Land Acquisition, Primitive Accumulation and the State

Arindam Banerjee

Land acquisition continues to remain a
difficult question for the Indian State and establishment. Growing criticism of
the colonial Land Acquisition Act of 1894 amidst intensified resistance in
defence of land rights led the UPA II government to enact the Land Acquisition,
Rehabilitation and Resettlement Bill (LARR), 2011. The LARR, 2011 brought in
requirements of Social Impact Assessment (SIA) and ‘consent of at least eighty
per cent of project affected people’; these clauses, along with the definition
of ‘public purpose’, have now emerged as contentious under the NDA government, voted
to power in May last year.

The LARR, 2011 was already compromising
transparency as it waived the requirements of SIA and ‘informed consent’ for
projects in the domain of atomic energy, railways, mining, national highways,
electricity and a few other areas. The new Land Acquisition Bill proposed by
the NDA government, adds to this list defence projects, rural infrastructure,
infrastructure and social infrastructure under private-public partnership,
affordable housing for poor and industrial corridors. Private schools and
hospitals are now defined as ‘public purpose’, and allegedly ‘private hotels’
were also desired to be defined as such, an idea the government dropped
eventually. The new bill attempts to increase the share of private investments
and acquisitions in projects, which can avoid transparency or accountability.
In the UPA Act, though some additional
award for resettlement and rehabilitation was provided for, the basic
compensation for land was still based only on the market value of assets in the
form of money (with a vague and restricted provision for annuity, Clause 30(j),
LARR, 2011). The new bill continues with this erroneous and inadequate idea of
Any accumulation
(and not merely transfer) of property rights at throwaway prices or inadequate
compensations qualify in the category of ‘primitive accumulation of capital’
(PAC). The concentration of ‘claims to assets’ in the hands of a particular
class (largely the corporate class in the Indian context under neo-liberalism)
also serves in ‘freeing up’ the labour of petty producers, which can then be
cheaply exploited.
‘The capitalist system presupposes the complete
separation of the labourers from all property in the means by which they can
realize their labour.’ (Marx, Capital Vol.1 Ch. 26, page 668)

