Tuesday, June 12, 2007

In India, a different approach to compensation for land acquisition

Source: Business Standard: "Share-for-land model catching on in the east"

Corporations and multinational development institutions have in the past come under fire for spearheading or supporting development projects that displace people. Critics have asserted that such projects often involve relocation to sites that are unfit for settlement, thus exacerbating problems such as poverty and disease.

However, private enterprises in India are beginning to experiment with a different kind of model for land acquisition. This new and innovative approach to development projects involves compensation packages for “land-losers”—individuals who lose their land as a result of a project. To date, the compensation packages have included some combination of the following: cash, shares in the enterprise, employment, and insurance annuities based on the price of the land.

This innovative approach was pioneered by Sajjan Jindal, Vice Chairman and Managing Director of JSW Steel, Ltd. for a project in Bengal. It appears to have enjoyed a favorable reception by the public. While there is no uniform compensation package for land-losers as of yet, others involved in projects in India that have land acquisition components, including Posco, a South Korean steel interest and Videocon, have taken notice and are experimenting with their own variations on compensation packages for land-losers.

For discussion:

Do you think this is a good approach to dealing with land acquisition issues?

Should it be left to private entities to design compensation packages or should the government step in to regulate the process, perhaps setting minimum standards for compensation packages?

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