Critical Perspectives on the Land Acquisition Act: Calls for Reform and Justice

When the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (commonly called the LARR Act or Land Acquisition Act, 2013) replaced the colonial-era Land Acquisition Act of 1894, it was widely hailed as a landmark reform. It promised fair compensation, mandatory Social Impact Assessments (SIA), and rehabilitation measures for those displaced by government acquisition. But beneath those progressive headlines, legal scholars, activists, and panchayat representatives have consistently raised hard-hitting questions: Does the Act truly protect the most vulnerable? Does it honour India’s constitutional commitment to local self-governance? And when land is acquired for private companies, whose interests does it really serve?

The Act’s promise vs. its shortcomings
Rehabilitation and resettlement: still incomplete
The role of administrative capacity
Who counts as an “interested person”?
Sidelining panchayats: a constitutional contradiction
Gram sabha consent: limited to scheduled areas
Land acquisition for private companies: where “public purpose” gets blurry
The 2015 amendment attempt and industry pressure
State-level circumvention and legal fragmentation
Compensation: fair in formula, flawed in practice
The path forward: what reform must address

The Act’s promise vs. its shortcomings

The 2013 Act was enacted in response to decades of displacement without adequate redress. According to estimates, over 50 million people have been affected by land acquisition since Indian independence, with 70% not receiving proper compensation or relocation support. The 1894 Act offered virtually no rehabilitation – it compensated landowners alone and left everyone else to fend for themselves. The 2013 Act was meant to change that. Yet critics argue that despite significant improvements on paper, the legislation still falls short in several fundamental ways.

Rehabilitation and resettlement: still incomplete

One of the most significant criticisms of even the 2013 Act is that while it introduced Rehabilitation and Resettlement (R&R) provisions, their actual implementation remains deeply uneven. The Act mandates that affected families receive housing, employment assistance, and allowances – but these entitlements depend heavily on whether the affected person holds formal, legally recognised title to the land. Those without clear documentation – tenants, share-croppers, landless agricultural labourers – often fall through the gaps.

Research by civil society organisations on major infrastructure projects like the Sardar Sarovar Dam documents how tens of thousands of families were still inadequately compensated and rehabilitated years after acquisition. A 2016 study by the Rights and Resources Initiative examined 289 land conflicts across India and found that they affected close to 3.2 million people, spanning approximately 1.2 million hectares of land, with projects valued at roughly ₹12 lakh crore in investment at risk. This staggering figure underscores how unresolved rehabilitation gaps directly translate into prolonged conflict and project delays.

The role of administrative capacity

Even where the law mandates R&R, enforcement is often weak. As noted by legal analysts, many states lack the qualified professionals and institutions needed to conduct proper Social Impact Assessments. When the SIA process itself is deficient, the R&R package built on its findings becomes equally hollow. The result: families are displaced, compensation is paid at undervalued rates, and the promised resettlement infrastructure – schools, hospitals, roads at the new site – is frequently delayed or never materialises.

Who counts as an “interested person”?

A pointed criticism of the Act relates to its definition of who qualifies as an “interested person” entitled to compensation and participation in the acquisition process. Under the Act, this category is interpreted narrowly – primarily covering those with formal legal rights or title over the land. This leaves out a substantial section of people who are materially affected by acquisition: informal tenants, encroachers who have lived on land for generations, agricultural workers dependent on the land for their livelihoods, and fisherfolk or pastoralists using adjacent common land.

As analysed in legal scholarship, while courts have occasionally adopted a broader interpretation – drawing from principles of natural justice and judgments like Olga Tellis v. Bombay Municipal Corporation (1985) – the statutory text itself does not resolve the ambiguity. Those without formal title cannot assert entitlements under the Second Schedule of the Act, even if they have been in possession of the land for decades. The Act’s failure to explicitly include such persons in its protective scope remains a structural gap that disproportionately affects marginalised communities.

Sidelining panchayats: a constitutional contradiction

Perhaps the most pointed democratic critique of the 2013 Act is its treatment of Panchayati Raj Institutions. While the 73rd Constitutional Amendment firmly established gram sabhas and panchayats as units of local self-governance – particularly under the Provisions of the Panchayats (Extension to Scheduled Areas) Act (PESA), 1996 – the Land Acquisition Act does not recognise panchayats as “appropriate governments” for the purposes of acquisition decisions.

Wikipedia’s overview of land acquisition in India puts it directly: the new law “bypassed the constitutional local self-governments by not recognising them as ‘appropriate governments’ in matters of land acquisition.” This means that while panchayats must be consulted during the SIA process and gram sabha consent is mandatory in Scheduled (Fifth Schedule) Areas, in non-scheduled areas the panchayat’s voice is largely advisory – and routinely overridden. The State and the acquiring authority retain the final say. For a law claiming to be consultative and participatory, this is a significant contradiction.