The dispossessed, newly created working
class need not necessarily be used in the formal, organized sector but can
flock to informal and low-paid activities, which plays its role in cheapening
of labour in the economy.  The PAC also
need not be a ‘historical process of
divorcing the producer from the means of production’ that Marx goes on to say
in the above passage but a continuous process on which the capitalist system is
contingent and parasitic.
Why market
prices are not relevant for compensation?
Before we look at why market prices of
land are possibly not a suitable benchmark for determining the compensations
for land acquisition, we need to examine a recent argument that agricultural
land prices are high in comparison to the world. Chakravorty (2013) estimates
the average price of agricultural land in 2010 based on productivity at 2.9
lakhs per acre (the present discounted value of future incomes) and contends
that this value is much higher than agricultural land prices in the USA[1].
This then forms the premise that such high market prices can be a starting
point for determining the compensation, at say four times the market price.
The reasoning that Indian agricultural
land prices are high simply because they surpass the value of their US
counterparts is erroneous. Even with far-advanced technology of farming, the US
agricultural lands are less productive than that in India. Based on FAO data on
total value of agricultural produce and cultivable area, if we calculate the
gross value of output per hectare for 2012, the figure comes to $1564 (in
international $). The same for US is 2012 is $1509[2].
This should not be surprising as tropical regions are usually richer in
bio-diversity, but such lands can be cultivated more than once, unlike
temperate lands. That tropical lands were more productive was not only one of
the primordial reasons of colonialism in early 16th century, but
continued to remain so in the later phases of colonialism.
Rather, with the emergence of an agrarian
crisis (though uneven across regions) in rural India, one would expect, that
agricultural land has lost its value relative to other assets in the economy.
The market price or the capitalized value of expected future incomes will be
depressed when the past stream of income from agricultural lands have been
arrested or grown at relatively lower rates (more on this later). One has to
compare returns in agricultural activities with the return on gold or financial
assets in recent times to realize this. For millions of small and marginal
farmers, where even simple reproduction of their farms becomes difficult, the
net returns are zero or negative.
The market price of land is a reflection
of the wilful transaction between a seller and a buyer. This is not so relevant
for land acquisition, when the land of an entire village or community is taken
over. Typically, a large number of community members do not participate in the
land market because they perceive the value of their land to be much higher
than what the market is offering. That land acquisitions are usually not from
‘willing’ sellers is evident from the use of ‘eminent domain’ by the State in
almost all instances of land acquisition in India currently, and in the past.
This is why the LARR, 2011 talks of ‘informed consent’ which in actual
implementation is often a legitimate way of forcing sellers to be ‘willing’
through State intervention.
The conventional and prevalent approach
to land acquisition actually does not deny this but argues that this can be
addressed by fixing the compensation as a multiple of the market price to
account for this higher valuation as well as relocation and resettlements
costs. This, however, simplifies the issue ignoring some very important dynamic
impacts of land takings.
The experience of land acquisition,
discussions on compensation and the resistance of people clearly indicate that
the value of land is determined by a more complex set of factors than merely
current and future returns generated from land. Apart from the role of land in
ensuring social status, asset security or insurance against unforeseen
circumstances, the value of land is also linked to the question of livelihood
that land-owners face and that too within the specific development trajectories
that they are subject too. This is why any discussion on the value of land
needs to be linked with livelihood destruction or changes within the
contemporary development context.
The lack of adequate
meaningful alternative livelihood opportunities and the absence of state
support in that regard, makes the land owned and cultivated by them an
indispensable and non-alienable asset i.e. land often becomes ‘priceless’.  The market land prices rarely capture the
psychological and other costs of a transformation of livelihood or falling into
unemployment or underemployment. The proliferation of the informal economy in
recent times in the country, with only casual and low-paid employment
opportunities for the displaced creates a condition, where rural households
dependent on their small pieces of land for their livelihood and food security
think best to hold on to their tiny plots. Consequently, the reservation price
for selling the land is very high and often unconnected with what land markets
Any meaningful
compensation for land takings cannot be in monetary terms but must also be
based on principles of ‘assets for assets’ (in a somewhat comparable sense) and
alternative livelihood provisioning under state support or regulation. The land
acquisition question in India, however, acquires a deeper complexity when we
examine it from the lens of the PAC.
Accumulation of Capital and its ‘Inevitability’:
It is often
argued that any capitalist development is necessarily accompanied by a PAC,
primarily for two reasons. First, the PAC ensures a re-allocation of assets to
more productive uses, which also enhances their value. Secondly, capitalism
continually requires a generation of a working class through dispossession of
petty producers, which augments labour supply in the economy. It is also
increasingly understood that PAC is a continuous process within capitalism
rather than merely a pre-history to capitalism.
No PAC is
meaningful unless the assets are acquired at relatively low prices and realized
at relatively higher prices. This incremental asset value between acquisition
and realization is what makes PAC so attractive, and crucial for injecting life
into the capitalist system. However, Dobb (1946) points out that PAC cannot be
carried out simply by acquiring property by the bourgeoisie using their savings
but ‘special circumstances’ are essential. The argument is lucidly presented
through the following passage:

