Calcutta, Jan. 7: Economist Pranab Bardhan today put forward the concept of an independent, quasi-judicial regulatory authority to oversee land acquisitions.
The professor from the University of California, Berkeley, said the process of land acquisition for private industry could not be left to the mercy of market forces.
The Mamata Banerjee government has been advocating a hands-off policy on land acquisition ' which many consider is one of the biggest hurdles to attracting big-ticket investment projects to Bengal.
"The land acquisition process cannot be left to the market because the transaction costs would be much higher, particularly when the buyer has to negotiate with numerous tiny sellers and spotty land records," said Bardhan, who has also taught at the Massachusetts Institute of Technology and the Delhi School of Economics.
His comments came at a workshop on "Economic growth in West Bengal" at the Indian Statistical Institute.
"In many parts of the economy, regulatory provisions are set up. For example, telecom and the stock market are such sectors. Land is another sector where there could be a quasi-judicial body," Bardhan said.
"The whole matter of land transfer, administering of compensation, and settlement has to be handed by an independent quasi-judicial authority… independent of political influence but subject to periodic legislative review."
Bardhan said land issues had become a "major bone of contention" in the industrialisation process.
He said that in a situation where states were competing to attract investment, a state government had to play a crucial role in ensuring the availability of necessary infrastructure such as road, power and skilled workers.
Economics Nobel laureate Joseph Stiglitz too had, during his visit to the city last year, expressed concern about the problems industry was facing in acquiring land in Bengal. He had suggested a larger government role in facilitating land acquisition.
A city-based economist welcomed Bardhan's suggestion about a quasi-judicial regulatory body.
"There is no doubt that land is required for industry. So, the suggestion (by Bardhan) is welcome. But such a body should take into consideration all the stakeholders, including the land-losers. The entire land acquisition process should have a bottom-up approach," he said.
The city-based economist, however, added that the Centre could establish such a body only with the support of all state governments since land happened to be a state subject.
Among the projects that have hit the land-acquisition hurdle in Bengal are Tractors India Ltd's green-field project at Changual in Kharagpur and DVC-Emta's mining project at Loba.
Even power plant projects by the NTPC and the DVC at Katwa and Raghunathpur, considered key infrastructure projects, are suffering for this reason.