FE Editorial : Landing an opportunity

Written by The Financial Express | Updated: Dec 15 2012, 05:43am hrs
Though the full details of the Land Acquisition, Rehabilitation and Resettlement (LAAR) Bill cleared by the Cabinet are not out, it appears largely positive as the Bill seems to have avoided serious pitfalls while addressing the needs of land losers. There is the obvious problem in that the government is making it difficult for private players to acquire land on their own by putting in R&R obligations even when government help is not sought for acquiring landwhich means the acquisition of land speeds up or slows down according to the whims and fancies of government officials. Thats important when you keep in mind that most land disputes have taken place around land acquisition by the government, not the private sector.

This obvious problem apart, the original LAAR of 2011 was quite progressive in terms of defining the scope of projects where the government would assist in acquiring land. This included PPP projects and infrastructure which was defined to include electricity, telecom, roads, highways, tourism, ports, airports etc. In May 2012, the Standing Committee poured cold water on this and categorically said that no government help could be given in acquiring land for PPP projects, and that the definition of infrastructure gave a great latitude to government to include projects in it, and needed to narrowed down. Where the Standing Committee improved (from industrys point of view) upon the original Bill was in saying the threshold levels for R&R obligations should be left to individual states to fix. The government on Thursday appears to have given many of the Standing Committees recommendations the go by. So, for instance, government can help PPP projects acquire land where the ownership of the land continues to vest with the Government. Industry is worried about land acquisition costs rising, especially with the R&R obligations, but land costs are such a small fraction of overall costs, this is unlikely to make a big dent in profitsindeed, higher costs may make the acquisition process smoother.

One obvious problem here seems to be there is no provision for helping industry to acquire land for purposes of setting up manufacturing units. Similarly, while urbanisation is going to be a big driver of growth, the Bill doesnt explicitly include townships in either public purpose or infrastructure where help in land acquisition can be given. According to McKinsey estimates, Indias urbanisation plans will need additional investments of $1.2 trillion over the next two decades, and 270 million additional persons are likely to move into cities in the next 20 years, necessitating the building of 700-900 million sq mt of commercial and residential space each yearthats more than two Mumbais each year. Hopefully some solution will be found to these important gaps when the Bill is discussed in Parliament.