill was finally approved by the Union Cabinet and has been introduced in Parliament on May 8 2015 for passing in the current session ( As expected, analyses and critiques have started appearing in the national newspapers, such as a highly critical article by Praveen Bhargav and Shekar Dattatri, in the Hindu newspaper of July 29. Since they are such well-known and respected conservationists who have also served on national committees, their views deserve to be looked at in all seriousness, and certain misapprehensions or even misconceptions clarified,  which is what I have attempted here from the hindsight of dealing with these issues from both the states’ and the centre’s point of view.

Genesis of the Compensatory Afforestation Fund and Authority (CAMPA)

It may be as well to first recapitulate the main components and motivation for this fund, which, as stated in the article referred to, had an accumulated balance of Rs.35,000 crores as of 2012 (and may have grown even larger since). There are two main components: one is a ‘tied’ fund for Compensatory Afforestation (CA), plus a few other committed items to do with catchment area treatment (CAT), protected areas (PA), etc. The lands on which these operations have to be carried out should have already been identified at the time of giving the forest diversion permissions under the Forest Conservation Act (FCA), and there are standards for per hectare costs to be incurred and so on (see the FCA Handbook, Govt of India 2004, Chapter 3). Strictly speaking, these operations ought to have been carried out immediately on inception of the concerned non-forestry projects, but because of various reasons, they have fallen way behind, exciting adverse comment from environmentalists, courts and the auditor-general.

One of the main reasons is that for a long time there was no clarity on how these funds (which come basically from the project proponents or implementing government agencies) are to be managed and deployed. The FCA Handbook (op. cit.) originally provided that each State or Union territory would receive the amounts directly into a special fund (non-interest bearing, as per Finance Ministry instructions), and maintain accounts and submit reports to the central government.  However, following the Supreme Court order dated 30-10-2002 (Dutta and Yadav, 2011, p.210 et seq.), the gazette notification dated   23-04-2004 had been issued (Handbook, Appendix-16), creating a national Compensatory Afforestation  Management & Planning Authority (CAMPA) in the central ministry, after which all existing balance amounts would have to be transferred to the central CAMPA account (and kept as interest-bearing investments in nationalized banks, post office deposits, etc.). Likewise, all future payments would also be made directly into this central account.

The NPV component

The second component is the payments toward the so-called Net Present Value (NPV), which is a measure of the value of environmental and ecological services lost as a result of the diversion. This was not a part of the original scheme, but came about as a result of the Supreme Court order dated 30-10-2002 adding this requirement in the nature of a fee, which was fixed in the range of Rs.5.8 to 9.20 lakhs per hectare, depending on the quantity (quality?) and density of the forest diverted.

Pursuant to the advice of the CEC and the instructions provided in the SC order, the MoEF order dated 23-04-2004  instructs that the NPV portion “shall be used for natural assisted regeneration, forest management, protection, infrastructure development, wildlife protection and management, supply of wood and other forest produce saving devices and other allied activities” (Handbook, p.97). This notification, however, was subjected to further discussion in the Supreme Court (Dutta & Yadav, p. 284), and further instructions issued by the Court in its long order on 26-09-2005 (op. cit., p. 294 et seq.). Key points include: increasing the number of independent environmental experts on the CAMPA Executive Committee to three; following corporate accounting based on double entry system; flexibility to take up operations in adjoining states rather than solely in the state where a particular project has utilized forest land; making it mandatory to set up “Special Purpose Vehicle” for carrying out the CA “in specified areas”; and a final ruling about the legality and modalities of levying NPV (op. cit., p.303).

The SC order dated 26-09-2005 has an interesting discourse on the concept of discounted value, and the different methods of putting a value to intangibles and non-market benefits: “opportunity cost, replacement cost, travel cost, contingent value method (CVM), revealed preference approach, and social cost benefit analysis (SCBA)” (op. cit., p.304). The SC recognizes that different types of environmental benefits would probably call for a different method of valuation. Of course, each site would have a different value in these terms, but a practical approach is called for that will not “overwhelm” the decision-maker by an “avalanche” of detailed information (p.306).  The SC decided to refer the valuation of NPV that should be recovered from project proponents, for different categories and types of forest, to a committee of experts, under the chairpersonship of Dr. Kanchen Chopra of the Institute of Economic Growth, New Delhi.

Need for an ad hoc CAMPA

While awaiting the results of this study, it was noticed by the Supreme Court that the ministry had not yet made the envisaged central CAMPA operational as desired, and on 05-05-2006 (Dutta & Yadav, p.376 et seq.), endorsing the suggestion of the CEC, the SC ordered the ministry to set up what is known as the “ad-hoc” CAMPA.

