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Land Acquisition: An Auction Based Solution Maitreesh Ghatak, London - - PowerPoint PPT Presentation
Land Acquisition: An Auction Based Solution Maitreesh Ghatak, London - - PowerPoint PPT Presentation
Land Acquisition: An Auction Based Solution Maitreesh Ghatak, London School of Economics Parikshit Ghosh, Delhi School of Economics Fundamental Questions How to price the land being acquired? Who to take land from? How to identify and
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Fundamental Questions
How to price the land being acquired? Who to take land from? How to identify and compensate livelihood
losers (tenants, labourers, etc.)?
What should be the government’s role?
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Asset Pricing: the Law
Market price used as benchmark. Land Acquisition Act, 1894:
compensation = market price
LARR, 2011 (tabled Bill):
compensation = market price X 4 (rural)
- r, market price X 2 (urban)
+ R&R package
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Market Price as Compensation: Practical Problems
Transactions few, records poor. Calculation is Collector’s discretion. Price underreported. Distress sales. Scope for manipulation: dummy trades.
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Market Price as Compensation: Theoretical Problems
Price/ Value Quantity D
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Market Price as Compensation: Theoretical Problems
Price/ Value Quantity D S P*
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Market Price as Compensation: Theoretical Problems
Price/ Value Quantity D S P* Owner Not owner
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The Auction: Outline
Coverage: project site (1,000 acres) +
surrounding area (another 1,000 acres).
Cheapest 1,000 acres out of the 2,000 acres
to be bought.
Those farmers within the project site who
have not sold in the auction to be given land acquired outside the project site.
Project cancelled if auction price exceeds the
reserve price.
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Stylized Map: Project Site
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Stylized Map: Site + Periphery
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Stylized Map: Auctioned Plots
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Stylized Map: Land Swaps
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Stylized Map: Land Swaps
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Stylized Map: Land Swaps
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Auction: Price Determination
Bids Plots
1 2 3 1000 1001 2000 …. ….
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Auction: Price Determination
Bids Plots
1 2 3 1000 1001 2000 …. ….
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Auction: Price Determination
Bids Plots
1 2 3 1000 1001 2000 …. ….
Price
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Project Accepted
Bids Plots
1 2 3 1000 1001 2000 …. ….
Price Reserve Price
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Project Cancelled
Bids Plots
1 2 3 1000 1001 2000 …. ….
Price Reserve Price
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Auction: Advantages
Minimizes coercion:
Farmers can keep arable land if they wish. Cash compensation not less than asking price.
Incentive not to over bid. Project must prove its worth. Allocates remaining farmland efficiently. No room for complaint later.
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