The consent of the gram sabha is indeed required for acquisitions in areas covered under the Fifth Schedule of the Constitution. However, this protection does not extend universally across all rural areas of India. In regions outside Scheduled Areas, communities can be displaced without any binding gram sabha approval. Critics argue that given how central land is to rural livelihoods and identity, consultation with local bodies should be mandatory – and binding – for all acquisitions, not just in tribal regions. The selective protection of gram sabha consent creates a two-tier system of democratic participation that leaves millions of non-tribal rural communities without a meaningful voice.

Land acquisition for private companies: where “public purpose” gets blurry

One of the most politically contested features of the 2013 Act – and a key reason the Modi government attempted amendments via ordinances in 2014 and 2015 – is the provision allowing the government to acquire land for private companies under the banner of “public purpose.” Under the Act, land can be acquired for private entities provided 80% of affected landowners give their consent. For Public-Private Partnership (PPP) projects, the threshold is 70%.

Legal commentators have noted that allowing compulsory acquisition for private commercial purposes fundamentally stretches the doctrine of eminent domain. Eminent domain – the state’s power to acquire private land – is classically justified by public necessity. When the end beneficiary is a private corporation, the “public purpose” justification becomes legally and morally contentious. Critics labelled the amended bill “anti-farmer” and argued it effectively allowed the State to act as a land broker for corporations.

The 2015 amendment attempt and industry pressure

As documented by legal analysts, the 2013 Act was widely characterised by industry groups as “anti-industry.” The Confederation of Indian Industry (CII) estimated that the Act could increase land acquisition costs by up to 3.5 times, threatening the viability of industrial projects. In response, the NDA government introduced the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015, which sought to remove consent requirements for five categories of projects, including defence, rural infrastructure, and industrial corridors. While the Lok Sabha passed the bill, it lapsed due to lack of Rajya Sabha support – a clear sign of the political contestation surrounding any dilution of farmer protections.

The episode revealed a fundamental tension in the Act: a law designed to protect communities from displacement is also expected to facilitate fast-paced economic development. These goals are not always reconcilable, and the Act’s provisions sit uncomfortably between them.

State-level circumvention and legal fragmentation

Another layer of criticism concerns how states have sought to work around the 2013 Act altogether. As noted in legal analyses, Tamil Nadu passed its own state law in 2019 to exempt three categories of industrial and infrastructure projects from the LARR Act’s applicability – a move upheld by the Supreme Court as a valid exercise of power under Article 254(2). Several BJP-ruled states have similarly enacted amendments reducing the scope of SIA and consent requirements. When state-level variations erode the central Act’s protective provisions, the uniform national standard the 2013 Act was meant to establish effectively dissolves. Landowners in different states end up with vastly different levels of protection – an outcome at odds with the Act’s foundational purpose.

Compensation: fair in formula, flawed in practice

The Act mandates compensation at four times the market value in rural areas and twice the market value in urban areas – a significant improvement over the 1894 Act. However, economists have pointed out that this formula attaches an arbitrary markup to historical market prices and does not necessarily reflect actual replacement cost. In areas with poorly maintained land records or where stamp duty values are artificially suppressed (a common practice to avoid registration taxes), the “market value” baseline itself is distorted. Multiplying an already inaccurate base figure does not guarantee genuinely fair compensation.

Additionally, legal uncertainty around Section 24 – which governs the lapsing of old acquisitions under the 1894 Act – led to thousands of pending cases before the Supreme Court issued a definitive ruling in the Indore Development Authority case in 2020. For years, families caught in that limbo neither received their land back nor received adequate compensation under the new regime.

The path forward: what reform must address

A fair critique of the 2013 Act does not negate its progress – replacing a colonial law that gave virtually no rights to displaced communities was essential. But the critique reveals where the Act still needs to go further. Meaningful reform would need to: expand the definition of “interested persons” to include those without formal title; make gram sabha consultation binding in all rural areas, not just Scheduled Areas; tighten the definition of “public purpose” to prevent its misuse for private commercial benefit; and strengthen state-level accountability in SIA implementation. Without these changes, the gap between the law’s stated promise of justice and its delivered outcomes will continue to widen – and land conflicts across India will persist.

What do you think? Should gram sabha consent be mandatory for all land acquisitions in rural India – not just in Scheduled Areas? And when land is acquired for a private company under the guise of “public purpose,” is the state truly serving the public or facilitating private interest at the community’s expense?

References

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Table of Contents

The Act’s promise vs. its shortcomings 🔗

Rehabilitation and resettlement: still incomplete 🔗

The role of administrative capacity 🔗

Who counts as an “interested person”? 🔗

Sidelining panchayats: a constitutional contradiction 🔗

Gram sabha consent: limited to scheduled areas 🔗

Land acquisition for private companies: where “public purpose” gets blurry 🔗

The 2015 amendment attempt and industry pressure 🔗

State-level circumvention and legal fragmentation 🔗

Compensation: fair in formula, flawed in practice 🔗

The path forward: what reform must address 🔗