How Would Farmers In Gujarat Profit From Joint Ventures?

If land is acquired for joint-venture projects where farmers are equity holders, they will become partners of industrial projects, instead of being victims (Photo Credit: Wikimedia.org)

When the government acquires land in India for industrial or government projects, the acquisition often deprives farmers of their land. Various drafts of the Land Acquisition Bill have tried to deal with the problem by proposing to pay land owners 30% more than the market price of land, or even four times the market rate. Now, the Gujarat government has proposed joint ventures (JV) with farmers under its new industrial policy. 

In the new model, the Gujarat government encourages farmers to hand over their land to the Gujarat Industrial Development Corporation (GIDC) to develop industrial parks under a JV with the GIDC. To develop industrial parks of 20-100 hectares, the government will give them equities and shares of profits proportionate to the land they hand over to the GIDC. Farmers will still be owners of the land, but they will hand over the right to put the land to use to GIDC and industrial units for a share of profits and equities.

How would this help the farmers, land owners and developers?

1. Land acquisition process need not make farmers landless. Many policy analysts have long been pointing out that the government should make farmers or tribals partners in industrial projects in India. People are often emotionally attached to their land, and if they can get a share of the revenues which accrue from a project they will allow the transfer of land in a positive light.

2. The compensation of four times the market price of land proposed in the amended to the land acquisition Bill will lead to land owners overstating the market price of real estate in India. Politicians and politically connected landlords who know where government will acquire property in India will be able to profit from the scheme. Making farmers partners in a joint venture will prevent such unwarranted speculation.

3. The state government’s move will help developers and industrialists too. Gujarat government’s plan to give private developers or JV of farmers and GIDC to give 100% reimbursement of stamp duty, and individual units a 50% stamp duty waiver will also prevent understatement of the value of property.

4. This will prevent farmers from being exploited by politicians, bureaucrat and crony capitalists. Farmers who lease land to industrialists would not feel that they are made to pay the price for rapid industrialization.

5. The new scheme would allow the transition from an agriculture-based economy to an industrialized economy without the usual conflicts. Farmers will also be able to profit from appreciating land prices after an area is industrialized.

Read more about how, before the Land Acquisition Bill 2015 reached its present shape, land acquisition laws in India has evolved since independence.