Former RBI Governor Raghuram Rajan praised the Andhra Pradesh government over one very key aspect related to development while giving his most significant speech about India since departing the central bank in September 2016.
Throughout the hour-long speech, Rajan had spoken about the need for India to have high-quality infrastructure, for the economic growth it results in, and while addressing the need, he asked, "There's a need for infrastructure. Why aren't we doing more?"
He answered the question himself, putting forth that one of the key bottlenecks is land acquisition, which isn't just a problem in India:
"We simply can't acquire land in an effective way. Now the problem isn't an easy one. India has a very high density of population -- a density that is equal to some of the more denser parts of Europe. Try building a highway in Europe, today you simply won't be able to do it, 'not in my backyard' (people would say)", Rajan said.
He continued, "Well this is what happens in India. Once you want to build a highway, you have to acquire land. Who are you going to acquire land from? Immediately, politicians & civil society senses an opportunity and everyone's fighting for the farmer. It becomes very hard to acquire land. We need a sensible process of land acquisition which protects the rights of the people whose land is being acquired but doesn't depend on too much government capacity to acquire that land."
Rajan then spoke about the current land acquisition bill: "The land acquisition bill that we have -- remember we don't need to acquire all the land some of it is anyway sold privately, it's the holdouts you want to acquire land from -- but the land acquisition bill we have today is simply not operational. It can't be for the kind of government capacity that we have, we can't actually acquire the land."
He proceeded to spell out a method that could work, and gave an example: "What we need is an easier system to operate -- one which recognises limits on government capacity but also recognises that the people selling the land often can be duped and we need to protect them. There are some practices emerging in India that are working quite well. For example, Telangana (he presumably meant Andhra Pradesh, which has been hailed for this) acquired land for its capital (Amaravati) by essentially promising the farmers who gave the land by essentially promising farmers who gave the land 'you give me 5 acres, I will give you back 2 acres of developed land'. Essentially what they acquired is an equity state. We need to think more about such types of structures"