presence of such a special circumstance could, indeed, be a necessity, …even
for any considerable accumulation to occur by the process of saving out of
income; since without it the efforts of the bourgeoisie to acquire a certain
type of property, for example land, would exert an upward pressure on its
value, and the subsequent attempt by the bourgeoisie to dispose of this
property in order to invest in industry would exert a downward pressure on its
value to their own detriment. The attempt to accumulate would accordingly be self-defeating.
The outcome would be a decrement, instead of an increment, in the property …
this loss in capital-value …nullify the attempt of the bourgeoisie to enrich
themselves. [Dobb 1946, Ch. V, page 180]
Such enhancement of asset-values is not
possible through normal buying and selling in the markets. Writing in the
context of medieval England, Dobb, identified the crisis of feudalism (which
depressed land prices) and colonial plunder of the ‘new world’ in the American
continent as providing these special conditions for PAC. The trading profits
and inflows of silver from Americas allowed the merchant explorers to often
gobble up estates from decadent nobles but also the lands of small petty
farmers. Later, large-scale Enclosures ensured that land was concentrated in
the hands of big farmers. While the absolute value of these lands may have
increased to some extent with some investments over time, their relative value
increased much faster when they could be possibly exchanged for cheaper labour
supplies created by dispossession of petty producers – facilitating capitalist
In contemporary India, the multi-faceted
impact of neo-liberal policies on the economy provide for these special
circumstances. A combination of the agrarian crisis and stagnation which
depressed land-value and allow its accumulation at lower prices and the real
estate boom which enhances the land valuation immensely after a change in its
use enables the process of PAC. In fact, the increment in asset value in such a
case is rapid and momentous and does not happen over decades and centuries as
Dobb observed and surmised in the case of early capitalism. Even where land is
directly not acquired for real estate, but say for corporate industries, the
linkage of the latter with the financial markets ensure that these assets are
financialized and yield much higher (though volatile) returns than what they
did when used by petty farmers.
Any law that slows down (or raises the
cost of) this process of changing property rights and land-use suitably and
enhancing asset-values massively is bound to face resistance from the
accumulating corporate class. The LARR, 2011 while clearly inadequate with
regard to determination of compensations, potentially would slow down the PAC, which
gained pace under neo-liberalism, with the SIA requirements and ‘consent’
clauses. The new NDA bill expectedly tries to undermine such provisions.
Any process of land and resource grabbing
is essentially violent, often explicitly. Instances of displacing Amerindians
from their lands in the 16th century leading to their
near-extermination or the burning of the cottages of resistant clansmen in
Scottish Highlands in the almost forgotten Clearances
of late 18th century to create sheep pastures are examples of such
explicit violence. The role of the State controlled by accumulating classes has
always been to manage this violent process of PAC in a ‘civilized’ and
‘legitimate’ fashion through enabling laws and regulations. Deporting the poor
by branding them as convicts or as indentured labour to the ‘New World’ was one
way to manage the outcomes of such uprooting of people; increasing colonial
exploitation and tribute appropriation to create more industries and jobs
domestically, de-industrializing colonies, was another. But parliamentary
deliberations and legislations were no less important.
In the final wave of enclosures between
1760 and 1870 in England, 7 million acres, or roughly one-sixth of the country,
was reclassified as private enclosed land from their ‘common property’ status.
The 4000 Acts of Parliament which did this, preceded by discussions and
representations before committees and tribunals, make this appear as a very
democratic and just process of changing property rights. Except that the
English parliament and government committees were largely comprised of big
land-owners, merchants and aristocrats; the cotters and small farmers who lost
their land through these enclosures were kept out of the representative
democracy which was yet to grant universal suffrage (Fairlie, 2009). Needless
to say, ‘conflict of interest’ was unheard of!
The Indian State today does not have many
options of managing the PAC that imperial States had. There is no access to new
uninhabited lands where the ‘unwanted surplus population’ can be sent, neither
are colonies available for exploitation. Manipulation of the legislative
processes by ruling classes thus assumes more significance than ever. Even so,
there are greater challenges posed to any such manipulation, when the
legislative is based on universal franchise. The accountability of the
Parliament to all citizens, including the petty land-owners, forced it to
respond to increasing land-struggles in the form of LARR, 2011; even though a
far from satisfactory response. Consequently, the government finds it difficult
to get its new, corporate-friendly version of the Bill passed in all Houses of
the Parliament.
Bypassing the Legislature to promulgate
an Ordinance and ‘Proroguing’ the Upper House to re-promulgate the same ordinance
later are the blunt and embarrassing tactics that the State resorts to protect
the corporate interests. But this simultaneously reduces the credibility of the
State. Creating a benign, sanctimonious and class-neutral concept of
‘development’, pitting it against petty land-based producers and branding the
latter as anti-development, however remains the best chance of manufacturing a
social consensus to hasten land acquisitions and facilitate PAC at the current
Chakravorty, Sanjoy. 2013.The price of Land: Acquisition, Conflict,
OUP India
Dobb, Maurice. 1946. Studies in the
Development of Capitalism.Routledge and Kegan Paul, London
Government of India, The Land Acquisition, Rehabilitation and Resettlement Bill, 2011
Fairlie, Simon. 2009. A Short History of
Enclosure in Britain, The Land, Issue
7 (, accessed on 12th
April, 2015)
Marx, Karl. 2010. Capital.  Vol. 1, LeftWord,
New Delhi
author is Assistant Professor at Ambedkar University Delhi

[1]Chakravorty (2013) uses farm output as a proxy for farm income,
which can be problematic for a period when costs of cultivation and credit have
risen faster in India, under economic reforms, often outpacing the growth in
output prices. This has stagnated profitability of agriculture even when the
output has grown.
[2]Computed by the author from FAO data on ‘Value
of Agricultural Produce’ and ‘total cultivable area’ from the World Bank database
for India and USA in 2012. Other years show similar results.