Resettlement Policy in India

The World Bank's OD 4.30 requires a review of the legal framework for resettlement in preparing a resettlement plan: "A clear understanding of the legal issues involved in resettlement is needed to design a feasible resettlement plan. An analysis should be made to determine the nature of the legal framework for the resettlement envisaged, including:

1. The scope of the power of eminent domain, the nature of compensation associated with it, both in terms of the valuation methodology and the timing of payment;
2. The legal and administrative procedures applicable, including the appeals process and the normal time-frame for such procedures;
3. Land titling and registration procedures; and
4. Laws and regulations relating to the agencies responsible for implementing resettlement and those related to land compensation, consolidation, land use, environment, water use, and social welfare."

To date, India has no national resettlement and rehabilitation policy. Only three States, Maharashtra, Madhya Pradesh and Punjab, have state wide resettlement and rehabilitation (R&R) policies. The Maharashtra Project Affected People's Rehabilitation Act of 1976, amended in 1986, is the most comprehensive. Other States have issued Government Orders or Resolutions, sometimes sector-wide but more often for specific projects. Two national parastatal companies, the National Thermal Power Corporation (NTPC) and Coal India Limited (CIL) have completed and issued R&R policies consistent with the Bank's OD 4.30. These affect projects across the nation. Many organizations in India have lobbied for a national rehabilitation policy.

While there is no national resettlement policy, land acquisition in India is covered by a national law, the 1894 Land Acquisition Act (LAA) and its subsequent amendments. The LAA allows for land acquisition in the national interest for water reservoirs, canals, plants, fly-ash ponds, transmission lines and highways to be carried out by the respective States, in accordance with its provisions. Under the LAA, compensation is in cash for the loss of land, other productive assets (such as standing crops and fruit and fodder trees), house plots and residences. A separate law, the Coal-Bearing Act of 1957 (CBA), covers land acquisition of coal-bearing land. Restoration of community and household productive assets, or of standard or quality of life, is not covered by the LAA but becomes a policy question determined on a project by project basis, unless a State or parastatal company policy applies.

The Land Acquisition Act of 1894 is summarized below This summary is adapted from a Draft report by the World Bank on Resettlement and Rehabilitation in India (April 1994):

• Land identified for the purpose of a project is placed under Section 4 of the LAA. This constitutes notification. Objections must be made within 50 days to the Collector (highest administrative officer) of the concerned District. The CBA requires 30 days for objections;

• The land is then placed under Section 6 of the LAA (or Section 7 of the CBA). This is a declaration that the Government intends to acquire the land. The Collector is directed to take steps for the acquisition, and the land is placed under Section 9. Interested parties are then invited to state their interest in the land and the price. Under Section 11, the Collector shall make an award within two years of the date of publication of the declarations. Otherwise, the acquisition proceedings shall lapse;

• In case of disagreement on the price awarded, within 6 weeks of the award the parties (under Section 18) can request the Collector to refer the matter to the Courts to make a final ruling on the amount of compensation;

• Once the land has been placed under Section 4, no further sales or transfers are allowed. However, since the time lag between Sections 4 and the others following it is about three years, land transfers are not uncommon;

• Compensation for land and improvements (such as houses, wells, trees, etc.) is paid in cash by the project authorities to the State government, which in turn compensates landowners. In the case of acquisition for coal projects, the coal companies make direct payments to landowners;

• The price to be paid for the acquisition of agricultural land is based on sale prices recorded in the District registrar's office averaged over the three years preceding notification under Section 4. The compensation is paid after the area is acquired, actual payment by the State taking about two or three years. An additional 30 percent is added to the award as well as an escalation of 12 percent per year from the date of notification to the final placement under Section 9. For delayed payments, after placement under Section 9, an additional 9 percent per annum is paid for the first year and 15 percent for subsequent years.

It is instructive to contrast R&R policy in India with that of China.

Return to the main MESAS resources page, to the social resources page or to Checklist for Resettlement -- A Case Study from India.