[Sange Tsering]
When highways expand, mines open, or dams rise, families often receive what looks like a life-changing amount of money. In Arunachal Pradesh, it’s very common. Cheques worth lakhs and crores arrive in places where cash incomes were once small and steady. For a moment, it can feel like sudden prosperity, like the famous Bomja village of Tawang where the defence ministry compensated the 31 households and the whole village was in the national newspapers, making headlines for becoming a crorepati village overnight.
But many studies from India and around the world show a troubling pattern: a few years later, a large number of these families are struggling again.
Reason? The problem is not that people are careless. The problem is that money replaces land, but it does not replace livelihood. Land is slow, patient wealth. A field may not give a huge return in one day, yet season after season it produces food, work and a sense of security. Compensation, in contrast, usually comes as a lump sum. It is fast money. And fast money behaves differently. Researchers observing mining belts in eastern India, dam-affected villages and road expansion areas have documented similar experiences. Families understandably spend on things that matter immediately: building a better house, buying vehicles, repaying debts, arranging marriage ceremonies, supporting relatives, or enjoying comforts they could not afford earlier, like buying iPhones, multiple two wheelers, SUVs, ornaments, expensive attires, throwing extravagant parties, designer clothes, etc.
These are not foolish decisions; they are human ones.
Yet most of these expenses do not generate future income. Once the cash runs out, people face a harsh reality. The farmland is gone. Forest access may be restricted. Traditional skills may not fit the new economy. Without training, jobs or investment guidance, it becomes extremely difficult to rebuild a stable source of earnings.
Development expert Michael Cernea famously warned about this through what he called the risks of displacement: landlessness, joblessness and social marginalisation. Simply handing over money, he argued, cannot prevent these dangers. Economists sometimes compare compensation payments to lottery wins like the famous winner of Kaun Banega Crorepati who won Rs 5 crore (less taxes) but failed to create a fortune out of it, he even failed to improve his old standard of living, Without financial planning or support systems, windfall gains tend to disappear quickly.
Where communities fare better, the story is different. Many people with compensation money have written their fortune in a much better way, but the majority failed to use this opportunity well. Instead of only lump-sum payments, there may be monthly income schemes, land-for-land options, employment guarantees, or serious efforts at skill development and investment literacy in place. Families must be helped to convert cash into businesses, education or long-term assets. In such cases, compensation will become a bridge to a new future, rather than a short celebration before decline. The lesson is simple but powerful: Rehabilitation is not about paying for what was lost. It is about rebuilding the ability to earn again. The people of Arunachal need to read the relevant Land Acquisition in Arunachal Pradesh (LAAR) Act to understand what is there for them and how the government has taken care of the issues.
Development is necessary no doubt, but knowing your rights is equivocally necessary. Until policies recognise this, the arrival of compensation money may continue to mark not the end of poverty, but the beginning of a new kind, which may be more dangerous than the traditional poverty.
Always remember, sudden compensation money often disappears quickly when people are not supported with financial knowledge, planning or long-term livelihood options. Our overall literacy may have touched a remarkable figure, but when it comes to financial literacy, Arunachal is still struggling.
When land is acquired for roads, dams, or mines, strategic infrastructure, etc, families may receive a large one-time payment. On paper, it looks like wealth. In practice, it frequently turns into short-term cash that vanishes within a few years. Scholars sometimes call this the ‘paradox of plenty’ or ‘sudden wealth effect’.
Research work of Michael Cernea (Impoverishment Risks and Reconstruction Model) shows that people displaced by development projects face several risks like loss of land, loss of regular income, loss of community support, joblessness, food insecurity, and no doubt the identity factor in Arunachal. Money alone rarely replaces these. Anthropologists studying mining regions in India, Africa and Latin America repeatedly describe a similar story: families receive lump-sum payments, but without guidance or investment avenues, spending rises quickly on consumption rather than sustainable income.
Compensation gives temporary money. If people are not trained in saving, investing or creating new livelihoods, the compensation cannot replace what was lost. The government must also think about delivering financial and investment literacy training, annuities or monthly income instead of lump sums, land-for-land options, job guarantees or skill development, support for small businesses, free education upto graduation to the kids of affected families in premier institutes. The reality needs to be understood well before it becomes a mistake of lifetime. Wealth gained in a moment can disappear in a moment if the discipline to manage it, has not been learned well.
Think well, before it’s too late. (The contributor is a PhD scholar at the NERIST)
