India Inc not happy with retrospective applicability rider

Written by Shubhra Tandon | Timsy Jaipuria | Mumbai | Updated: Aug 31 2013, 10:25am hrs
Increased cost and time to acquire land is not the only thing worrying India Inc after the Lok Sabha passed the land acquisition Bill on Thursday.

Another problem issue is the retrospective applicability to all cases of land acquisition if the award under the earlier 1894 Act has not been made yet. The provisions of the new Bill will be applicable even in cases where awards have been made, but no compensation has been paid to the extent that it would have to be paid as per the new rates. The retrospective applicability has been applied on the basis of stage and not date.

This, said members of India Inc, would delay a host of ongoing projects where the land acquisition process is on and partial acquisitions are pending. Projects such as the Navi Mumbai airport, Delhi-Mumbai industrial corridor, multi-modal corridor being implemented in the Mumbai Metropolitan Region and several township and road projects would get affected by this retrospective applicability in terms of time and cost overrun.

"For Navi Mumbai airport, for example, the amount to be paid for acquisition of the remaining 10% of land would now be equivalent to the 90% already acquired, Niranajan Hiranandani, co-founder and chairman, Hiranandani Group told FE.

I doubt the government will be able to get the consent of 70% of the affected families for land required for its flagship projects, Rajeev Talwar, group ED of real estate developer DLF said.

Navi Mumbai International Airport, coming up in the Kopra-Panvel area in the eastern side of MMR, is already faced with delays of several years and cost escalation. It shot up almost three times to over Rs 14,500 crore (in 2011-2012) from the earlier estimated Rs 4,766 crore in 2006-2007.

Most of the escalation has been on account of land acquisition needs and various other cost escalations.

About 450 hectares of private land is yet to be acquired as the project affected persons are asking for allotment of 35 to 40% of the developed land, while the state government is ready to offer 22.5% of the developed land. The matter is still not resolved.

Another project in Mumbai that could face hiccups is the Rs 18,000-crore multi modal corridor running extreme north from Virar to Alibaug, south of MMR.

UPS Madan, metropolitan commissioner, Mumbai Metropolitan Region Development Authority (MMRDA), said it would be too early to ascertain how the land acquisition Bill would affect this particular project as the process of land acquisition is at very initial stages.

However, he said, "It looks it will be much more difficult to acquire land for projects, meet all other obligations and we will have to shell out more money going forward".

Expressing concern over the retrospective applicability of the Bill, Chandrajit Banerjee, director-general of CII said, Cases of land acquisition where award has not been made, the process would lapse upon enactment of the new Bill and the entire land acquisition process would have to start afresh. We suggested that in order to avoid lengthy delays in land acquisition and consequent cost overruns, in cases of land acquisition where the notification under section 11 of LA Act 1894 has already been issued and the process of award commenced, such cases should be continued and not started afresh.

What has worried the industry is that the Bill prescribes for consent of 80% of affected families for acquisition for private sector projects and 70% for public-private projects.

Further, affected families and not the land owners have been made the basis for consent requirement for any acquisition and the definition of affected family includes agricultural labourers, tenants, including any form of tenancy, share-croppers or artisans who may be working in the affected area for three years prior to the acquisition, whose primary source of livelihood stand affected by the acquisition of land. This definition of project affected families is too wide and it would be practically impossible to identify the genuine affected families and attain their consent, Ficci president Naina Lal Kidwai said.

Commenting on this, Bajaj Auto chairman Rahul Bajaj said, The farmers in India have been short-changed for decades. The government is responsible for it more than industry. As the Bill suggests, if the industry has to get 80% consent before the government buys 20% land, then one may end up not getting any land at all. Hence, the government should buy 100% of the land required, if it is, say, over 50 acres, at the correct market price and some premium. The problem is the determination of the market price who will do it and how will it be done The compensation of up to four times the market value of land in rural areas may make the industries nonviable. They may be forced to look abroad for expansion.

(With inputs from Geeta Nair in Pune and Sandip Das in New Delhi)