At a time when land acquisition and rehabilitation & resettlement is kicking up a storm in the entire country and Uttar Pradesh seems to be in the eye of that storm, the biggest player in the insurance sector, LIC of India has reposed faith in the state government and evinced interest in implementing the state?s new resettlement and rehabilitation (R&R) policy benefits.
LIC was the only one of the five bidders?Allahabad Bank, SBI Life Insurance, ICICI Prudential and Bajaj Allianz?that had submitted the technical bids.
It may be mentioned that the state in December last had invited a request for qualification cum request for proposal (RFQ cum RFP), seeking the engagement of private financial institutions for the implementation of the annuity scheme of the new R&R policy to land owners and farmers.
According to this policy, disbursement to the tune of R20,000 per acre, per year for 33 years needs to be made to dispossessed landowners and farmers along with the additional amount of Rs 600 increased annuity per year.
Speaking to FE, a senior official of the state government said on condition of anonymity that the confidence reposed by LIC shows that state?s R&R policy is one on which it can bet its money. ?If FIs are keen on a new product for this scheme of ours and are ready to handle this project for the next 33 years, despite the unfavourable vibes that we seem to be getting so far, it shows that we are on the right track. We will now examine the quote given by the LIC and if we find it reasonable, we will go forward with it,? he said.
?While efforts are on in Haryana to disburse land compensation through this same method, it is on a much smaller scale. UP, on the other hand, aims to acquire an estimated 5,000 hectares of land every year for development. This compensation method will be the first of its kind in the country and will be the first real test for R&R disbursement,? he added.
It may be mentioned that the compensation amount is likely to run into thousands of crores over a period of 33 years and it for this reason only the Mayawati government thought it prudent to hand over the work to a private service provider who can work on an exclusive financial product to cater to a demand of this size rather than engage the state machinery into it. ?We think that governments cannot handle accounts of such huge amounts for such a prolonged time. It is better top ask for professional people who are well equipped to do the job and secondly, governments are basically not meant to do this kind of work. It is our job to govern not to distribute compensation,? said the official.
Another official close to the development told FE that the reason why only the LIC has come forward may be that the state government has been quite unwavering in some of the parameters. ?We were resolute in our demand that the financial companies necessarily obtain the performance guarantee approval of their regulators as that this is the first time that this scheme is being launched anywhere in the country and there is no benchmark for them to follow. Also, the scheme directly affects poor landowners, whose land has been acquired for development schemes such as building roads, towns and industry. To ensure that they do not suffer if case of the company’s financial heath failure, we made sure that they give a performance guarantee approval from either Irda, in the case of the insurance companies and the RBI in the case of banks,? he said.
It may be mentioned that at pre-bid discussion meetings the companies had asked for the state government to waive the mandatory requirement of providing performance guarantee approvals from the Irda and the RBI.
