* Bill likely to be approved in December: Minister
* Legislation seen key to government's electoral chances
* Proposes paying four times market value for land in rural
* Farmers and businessmen criticise compensation plans
(Adds details of bill, comment)
By Manoj Kumar and Frank Jack Daniel
NEW DELHI, Sept 7 India's government edged
closer to replacing a century-old land acquisition law on
Wednesday, introducing a bill in parliament that seeks to
placate a rural voter base worried it is being short-changed in
the country's rush into modernisation.
Delayed for months by anti-corruption protests that
paralysed parliament, the bill that would increase compensation
for forced and large land sales was squeezed into the
lower house ahead of a recess and could be voted on in December.
Compulsory land acquisition for the public good is a
contentious issue as crowded India seeks to industrialize, often
at the expense of small landholders. The new bill proposes
paying four times market value for land earmarked for
infrastructure projects in rural areas.
The legislation, spearheaded by ruling Congress party leader
Sonia Gandhi and her son Rahul, is seen as crucial for the
government's chances of winning elections in the heartland state
of Uttar Pradesh next summer.
The Gandhis have staked their political future on making big
gains there ahead of a general election in 2014, where
Rahul Gandhi is seen by many as a potential prime ministerial
candidate for the Congress party.
"The entire credit for this bill should go to Rahul Gandhi,"
Rural Development Minister Jairam Ramesh told reporters. He said
opposition parties broadly supported the reform, which he hoped
will be approved in December.
The mainly poor farmers who make up the bulk of India's 1.2
billion population worry they are being ripped off by rapacious
businessmen and politicians in land deals, while companies are
wary of making large investments for fear courts will strip them
of their holdings.
The government wants to meet the needs of the farmers but
must also keep India's economy growing at a fast rate by
attracting investment for new roads, housing and factories.
Major infrastructure projects are currently held up by
clashes over land. Tata Motors had to abandon plans in
2008 to build a car factory in West Bengal state due to violent
protests by farmers.
'LAND FOR LAND'
In the poor coastal state of Orissa, protests by farmers
have slowed the construction of India's biggest single foreign
direct investment, a $12 billion steel mill belonging to South
Korea's POSCO .
Farmers there say they will have no livelihood if they sell
and accuse police of burning crops and beatings to force them
out on orders of corrupt officials in cahoots with business.
"For POSCO, most farmers are just not willing to sell their
land, said Madhuresh Kumar, a land activist with the National
Alliance of Peoples' Movement. He said farmers wanted their land
replaced with farms of the same quality.
"Money can never replace land or livelihood, In urban areas
maybe money can satisfy, not in rural areas. There should be a
land for land clause."
Under the bill, the government can forcibly acquire land if
80 percent of families affected by a project agree to sell.
Payment will be several times over market value.
Private firms buying more than 100 acres of land
in rural areas or more than 50 acres in urban areas, will also
have to compensate affected families by providing jobs to at
least one member of the family or an annuity for 20 years.
Critics say the new rules will push up costs and encourage
companies to exploit loopholes.
"As a company I will try to find a way out," said M R
Madhavan, head of research at legislation think-tank PRS India.
"And there is an easy way out. I will make two smaller
The bill has broadly been praised by industry for setting
clearer rules, but there is also concern higher land costs will
be passed on to consumers.
"Costs will possibly be very large," Rajeev Talwar,
executive director of DLF , India's largest developer,
told Reuters. "This is only going to make housing even more
First proposed in 2007, the bill would replace an 1894 law
written by the British.
It has until now been held up by political wrangling. The
government of Prime Minister Manmohan Singh has been criticised
for failing to push through more quickly this and other reforms
seen as vital for driving growth.
Significantly, the new rules will not apply to
land acquisition for roads, defence, railways, mining and
special economic zones for export industries.
(Additional reporting by Abhijit Neogy and Rajesh Kumar Singh
in New Delhi and Henry Foy in Mumbai; Writing by Frank Jack
Daniel; Editing by Paul de Bendern and Ed Lane)