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Impact of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 on Infrastructure Development in India: An Analysis

By - King Stubb & Kasiva on April 20, 2023

India is a country with a rich legacy in agriculture. Therefore, the acquisition of land in India is a matter of great significance, as the interests of both parties involved must be considered. Balancing these interests is a highly contentious issue, given the competing demands on land resources. The Land Acquisition Act of 1894 was replaced by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act of 2013, also known as the Land Acquisition Act 2013, which came into effect on January 1, 2014.

The earlier land acquisition Act lacked adequate grievance redressal mechanisms for the landowners and was viewed as arbitrary in nature. In contrast, the new Act is explicitly designed to be more owner-friendly, with a title that reflects the lawmakers' intention to improve the fairness and transparency of the land acquisition process.

The Land Acquisition Act 2013 seeks to balance both sustainability and development concerns, while also ensuring greater protection for landowners. One key feature of this Act is the requirement for prior consent, which applies to private players as well. Under this Act, land can be acquired by the government for various purposes, including strategic purposes of the naval, military, and air force, infrastructure projects, public-private partnership projects, and other similar purposes.


The Positive Impact On Public

  • Prior Consent for not only the government but also for Industry Players

Under the new Act, both the government and industry players must obtain prior consent before acquiring land. If the government acquires land for public-private partnerships or on behalf of private companies for public projects, they must obtain consent from 70% of affected families. If private companies acquire land exceeding the limit prescribed by the appropriate government through private negotiations, they must obtain consent from 80% of affected families. These provisions are new compared to the old act. Additionally, the new land acquisition laws in India require that rehabilitation and resettlement provisions apply in cases where private players acquire land exceeding the prescribed limit.

  • Defined purposes for Acquisition

According to the new Act, the government is prohibited from acquiring land for private players unless it is for a public-private partnership or for a public purpose. If private players acquire land beyond the limit set by the government, the new Act's provisions will apply, ensuring fair compensation for landowners.

  • Social Impact Assessment Study

An important feature of the Act is that before deciding to acquire land, the government conducts a social impact assessment study to determine the potential social impact of the acquisition. This study is carried out in consultation with local government bodies such as Panchayats. The aim is to identify and address any adverse effects the acquisition might have on the local community. If the social impact assessment report shows that the potential benefits of the project outweigh the negative social impact, the project can proceed, and the land can be acquired.

  • Rehabilitation and Resettlement Package

The rehabilitation and resettlement package provided under the new Act is much broader in scope, as it takes into consideration various elements beyond just monetary compensation, such as employment opportunities. This ensures that landowners receive fair compensation.

The Impact On Infrastructure

Firstly, it is important to acknowledge the immense impact that land acquisition has on the public, particularly those who are displaced, as well as on infrastructure development in India. To address these concerns, the new Act includes provisions for a rehabilitation and resettlement committee, which comprises various stakeholders, to monitor and implement the Rehabilitation and Resettlement Scheme. This is mandatory when land acquisition exceeds 100 acres, with special provisions for multi-crop irrigated land to ensure food security. In addition, the consent of Gram Panchayats or Autonomous District Councils is mandatory for land acquisition in Scheduled Areas, which brings transparency to the process.

One positive impact of the Act is on defense infrastructure, as it permits the Collector to acquire land compulsorily in emergencies or for national security purposes, although this is only allowed in exceptional circumstances and with fairness in mind.

Overall, the compensation provided to landowners under the Act is significantly higher than under the old Act, with a minimum compensation of 1 to 2 times the fair market value, along with the value of the asset attached to the land and Solatium, which is an additional payment equal to 100% of the compensation. This makes people more willing to give up their land for government or public-private partnership projects, which can increase living standards and contribute to the country's development.

Another advantage of the Act is that it can aid the government in obtaining disputed land where an award made under the previous Act is challenged. The Act has a retrospective effect, making it easier to obtain consent for land acquisition and facilitating the acquisition of land for infrastructure projects. The Act is owner-centric, with four times higher compensation in rural areas and three times higher in urban areas and includes provisions for consent and rehabilitation that were absent in the previous Act.

The Act promotes stakeholder participation in the land acquisition process, which can help to minimize disputes and expedite infrastructure development. The process is transparent, with suggestions from landowners or elected representatives being considered after the government publishes a notice. However, it is important to conduct physical groundwork to ensure that the process is being carried out in letter and spirit, which is beyond the scope of this assignment.

