Land Acquisition: Not As Easy As It Seems

After a wait of more than a year, the much awaited Land Acquisition Bill has been approved by the Union cabinet. If it clears the Lok Sabha (which is a foregone conclusion now) the bill passed into an act of law will pave the way for the replacement of the 118 year old Land Acquisition Act of 1894 thereby bringing in some amount of contemporary flavour to it. The bill has twin objectives of addressing concerns of farmers and those whose livelihoods are dependent on the land being acquired and simultaneously facilitating land acquisition for industrialisation, infrastructure and urbanization.

• Consent of 80 per cent of people will be made mandatory except where land is acquired for public purpose. Public purpose is defined as land used for strategic purposes, infrastructure and industry.
• However, consent will not be mandatory, when land is acquired by the government for its own use.
• Urgency clause will be invoked in the rarest of rare cases like national defence and security purpose
• There will be different land acquisition norms for rural and urban areas.
• The bill proposals include a subsistence allowance of Rs 3000 per family per month for a year and an annuity of Rs 2000 per family per month for 20 years.
• The bill also includes employment provisions.
• And finally, states are free to have their own land acquisition laws.

Experience shows, that land acquisition remains one of the biggest hurdles in smooth completion of projects, especially the large infrastructure projects. It is a well established fact that many projects in India suffer due to cost overruns and one of the prime reasons of such cost overruns is the time overrun. Land acquisition remained the prime culprit for such time overruns. Therefore, getting a green signal from the cabinet should have actually brought cheer among those who are into these kinds of projects.

However, certain features of the bill will make land acquisition costly and will also not serve the purpose for which it has been enacted. According to a report, large projects where land cost plays a dominant role (like large residential projects or airports), the cost of land is likely to go up by as much as twice the original amount. Even getting the consent of 80 per cent of people whose land is to be acquired becomes difficult as almost 10 per cent of them are untraceable at any given point of time.  There are other difficulties too, as Mayank Saksena, Managing Director – Kolkata & Head – Land Services, Jones Lang LaSalle India explains. According to him “one point of doubt would be that the proposed Bill says that the provisions would be applied retrospectively if the award of compensation has not yet been made. By award of compensation, one would assume that the land owner has actually received the funds into his bank account. If the land owner in question has not accepted or otherwise received payment, it does not count as award of compensation. The implication is that if the land owner has not received compensation for any reason at all, he can bargain for a higher price and thereby hold up the process and also contribute to further land inflation”.

Thus we believe that the proposed bill is one step forward and two steps backwards, as it will not make life of corporate India any easier and hence it needs to be carefully reviewed before passing and there has to be an effort to strike a balance between land sellers and buyers.