New land bill: ‘It’s a non-sensical position to take’

New land bill: ‘It’s a non-sensical position to take’

FP Editors Sep 6, 2011

The Cabinet has given its seal of approval to the new Land Acquisition Bill. The bill aims to address the concerns of farmers who lose their land, help land acquisition for industrialisation and other infrastructural projects.

Once implemented, the Bill will replace the Land Acquisition Act of 1894 and supersede all specialised legislations on land acquisition, including those for special economic zones and the Railways. Rural development minister Jairam Ramesh said the draft bill will be placed before Parliament in the current session.

Once implemented, the Bill will replace the Land Acquisition Act of 1894 and supersede all specialised legislations on land acquisition, including those for special economic zones and the Railways. Reuters

While Ramesh insisted the bill tried to adopt a “balanced stand” between promoting development and urbanisation and protecting farmers’ rights, businesses have greeted the bill with some reservations.

Here are the highlights of the draft bill:

Approval of 80 percent of land owners mandatory for acquiring land for a project, except in instances where land is acquired for public purposes.

Public consent not required for ports, canals, highways and railway projects. Public purpose is defined as land use for strategic purposes, infrastructure and industry.

Consent not mandatory when land is acquired by the government for its own use.

Compensation to land owners has to be four times the market value of land in rural areas, and two times the market value in urban areas.

The onus of providing compensation will be on the party directly acquiring the land, whether it is the state government or private developers.

Acquisition of up to 5 percent of multi-cropped land is allowed with riders.

After acquisition, the purpose of land use cannot be changed.

Compensation must be paid to those giving up land within three months of acquisition while resettlement and rehabilitation benefits must be provided within 18 months.

Compensation to displaced individuals is to be Rs 5 lakh.

A subsistence allowance of Rs 3,000 per family has to be paid per month for a year and an annuity of Rs 2,000 per family per month for 20 years.

Twenty percent of developed land to be given to owners.

Twenty percent profit on each transfer of land within 10 years to be shared with owners.

There will be different land acquisition norms for rural and urban areas.

States are free to have their own land acquisition laws.

Any acquired plot that remains unutilised for 10 years can be put in a land bank, to be later used for any purpose the state government deems fit.

Urgency clause can be invoked in rarest of rare cases like national defence.

The bill also includes a provision to apply the law with retrospective effect.“The new law will apply to all cases of land acquisition where the award (compensation) has not been made so far under the previous law, or the possession of land has not been made regardless of whether the award has been paid or not,” a ministry source said.

How has industry reacted?

Overall, businesses seem to have reacted to the new bill with some scepticism, arguing that it could hamper industrial development.

Lalit Kumar Jain, national president of the Confederation of Real Estate Developers’ Associations of India (Credai), was among the most vocal critics. “It is disastrous,” he said. “If private land is bought under this Act, be sure that very little land can be developed. There are too many points of conflict. It is an absolutely mindless idea to bring private land acquisition under this Act… This is a big mess. If I have to take 80 percent consent, I might as well take 100 percent. Why should I go to the government at all? If this bill is passed as it is, GDP growth is bound to come down to 6 percent or less if we are growing at 8 percent.”

CREDAI NCR President Pankaj Bajaj said: “Farmers’ interest has been protected, but the housing requirements of the middle class have been completely ignored.” He added that land costs would go up 60-80 percent because of the higher compensation offered to farmers.

KP Singh, chairman of India’s largest real estate company, DLF, adopted a similar line when he argued that “what was happening was unjust for farmers but they should not go to another extreme where urban development gets affected”.

Niranjan Hiranandani, managing director of Hiranandani Constructions, was equally critical. “I think it is a non-sensical position to take. Ultimately, we need a balance wherein we satisfy all the stakeholders in this case.” He added that the relief and rehabilitation clauses were almost like an “extortion racket”. “The government is trying to appease stakeholders, but at the cost of development. That is the problem,” he added.

Arun Nanda, executive director at Mahindra and Mahindra, believed that the bill was too populist while Anshuman Magazine, managing director (South Asia) of property consultancy CB Richard Ellis, thought the bill looked like a “job done in a hurry”.

Industry bodies also gave the bill a muted reception. The Confederation of Indian Industry expressed fears about the rehabilitation and compensation norms. “We are concerned about the cost of R&R (relief and rehabilitation) that would be loaded on industry and the solatium ratios that are spelt out. We believe that the costs have to be reasonable for industry to remain viable,” it said. CII President B Muthuraman said the total cost involved could turn out to be a “big negative”.

Another business chamber, Ficci, was mildly sanguine: “According to that (bill), the government will leave it largely to the private sector to acquire land directly and will not interfere. We still feel that some weaknesses would be addressed when it is tabled in Parliament,” said Rajiv Kumar, Ficci secretary general.

Union agriculture minister Sharad Pawar also didn’t seem very happy with the proposed bill, adding that it would further delay projects. “The proposed amendment in the Act that suggests more compensation to the landholders has side-effects to it and would set wrong trends in acquisition. My apprehension is that the owners will get excessive powers of negotiation and this would result in stalling the projects due to the non-acquisition of the land,” he was quoted as saying in a DNA report.