Just compensating farmers is not enough, rather they must be made stakeholders in projects that displace them. This is the foundation of the government's proposed land rehabilitation policy. It will be an act of Parliament and binding on Corporates, reports CNBC-TV18.

The PM has promised a rehabilitation policy for those displaced by special economic zones (SEZs) and other industrial projects in the next three months. The government is already giving shape to the proposed policy. In fact the policy says that the farmers are paid market price for land and not the registered price.

According to the current land acquisition laws, land is valued at an average of the last three year's registered price. The registered price is usually an underestimate. Moreover, the compensation given over and above the price of land could also be doubled from 30 per cent to 60 per cent. The rehabilitation plan would be applicable in all cases where 200 or more farmers are getting displaced.

For instance, in the case of Tata Motors' proposed plant in Singur, more than 12,000 farmers are getting displaced. So the policy would be applicable in this case and it would be binding on corporates to implement the rehabilitation plan. Besides providing alternate land, the government also wants companies who buy the land to train displaced farmers so that they could be employed in the plants that come up.

A rehabilitation council would also be set up to monitor implementation of the plan.

Commerce secretary G K Pillai says that the compensation currently offered is not enough and the government is mulling solutions like revenue sharing with the tillers and even land leasing to make farmers long-term stakeholders. The policy has been circulated to key ministries and would come up for cabinet approval shortly. Commerce ministry sources say that it would have to be a legislation to give it teeth.

Whether this policy stem the current discontent and pave the way for large-scale industrialization? Only time will tell.