Landing in a mess PDF Print E-mail
Friday, 27 May 2011 00:00
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On the face of things, the National Advisory Council’s suggested draft land acquisition act will take care of most of the problems India faces when it comes to land acquisition for large projects. Industry will welcome the suggestion that the government acquire all the land since it was uncomfortable with the suggestion that it be asked to acquire 70% of the land for a project first—after this, the government would acquire the remaining 30%. Even this was not acceptable to the UPA’s key ally Mamata Banerjee who wanted industry to acquire 90% of the land itself. While industry would welcome the 100% suggestion, it’s an open question as to whether Banerjee would go along.

That said, there are serious issues with the NAC proposal. For one, there is the issue of whether disallowing the private sector from acquiring land is a good idea and the kind of delays this would cause, apart from giving the government one more opportunity to play favourites since it will decide which industrialist it will acquire land for. There is then the issue of the invariable protests that come up. The NAC’s solution is annuities of the type Uttar Pradesh and Haryana have, 10 days of wages per month at the minimum wage for 33 years to stake holders who lose their livelihood as a result of the land sale, preference for jobs, and so on. In addition, a one-time payment that equals six times the registered value is to be paid. This pretty much leaves the ball back with the state since it is the government which decides what the circle rate is. A critical piece here is a 25% capital appreciation clause. Impossible to implement in practice, it says a fourth of any capital appreciation up to 25 years after the land is sold will have to be shared with the original landowner. So, if a flat built on a land got for a housing complex is resold after 13 years, a fourth of the capital appreciation will be given to the landloser. How track is to be kept of the original landowner, or of how much of the capital appreciation is due to the land and how much due to fact that a industrial park came up alongside are some questions that come to mind. This 25% clause, it appears, has yet to be ratified by the NAC. Whether industrial projects or housing projects are to be considered ‘public purpose’ enough for the state to acquire land is also undecided. Much simpler to specify conversion rates for agriculture to industrial/commercial use which will allow farmers to realise the market value for land, and allow private firms to acquire the land on their own.


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