Projects hit as government fails to notify rules under Land Acquisition Act

NEW DELHI: Nearly four months have passed since the new Land Acquisition Act came into force, but development projects continue to be stalled since the government has failed to notify the rules to implement the law.
Industry chambers such as the CII and Ficci are now looking forward to the next government to speedily finalise the rules and make some amendments in the existing provisions to ensure that the new law does not impede infrastructure development and industrialisation.

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, which was pushed by rural development minister Jairam Ramesh, became effective January 1. However, no land has been acquired for public purpose under the new law so far because of ambiguity in rules.

“The Act, in its present form, is absurd. There is a need to rethink the Act and we will work with the new government to make the Act beneficial for both the seller and developer,” said RV Kanoria, chairman of the Ficci task force on land reforms and policy. He added that the law is disastrous for industry as the time frame for acquisition is as high as over 50 months, by which time projects will undergo huge cost escalation.

The CII (Confederation of Indian Industry) has voiced similar concerns, besides emphasising on simplification of procedures. “It is important to look at simplification of overall processes as laid down in the Act so as to reduce the time required for acquisition of land from the currently stipulated 56 months to a minimum of two years,” CII director-general Chandrajit Banerjee said.

According to the CII, land acquisition is likely to cost 3-3.5 times more and the rehabilitation and resettlement costs are also likely to go up by about three times, a concern that is shared by some government officials.

Department of industrial policy and promotion (DIPP) secretary Amitabh Kant has criticised the new Act, saying that it has become “virtually impossible” to acquire land for construction of roads, ports and creating other infrastructure under the new law.

“Land acquisition for roads, ports and similar other economic activities has not been happening ever since the new Land Acquisition Act came into being,” Kant said, emphasising the need for amendment to the Act.

The law, passed during the monsoon session of Parliament last year, received the President’s assent on September 27, 2013. It replaced the Land Acquisition Act of 1894 by establishing new rules for compensation as well as resettlement and rehabilitation.

The most important feature of the law is that it requires the developers to get the consent of up to 80% of the people whose land is acquired for private projects and of 70% of the landowners in the case of public-private partnerships projects.

These include land acquisition under public purpose for industrial corridors and the National Investment Manufacturing Zone. Besides, it provides for compensation as high as four times in rural areas and two times in urban areas.

However, industry strongly feels that manufacturing projects should also be included in the definition of public purpose to facilitate setting up of large projects such as steel and cement plants, etc.

Land acquisition in states such as Haryana and Uttar Pradesh for factories, roads and housing projects has sparked bitter clashes between farmers and state authorities, resulting in severe project delays.