Originally published in Hindustan Times
Land acquisition, a cornerstone of economic development, remains a contentious and inadequately addressed issue in Punjab. Despite its critical role in enabling infrastructure, housing, and industrial projects, the governance aspects and economic implications of land acquisition have often been overlooked. This neglect has resulted in significant policy gaps, exacerbating challenges and conflicts. Addressing these issues requires a nuanced understanding of institutional roles, market dynamics, and socio-economic impacts to ensure equitable and sustainable development.
The recent Nobel Prize in Economic Sciences awarded to Daron Acemoglu, Simon Johnson, and James A. Robinson serves as a timely reminder of the pivotal role institutions play in shaping the trajectory of development. Their insights into how inclusive or extractive frameworks impact societies are strikingly relevant to Punjab’s ongoing struggles with land acquisition. As citizens, we often hear about infrastructure projects delayed or derailed by disputes, but the deeper institutional failures driving these issues rarely enter public discourse. (source: Acemoglu, Daron, and Simon Johnson. “Unbundling Institutions”. Journal of Political Economy 113, no. 5 (October 2005): 949–995)
In Punjab, the land acquisition process often skews toward extractive practices, benefiting a select few at the expense of broader community welfare. Fragmented landholdings, political interference, and outdated land records exacerbate this imbalance, leaving landowners, particularly those in rural areas, vulnerable to exploitation. Instead of fostering shared prosperity, the process frequently becomes mired in inefficiencies, inequities, and conflicts.
What is perhaps most troubling is the disregard for external costs—livelihoods lost, communities uprooted, and environmental degradation left unaddressed. These issues are compounded by asymmetric information, where acquiring authorities hold an upper hand over landowners, and the ‘holdout problem’, where a few reluctant sellers can stall entire projects. These systemic failures not only delay critical infrastructure but also deepen public distrust in the fairness of the system. For Punjab to realise its development potential, a shift from extractive to inclusive practices is essential.
Punjab’s land acquisition policies have evolved significantly, yet persistent challenges undermine their effectiveness. The colonial-era Land Acquisition Act of 1894, with its limited compensation provisions and opaque processes, laid the groundwork for much of the state’s legal framework. Subsequent amendments and alternative models, such as the Land Pooling Scheme (LPS) of 2008, aimed to address some of these concerns. However, the system remained fraught with issues of fairness, power imbalances, and procedural inefficiencies. The enactment of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act, 2013 (LARR Act) marked a watershed moment, prioritising equity and accountability. Yet, in practice, challenges persist. Political interference, corruption, and manipulation have marred the process, as highlighted by scandals such as the Guava Orchard Compensation Scam (SAS Nagar) and disputes surrounding the Amritsar-Jamnagar Expressway. (sources: Indian Express, Guava orchards and a scam worth Rs. 137 crore in Punjab, 2024; India Today, Farmers clash with police in Punjab over compensation for land acquisition, 2024)
From an economic perspective, the compensation framework, closely tied to market rates, has unintended consequences. While higher compensation benefits landowners, it inflates land prices, deterring industrial investment and exacerbating financial strain on tenant farmers. This misalignment between rising compensation rates and stagnant land productivity creates economic distortions, undermining agricultural sustainability and industrial development.
According to a report by PANJ Foundation, Punjab’s legal framework vividly illustrates the intricate challenges surrounding land acquisition. From 2017 to 2024, the Punjab & Haryana High Court recorded a striking 1,404 cases on the matter, with 28% centred on disputes over fair compensation and 15% challenging the legitimacy of the acquisitions themselves. The Supreme Court, during the same period, adjudicated 290 appeals from Punjab, of which 40% pertained to compensation-related conflicts. Urban hubs such as Bathinda, Ludhiana, Amritsar, Patiala, and SAS Nagar have emerged as hotspots for these legal battles, underscoring persistent governance shortcomings and the critical need for systemic reform in managing land acquisition processes. (source: https://www.panj.org.in/policy-brief-1-land-acquisition-in-punjab/)
Improving the land acquisition process in Punjab requires a multifaceted approach that integrates economic equity, governance reforms, and sustainable development practices. Ensuring fair compensation for landowners should be complemented with initiatives that promote the effective utilization of funds received through compensation. Financial literacy programs can guide landowners in investing their payouts in sustainable agriculture, skill development, or entrepreneurial ventures, fostering long-term financial security and community development. Additionally, incorporating post-compensation social impact assessments (SIAs) can help evaluate how the funds are utilised and identify gaps that may hinder their effective use.
Transparency in the valuation process is another critical area that requires attention. Establishing independent valuation boards and leveraging digitized platforms for land valuation can help reduce inconsistencies and disputes over compensation. Digitised land records and valuation systems can also minimise manipulation and delays, ensuring that compensation reflects actual market values and accounts for the socio-economic impact on affected communities.
Simplifying legal procedures and building the capacity of arbitrators to resolve disputes quickly can significantly reduce delays. A centralised land acquisition data portal can provide comprehensive insights into ongoing disputes, trends in compensation, and socio-economic impacts, enabling evidence-based policymaking that is responsive to the needs of stakeholders.
Sustainable land use, aligned with higher acquisition costs, should focus on eco-friendly projects like renewable energy and agro-industries. Innovative models, such as land-sharing agreements, can foster local economic growth and mitigate financial strain on industries. Participatory mechanisms, transparent communication, and accessible grievance systems can build trust and reduce resistance. Skill development and employment guarantees for displaced individuals can address livelihood loss.
By adopting targeted reforms and leveraging data-driven insights, Punjab can transform its land acquisition process into a model of inclusive development. Such efforts would not only resolve conflicts but also unlock the state’s economic potential, paving the way for a future where development is not a zero-sum game but a shared opportunity for progress.