Land Acquisition Bill – More Socialist In Nature

It seems that the UPA Government is in hurry to bring in all the socialist reforms as soon as possible. And hence after the food Security Bill, the Land acquisition bill is also likely to see the day light. It seems that the UPA Government is keeping no stone unturned to assure itself the third term in a row. That is why while already the Government is facing difficult issues like CAD, Depreciating Rupee and contracting GDP growth, The Government is focusing on the non core issues like Land Acquisition and Food Security bill. The Land acquisition bill is another step towards the similar direction.

The pro and cons of the land acquisition bill have been discussed by us many times in the past.  The important point here is, the changes in the 120 year law are expected to be beneficial to the farmers as it would give them the right due for their land. However as one gets benefited the others have to pay for that. Naturally the builders would be impacted negatively as their margins get impacted. But the ultimate sufferer would be the common man whose dream of buying own a house may just get shattered. The simple reason being the builders would pass on the cost to the ultimate buyers. 

Following are some of the highlights of the Land Acquisition Bill. First is, compensation has been upped up to four times the market values in rural areas and twice the market value in urban areas. Secondly, Consent of 80 % of land owners required for acquiring land for private projects and 70 % land owners for public private projects. Third, to provide justice to historical cases, the bill is being applied with a retrospective effect where no reward for the land acquisition has been made. Fourth factor is, if the land is being sold to the third party and profits are more than 40 %, then profit should be shared with the land owner. 

So the above mentioned are few of the factors that are likely to affect the Realty players. But again we are of the opinion that not all realty companies would be affected. Those already having the large and already paid for land bank would not be affected immediately.  This includes the like of DLF in the northern areas and HDIL in western parts of India. On the southern front Puravankara would be the one which may not be impacted much. 

However there are going to be long term issues when the companies try for new land acquisitions. Naturally while the land bill is good for many farmers, it would negatively impact another stratum like builders and even the first time house buyers.It seems to be more of a socialist nature and hence is negate e for the capitalists. With more reforms required for the growth, the land acquisition would not be of help to revive the economy.