The SC again made some telling remarks on the CAMPA matter on 28-11-2006 (Dutta & Yadav, p. 422), wondering why a Chief Executive Officer (CEO) had still not been appointed and comprehensive rules had still not been formulated and finalized in terms of the SC orders of 29-10-2002 and subsequent proceedings, and asked the ministry to report compliance by 15-12-2006. This the ministry has done by making the Additional DGF in the ministry the “acting CEO” with regular appointment to be made after the CAMPA is constituted, which was apparently accepted by the Court (SC order dated  05-01-2007, Dutta & Yadav, p.430). Whereas the original government notification of 23-04-2004 had provided (apart from the governing and executive bodies) for a CEO of the rank of Inspector General of Forests (IGF), a Joint CEO, and two Deputy CEOs to be appointed on deputation, apart from the other complement of staff (cf. Appendix-16 in the Handbook), the ad-hoc CAMPA has the ADGF of the ministry as the CEO, and only a tiny handful of support staff for accounts and correspondence, engaged on contract. The ad-hoc CAMPA governing committee itself is composed (as desired by the SC) of representatives from the Central Empowered Committee (CEC), Comptroller and Auditor General (CAG), and also has members from related central ministries (Rural Development), apart from the DG Forests (who acts as Chairperson) and the ADGF. All the CA and NPV monies lying with the state governments were supposed to be got transferred to the bank account maintained by this body, and all further payments were to be routed into this account. These amounts are being kept as interest-bearing deposits in (nationalized) banks, thereby fulfilling onje part of the orders.

However, it appears that in practice, there was not an agreed smooth procedure for allocating funds to the state governments to carry out the CA and other operations, so the CAMPA account was building up a large balance (now around Rs.35,000 crores or more), defeating the very purpose of the scheme. (For comparison, the amounts available in the Postal Life Insurance corpus in 2013-14 was Rs.32,716 crores according to their website, with a sizeable administrative structure to manage the operations over the whole country). The SC noted in order dated 25-02-2009 (Dutta & Yadav, p.519) that some 23 state proposals were pending consideration with the ad-hoc CAMPA committee, and directed it to scrutinize the proposals and file a report in the Court for orders; it is apparent the monies were not being dispersed all this time to the states. There was also a fairly extended period, from 2004 (see SC order dated 15-09-2006, Dutta & Yadav, p.409) to 2008, of a lack of trust between the ministry and the court, owing to a somewhat ill-advised move to pack the Forest Advisory Committee (FAC) with experts in Mining, Civil Engineering and Development Economics (who would tend to function as industry representatives), rather than environmentalists or wildlife experts (vide Forest (Conservation) Amendment Rules, 2004, published in Gazette of India Extraordinary on 03-02-2004, see Handbook, p.14). This resulted in a stand-off and the SC taking over part of the executive functions of the ministry with the help of the CEC (SC order dated 27-04-2007, Dutta & Yadav p.433), until finally the FAC was reconstituted with environmental experts like Madhav Gadgil and the Court returned the ministry its powers under the Forest (Conservation) Act (SC order dated 02-05-2008, Dutta & Yadav, p.485) .

The initial attempt of the then government to bring in an Act to set up the regular CAMPA in terms of the SC orders was defeated in the Rajya Sabha in February 2009 (mainly as the states did not take kindly to the centralization of the control in the hands of the ministry, as they felt that the amounts rightly belonged to the states, and should be kept at the disposal of the respective states, see It was only in July 2009, after Jairam Ramesh assumed charge of the ministry, and undertook some confidence-building measures with the CEC (Ramesh, 2015, p.291), that a mutually acceptable compromise was worked out, in the form of an ad hoc CAMPA complemented by state CAMPA with their own accounts. The SC reverted control back to the ministry (SC order dated 10-07-2009, Dutta & Yadav, p.531), with the rider that the ad-hoc CAMPA would release only upto 10% of the principal amount (roughly, the interest accruing) every year to the states, on the basis of proposals (annual plans) duly approved by the national CAMPA governing body (the National CAMPA Advisory Council or NCAC under the chair of the Minister). It was also stated that the ad hoc arrangement would be replaced in short order with the regular CAMPA duly notified with the prior approval of the SC. This is what the ministry has been trying to do all these years, while continuing to operate the funds with the ad hoc committee in the meantime, and which has culminated in this new bill in Parliament.

In the next section, we will deal with some of the apprehensions about the proposed CAMPA structure.

Downloadable pdf version:


Bhargav, Praveen and Shekar Dattatri (2015): Sowing the seeds of a disaster. The Hindu, 29 July 2015, p.11 (Bangalore).

Dutta, Ritwik and Bhupender Yadav (2011). Supreme Court on Forest Conservation. Third Edition. Universal Law Publishing Co., New Delhi.

Government of India (2004). Handbook of Forest (Conservation) Act, 1980. Ministry of Environment & Forests, New Delhi.

Ramesh, Jairam (2015). Green Signals. Ecology, Growth and Democracy in India. Oxford University Press, New Delhi.