Land Acquisition and Urbanisation

By: Vijai Singh
Lessons learnt from large scale acquisition of land for planned development of Delhi under the Land Acquisition Act of 1894 have gone on to frame the new Land Acquisition Act of 2013. Yet, some major concerns remain unaddressed to this day.
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Land is a vital component in the economic process and an important asset. Everyone needs some land to live and work on. Its ownership pattern and its use largely determine the structure of the economy and shape economic processes. In the process of urbanisation, the land hitherto used for agricultural and allied purposes, is put to non-agricultural uses such as housing, commercial infrastructure, public utilities and the like. When rural land is converted into urban land, it commands far greater market value.

Who is entitled to this increase in market value of the rural land? Is it the individual who owns the land, the person who buys it, the middleman or the society at large, which is collectively causing the process of urbanisation. Urban planners, researchers and policy makers have different takes on the issue and there is no consensus as yet.


Urban Land Development in Delhi: A Different Model

Delhi went in for large-scale acquisition of land ‘to check the haphazard growth of Delhi’ (following the unprecedented influx of refugees after partition in 1947). Thereafter, a ‘Master Plan’ was put in place, for which the Delhi Development (Provisional) Authority was created in 1955. Accordingly, in 1959, about 34,000 acres of land were notified under section 4 of the Land Acquisition Act, (indicating intention to acquire for ‘Planned Development of Delhi’). In total, acquisition of 60,000 acres of land (30,000 acres for residential use, 10,000 acres for commercial use and 20,000 for parks) was visualised in the First Master Plan.

However, our systematic study of the land acquisition process (covering all the 3,277 acquisition awards from 1948 to 1989), has shown that in the absence of foresight regarding Delhi’s economic and social dynamics, the urban landscape that emerged revealed severe gaps of spatial-inefficiency in basic planning. Besides, the conversion of rural land for urban usage jacked up the value of the land, attracting vested interests who pocketed the benefits that ought to have rightly gone to the State/community. However, urbanisation went on at an astonishingly fast pace. In fact, over 25 per cent of rural land was converted to urban in just three decades (1960-89) (Vijay Singh, 2014, Delhi: Land Acquisition, SFRD).


Social and Economic Implications of Land Acquisition and Urbanisation in Delhi

In sharp contrast to the well considered, efficient spatial relationship defined through a good transportation system in the two earlier cities of Shahjahanabad and Lutyen’s Delhi, the process under the first Master Plan was grossly deficient in intra-city spatial planning. Apparently, Delhi was conceived as a point in space and the dimension of distance was ignored. This saw a criss-cross of living and working spaces entailing enormous movement of people in all directions for their daily livelihood and massive waste of time, money and energy.

Secondly, land acquisition was not integrated into the pace of development and its economic impact, leading to inefficient distribution and terribly sub-optimal use of the scarce land. Thus, as much as 25 per cent of the land acquired was for non-plan purposes, much of it being done by Municipal Corporation of Delhi (MCD) or Public Works Department (PWD) under local pressure and need.

Thirdly, the city ecology was neglected leaving green areas unacquired, resulting in encroachments and illegal construction on them.

Fourthly, the spatial and temporal phasing was not rational. Instead of contiguity in acquisition and development, far off land was acquired first raising the costs of development.

Fifthly, ignoring the affected people led to non integration of rural pockets with the urban surroundings. Acquisition of agricultural fields constricted village settlements and saw them degenerate into slums in the absence of infrastructural planning/support. Cash compensation with little thought of livelihood integration with the encircling urban colonies created its own socio-economic and other problems for both. Massive price differences, of over five times, between flats in Munirka village, as against similar sized Delhi Development Authority (DDA) flats just 10 metres away is reflective of the lack of urban planning resulting in lower valuation of city land and economic loss to the nation. Sixthly, the slow pace of development after acquisition resulted in encroachments on as many as 1500 acres of DDA land, leading to unauthorised colonies coming up as insanitary pock marks in the national capital.

Seventhly, assessment of market value of rural land was artificial, and compensation paid was irrationally low and disbursement subject to inordinate delays. This saw a spurt in the growth of unauthorised colonies. Around 2200 such colonies have come up on 36,000 acres, which is around 10 per cent of the total and 20 per cent of the urbanised land bearing around 30 per cent of Delhi’s population estimated in 2014.

The DDA reported in 2014 that over 1500 acres out of a total of 79,000 acres in its jurisdiction were encroached upon. Also, 5848 acres remained undeveloped till recently and there was a total lack of development in 3600 acres of village (lal dora) land which were the outcome of ill planning in Delhi. This could have been avoided with better foresight and proper prioritisation of lands to be acquired, quick utilisation after acquisition, and people’s involvement in urban planning. That would have made urbanisation in Delhi a model worthy of emulation.


