ARE AMENDMENTS THE WAY FORWARD?
Some provisions of the Act have made land acquisition a cumbersome and expensive process which could delay schemes like 100 smart cities and Housing For All by 2022
Finance minister Arun Jaitley this week promised to go ahead with t he amendment of the Land Acquisition Act. The Right to Fair Compensation, Resettlement, Rehabilitation and Transparency in Land Acquisition Bill 2013 was passed by the UPA government and seeks to fix fair compensation for farmland being taken over for industrial projects. However, it has made land acquisition process dif ficult, which is impacting projects.
Real estate experts and economists are concerned that the Act in its present form will adversely impact both urbanisation and development. They believe that the clause to seek consent of a majority of gram sabha or adult members of a vil- lage and the mandatory social impact assessment that aims to assess the social costs of the project versus its benefits will be a long-drawn process. Many are also critical of the requirement of consent of at least 70% people for acquisition of land for public private partnership projects and 80% for acquiring land for private companies.
Such stringent measures can pose problems for realising ambitious projects such as the two mega infrastructure projects — the Delhi Mumbai Industrial Corridor and Mumbai Chennai Industrial Corridor. It is likely to pose a challenge to development of a 100 smart cities for which 7,060 crore has been allocated .
Prime Minister Narendra Modi’s Make in India campaign to revive manufacturing also requires free flow of raw materials, improving logistics infrastructure such as port to inland connectivity, cargo airports etc. The Act also calls for an additional compensation to the affected families for their rehabilitation and resettlement. Companies are also expected to employ those who are from displaced families.
According to Neeraj Bansal, partner and head, real estate and construction, KPMG in India, the new LARR ( Land Acquisition Rehabilitation and Resettlement) Act, 2013, — which replaced the archaic Land Acquisition Act, 1894 — seeks to balance out the interests of the land owners; project affected families; and the acquirers. However, certain provisions of the Act have made land acquisition process an unwieldy, cumbersome exercise and significantly increased acquisition cost which may negatively affect the viability of large infrastructure, townships and SEZ projects. Slow development of infrastructure in the country could delay major government projects such as 100 smart cities and Housing For All by 2022.
To meet the growing requirements of urbanisation and affordable housing in the country, large tract of land parcels have to be made available on time and at appropriate pricing to enable development of affordable urban infrastructure and housing. The LARR Act, 2013, provisions in the current form restrict the ability of the gover nment/ developers to expedite acquisition of large land parcels at optimum cost, thereby resulting in pressure on existing available land and indirectly impacting pricing as well, Bansal adds.
“The cost of acquisition of land may increase, given the higher compensation multiple indicated in the new Act. However, much will depend on the way in which the smart city concept will be formulated and the consequent role to be played by the Centre and state governments. Permitting higher floor space index (FSI) in order to optimise land requirements, considering alternative land locations, providing benefits like share of developed area to landowners could be some variables which could optimise the overall land acquisition cost,” says Sheetal Sharad, assistant vice president, ICRA Limited.