Insights into Land Acqusition Experiences of Private Businesses in India
XLRI Jamshedpur Working Paper No. 08-11
20 Pages Posted: 5 Nov 2008
Date Written: November 4, 2008
Socio-political uprising against land acquisition for industrial projects, in the recent times, has emerged as a major constraining factor leading to time lags, cost over runs, business uncertainties and even shelving of projects.
Varied signals from recent (diverse) private experiences right from Tata's Singur project in West Bengal, Posco's Paradeep project in Orissa to Jindal's Raigarh project in Chattisgarh showcase a variety of tactics to gain access to land for private Greenfield projects. This paper analyses the recent land acquisition styles being adopted by few private businesses. It analyzes the successful land acquisition models vs. the not so successful ones and the lessons therein for infrastructure project proponents.
We observe that the chances of failure in land acquisition for the private business would be more if the land acquisition style is thickly sandwiched, by multiple layers of political contestation and authority, between the communities giving up their livelihood rights and the private business interested in the deal. This failure can be attributed to non-co-operative stance adopted by the different parties involved, information asymmetry between the locals and the private business, involvement of more number of intermediaries in communication, involvement of self interested parties (political and other rent seeking agents), and wrong signals and misinterpretation of signals between each other (primarily the locals and the private business). On the other hand, we also observe that the key ingredients of successful land acquisitions includes: less reliance on agricultural land; providing attractive compensation to local communities (with a scope for sharing potential upside); direct engagement with stakeholders; avoiding formal political alignments; and keep low profile with planned communication channels resulting in minimal information asymmetry between the key parties.
Based on the study, we advocate that successful land acquisition for Greenfield projects go beyond gaining mandatory legal and environmental licenses to gaining social consent to operate from a wider stakeholder base.
Keywords: Community, Greenfield Projects, India, Land Acquisition, Projects, Social Consent, Sustainable Development
JEL Classification: D72, D78, R53, R33, R14, O22, L70
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