Abstract:-

Land acquisition is a commonplace and hotly debated policy for the developing countries due to opposing views on adequacy of compensation, held by the government and land-owning households. Theories abound as to what would be a good design for compensation. But the empirical question remains open – how do households respond in terms of consumption when they disagree about the quantum of compensation? We estimate consumption responses of households in quasi-randomized setups with six different events of land-acquisition-related conflicts in India between 2018 and 2019. Household-level consumption increases when the conflict arises due to disagreement about the level of monetary compensation (three cases of conflicts), does not change in other cases where the demand is for higher non-monetary compensation (residual three cases of conflicts). Current income does not change and borrowing for consumption goes down post the conflicts. We theorize that this increase in consumption reflects expectation about future income in the form of higher compensation with negligible downside risk. Overall, this work presents a novel scenario where conflicts are associated with increases in consumption of the parties involved in the conflict.