The National Highways Authority of India’s (NHAI) progress in land acquisition has somewhat stalled in the last couple of years due to rising land costs, coupled with the amendment in 2015 to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act.
In FY16, NHAI acquired 9,285 hectares (ha) for `21,934 crore while in FY17, it acquired 7,491 ha for Rs 17,823 crore. This translates to about Rs 2.4 crore per hectare in both years. In FY14, NHAI paid just `90 lakh per hectare, which rose to Rs 1.35 crore in 2015. Analysts at Kotak Institutional Equities said it is unlikely the cost of land acquisition would remain static for long, pointing out that land costs already exceeded Rs 3 crore per ha in FY18. Moreover, the increase in construction activity would possibly drive the cost of acquiring land to new highs. It is only because of the fall in area of land acquired that overall cost of land acquisition has been stagnant over FY2016-18. The analysts said higher cess funds in FY18 would largely fund land acquisition costs of about Rs 21,000 crore in FY18.
Manish Agarwal, partner, PwC India, believes NHAI may be able to keep a lid on costs if it strikes the right balance for land acquisition. He explained, “Obviously, land is costlier closer to the urban centres. It is also costlier to acquire land along existing highways because landowners demand a premium due to the development potential. Perhaps, NHAI can begin to look at greenfield alignments wherever possible because the costs are comparatively lower in the less developed areas.”
Agarwal added the pressure to acquire land at a faster pace may be greater in the coming years due to an aggressive Bharatmala road-building programme envisaged by the government. NHAI, in its annual report for 2016-17, had said due to the new Act, in some cases the cost of land is more than the cost of the entire project. NHAI said affected land owners, in some cases, have refused to hand over possession of land and have demanded higher compensation even where land acquisition was completed before the promulgation of the Act.