In keeping with its resolve to take the reform agenda forward despite political odds, the Narendra Modi government has decided to issue an ordinance, amending the much-decried land acquisition law that came into force a year ago and making it easier for Corporate India to get land to set up defence production units, develop “affordable housing” projects and even create townships along industrial corridors. As per the ordinance, recommended for promulgation to the President by the Cabinet on Monday, these projects will be exempt from the onerous requirements of consent from a vast majority of the “affected families” and social impact assessment (SIA).
Also, “infrastructure projects” under the public-private partnership (PPP) mode covering a whole gamut of capital-intensive sectors that are currently troubled by investment apathy, like highways, expressways, ports, and metro rail projects, will also enjoy waiver from consent and SIA clauses if the ordinance gets President’s assent.
The compensation for those displaced by land acquisition, prescribed in the 2013 Act — which is four times the market value of the land in rural areas and twice the market value in urban areas — will, however, remain and so will the rehabilitation and resettlement (R&R) requirements. In fact, the ordinance seeks to extend the compensation and R&R measures to a clutch of major sectors like national highways, metro rail, electricity transmission and atomic energy that were exempt from the same under sector-specific Acts.
Effectively, these changes mean the consent and SIA requirements would now be applicable to only private manufacturing units, mining projects, large real estate projects and steel, copper and aluminium complexes where the land is either acquired by a private business or by the government on its behalf. The compensation and rehabilitation and resettlement obligations will be almost universal for all land acquisitions.
In the case of government and PPP ventures, the land rights will vest with the government and in the case of private projects, with the firm concerned. In these areas, one solace for the private sector is that states are empowered to define the minimum size of a project to require consent and SIA compliance.
Stating that the proposed amendments would further strengthen the protection of the interest of affected families, the government said the changes were also “pro-development” as procedural difficulties (read consent and SIA clauses) have been removed to meet strategic and developmental needs of the country. “…the present changes allow a fast-track process for defence and defence production, rural infrastructure including electrification, housing for poor including affordable housing, industrial corridors and infrastructure projects including projects taken up under public-private partnership mode where ownership of the and continues to be vested with the government”, a government release said.
Addressing the media, finance minister Arun Jaitley clarified that the proposed waiver from consent and SIA for affordable housing projects would be restricted to projects consisting only of dwelling units defined as affordable and not projects including units above that threshold as well. Asked whether rural infrastructure would also include rural roads, the minister said attendant facilities to rural roads like drainage systems would be.
Most state governments and industry had raised concerns over the consent and SIA clauses in the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, saying they were impractical and created undue burden on project developers. Industry bodies like CII have also noted that the Act jacked up land acquisition cost by three times, rendering projects unviable and thwarting investments in a struggling economy.
The Modi government, which has met with a non-cooperative Opposition in the just-concluded winter session, has since been resorting to the ordinance route to carry out the much-needed economic reforms. Last week, it issued an ordinance raising the foreign investment limit in the insurance sector to 49% and for reallocation of the coal blocks cancelled by the Supreme Court. These ordinances would need to be re-issued if Parliament fails to ratify them in the Budget session. Given that the composition of the Rajya Sabha, where the government is in a minority, is not going to be different during the Budget session, there’s no guarantee Parliament will approve the relevant laws in the coming session. Unless the two Houses separately reject the amendments, the government can’t even call a joint session of Parliament where the BJP-led coalition will have a majority.
The 2013 Act stipulates that consent of at least 70% of the project-affected people is mandatory for acquiring land for projects under the PPP model. As for acquiring land for private companies involving projects aimed at public purpose (which includes manufacturing industry also), consent of 80% of the people affected is required.