Negative Impact on Infrastructure Development:

This is a dual debate between human rights and economics, where drawing a line is a must. The point being made by this case is that, for industrial or infrastructural development to occur, it can be extremely difficult to obtain mandatory consent as required by certain statutes. However, there are cases such as POSCO where the government started acquiring land in phases, even after the forest dwellers under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, denied consent.

During the first attempt, there was intense public resistance, leading to the suspension of the acquisition. The second attempt in 2013 also faced fierce public resistance, resulting in clashes between the public and police. It was later discovered by the National Green Tribunal (NGT) that there were serious inconsistencies in the grant of environmental clearance and social impact assessment, and that requisite approvals mandated by law were absent. In 2017, the POSCO management withdrew from the project due to regulatory hurdles and changes in the law.

  • States are resorting to the Old Act to avoid the impact of new laws on infrastructure development in their states.

Developers often seek government support for commercial land development. The government acquires the land under the immunity of the law and then transfers it to private players. However, many state governments find the process under the New Act lengthy and complicated. As a result, they are creating their own local laws that are more similar to the Old Act to circumvent the New Act.

For example, The Tamil Nadu Land Acquisition Laws (Revival of Operation, Amendment, and Validation) Act[1], 2019 under Article 254 (2)[2], along with the intent to exempt the applicability of LARR, for three categories of industrial and infrastructure projects, that span across the majority of acquisitions. When this enactment was challenged, in the Supreme Court; the Apex Body held that the enactment is valid on the ground that subject to the very consent of the president the State is allowed to make its law under Article 254 (2).[3]


It has been observed that the Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act, 2013 ("New Act") has introduced a well-structured compensation scheme. In the traditional roles of the government as "Law Keepers," there have been instances where governments have extended their powers to support private parties in land acquisition, thereby creating an imbalance of negotiating powers between the acquirer and the affected people. It is this unequal balance that led to the introduction of the New Act.

The Act defines "Public Purpose" and intends to eliminate the government's intermediary role in land acquisition by private players. The provisions of the New Act apply to private players acquiring land beyond a certain area or those involved in a public-private partnership (PPP) project. This expands the scope of the acquisition act, making it applicable to both private and public players.

However, the extent to which the New Act has been successful remains a question. While the Act's reforms were expected to facilitate acquisition without disputes, the lengthy procedures prescribed by the Act may increase the overall cost of the project. Adhering to these procedures in letter and spirit may adversely affect the ease of doing business and the overall development of Indian infrastructure.

Suggestions to increase the efficiency of the land acquisition Act in the public interest and to avoid disputes with landowners are as follows:

  • Governments must avoid hasty and ad hoc land acquisitions to prevent disputes.
  • The government must oversee whether private players are following the provisions of the Act to ensure inclusive welfare and minimize disputes. Additionally, the government should keep land ready for investors to increase efficiency and accelerate growth.
  • Offering certain perks, such as toll benefits or tax benefits, for a period of two to three years, could motivate landowners to give up their lands without dispute.
  • The lengthy procedure for every acquisition in the new Act is discouraging for private entities and state governments. Therefore, the Act should simplify the procedures for barren and wasteland compared to agricultural land, residential land, and commercial land. Simplifying the process would increase stakeholder acceptance of the legislation.


Can a government legally acquire your land in India?

The government does possess the legal authority to acquire the land of people in India to accelerate economic and infrastructural development.

What are the disadvantages of Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013” (“New Act”)?

. It has a lengthy and cumbersome process of acquisition and that leads to an increase in costs for the project.

Is the Act beneficial for infrastructure expansion?

While the provision of fair compensation can help avoid disputes in some cases, the time-consuming process and requirement for consent can also create hurdles for infrastructure expansion. Therefore, the Act's impact on infrastructure expansion needs to be assessed on a case-by-case basis.

[1]The Tamil Nadu Land Acquisition Laws (Revival of Operation, Amendment, and Validation) Act, No. 38, Acts of Tamil Nadu State Legislature, 2019 (India)

[2]INDIA CONST. art. 254 (2)

[3]The State Of Tamil Nadu & Anr.Etc Etc. vs. R Chokkapan Etc Etc, Petition(s) for Special Leave to Appeal (C) No(s). 22727-22730/2019 

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