New Delhi, Nov. 1: A system of a regular payment of cash, rather than a fixed amount, to those displaced by industrial and mining projects is on the steel ministry’s radar.

“We need a humane compensation policy ... not the current system of working out the average of a land’s valuation over the last five years that has no relevance to the value of the land after its development,” Union steel minister Virbhadra Singh told The Telegraph in an interview.

The plan is to introduce a system of annuity payments — a regular payout similar to royalty — comprising a small portion of the revenues generated from a factory or a mine on the land of the displaced, Singh said.

The petroleum ministry had recently proposed that 5 per cent of the government’s oil and gas royalties should go back to those displaced by exploration and drilling activities. If both the Centre and states give 5 per cent a year, the amount can be over Rs 300 crore.

Under the draft prepared by the oil ministry, there is no provision for direct annuity to individuals or communities. The amount is to be received by the local administrative bodies, who are supposed to give 50 per cent to the displaced.

However, officials said direct payouts could also be worked out, subject to government approval.

“Land values are naturally low in tribal forested areas. They go up only after the tribals lose their rights over those lands, which means low payments before the factory or mine is set up,” said Singh.

A regular payment, according to Singh, will ensure a steady source of income. If the displaced receive money lump sum, they often waste it on consumption items.

“We have to realise that retention of a link between the people and their land could be one way to solve the problem,” said Singh.

The steel minister also stressed on employment, housing and infrastructure development.

Land acquisition has become a major political issue in the country. Trinamul Congress leader Mamata Banerjee’s protests against acquisition by the Bengal government at Singur and Nandigram have led to her landslide victories in the elections to Parliament and state local bodies.

Orissa tribals have also agitated against acquisition at Kalinganagar; tribals in other mineral-rich states are aggrieved by the low compensation offered for coal and iron ore bearing lands.

The slow pace of land acquisition has clogged the progress of many steel and mining projects in eastern India.

The state governments are no longer acquiring land on behalf of industry. However, there are concerns over coercive methods being adopted by private companies to acquire tribal land.

Companies are now reworking their rehabilitation plans to offer a mix of lump-sum payments, equity and jobs. A land acquisition guideline, which had come up before the cabinet, is yet to be cleared.