The Land Acquisition Act 2013 and its Implications for Development

Learning from the Delhi Model, let us now examine the Land Acquisition Act 2013, and its implications for the development process. The New Act in its preamble, proposes to address the issues of fair compensation and rehabilitation and resettlement while apparently making the process transparent, humane and participative. It also intends to make people whose land is acquired under compulsory acquisition, partners in development leading to improvement in their social and economic status post acquisition.

Large scale acquisition of land for urbanisation is not mentioned as a public purpose where the whole city or township is planned for development through acquisition of land by a state like Delhi. Instead, various projects for infrastructure, housing, planned development or improvement of village or any other sites in urban areas are covered.


Market Value and Compensation

In view of the compensation for acquired land in Delhi seen as irrationally low, a practical way has been devised to determine the market value based on the Stamp Act, registered sale deeds, agreements to sell, and the consented compensation amount, which would undoubtedly reflect a higher market value than that in the previous Act. Similarly, an increase in solatium and introduction of a multiplicity factor of four for rural land makes the compensation amount much higher than earlier. In addition, a comprehensive package of rehabilitation and resettlement makes the overall compensation attractive for landowners.

Whenever rural land is converted into urban land, its value increases manifold depending on the kind of proposed urban uses. However, an important conceptual question about who is entitled to this increase and in what proportion is not addressed in the new Act. This has serious implications for development based on land acquisition. If the value of compensation is irrationally higher, it can adversely affect development by distorting the true market value. And if it is lower than the true market value, it spells social injustice to the landowners with unwarranted profits to the acquiring body.

A more scientific and rational way of determining the market value would be to first classify the land as rural land, undeveloped urban land and developed urban land. The market value of rural land means the value of agricultural land with only agriculture and allied uses in its pre-acquisition state. The market value of undeveloped urban land is similar to rural land, except that it has proposed urban uses but without any actual development on or around it. And finally, the market value of developed urban land is the market value of the same land when proposed development is undertaken on and around it with necessary infrastructure. Normally, the market value of undeveloped urban land is higher than rural land and that of developed urban land is higher than undeveloped urban land.

The entitlement in the increase in value should depend on the contribution to such increase by the landowner, State or the acquiring body and accordingly the justified shares can be determined. This could be a rational method to apportion the increase. The Land Acquisition Act 2013 does not provide any such framework or principle with which the justifiable shares can be determined.


Development Plan

Whereas, various infrastructural and other projects are mentioned under public purpose, the concept of a development plan of the area or the integration of the proposed projects in overall development of the area is not defined. Any economic or social impact of a project would depend on the relation of the proposed project to the overall development plan. For example, in Delhi, whereas the agriculture land of villages was acquired, their abadi (residential land) was left out of the development plan. Thus, although, they were not displaced residentially but at the same time they were also not integrated in the overall development resulting in the unplanned and haphazard development leading to much lower than optimal level of productivity and market value of their land.


Rehabilitation and Resettlement

The resettlement and rehabilitation package seems to be based on the numeration of practical facilities rather than providing a sound conceptual framework or principles leading regenerative development processes. The way of defining housing, land and more, to various communities does not seem to be based on a theoretical framework of spatial planning and development concepts. The provision of facilities without proper and efficient planning can ultimately lead to low productivity levels.


Administrative Structures and Processes

The structures and processes to administer and implement the provisions of the Act seem to be little impractical keeping in view the experience and working of the Indian bureaucracy. The administrative processes although intended to be transparent and participative on paper, may not work so in reality. The rules and procedures need to be simplified in order to make them effective and understandable.



A simpler approach to land acquisition and development would be to simplify the implementation of law through prototype models of market value, rehabilitation and resettlement. The understanding that land acquisition is only an instrument of planned development and not something of its own should be well appreciated. Thus, a rational way will be first to formulate an integrated development plan on sound concepts and then proceed to acquire land in order to implement those plans. Under such an approach, the development plan will itself guide all consequent administrative, developmental and rehabilitation and resettlement processes rather than other way except in case of land acquisition for strategic or emergency purposes. This was a fundamental mistake committed in the urbanisation of Delhi, where plans were left behind and isolated from the land acquisition process over time. In other words, all components of land acquisition become meaningless in the absence of proper planning of the development processes or planned development. Similarly, the provisions related to acquisition of land for public-private-partnership projects or for private companies projects can also be examined in the same framework. Whereas, the extension of similar provisions to land acquisition under other thirteen Acts will provide uniformity in the land acquisition process, the exemptions and other provisions given in the Land Acquisition Ordinance 2014 may require a rigorous analysis to reach a rational decision about their justification

Disclaimer: The data presented is the sole responsibility of the author.

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