Column: Make-in-India now on firmer ground

Updated: February 24, 2015 11:34:18 AM

The land Ordinance will help billion-dollar projects which were stalled so far to take off

The writing is on the wall. The government wants to move ahead and make business-friendly laws to boost economic activities in India.

Recently, by using its executive powers, the Union government proposed certain changes to the provisions of The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The changes are pending before the President for his assent.

The new law, which the Ordinance proposes to change, had come into force on January 1, 2014, replacing the archaic Land Acquisition Act, 1894. The Indian industry has been lobbying for the easing of some of the restrictive provisions of the Act put in place by the earlier UPA government.

According to the current changes, it is understood that projects falling under defence, rural electrification, housing for the poor and industrial corridors will not require the approval of 80% of the affected landowners. Further, social impact study involving public hearings will no longer be required with the bringing of the new changes. Prior to the changes, the consent of at least 80% of the affected families in case of acquisition of land for private companies and at least 70% in case of PPP projects was necessary. Additionally, whenever the appropriate government intended to acquire land for a public purpose, the government, in consultation with the concerned panchayat, municipality or municipal corporation, was required to carry out a social impact assessment study. In the event the expert group came to the view that the project does not serve any public purpose, or the social costs and adverse impacts of the project outweigh the potential benefits, it was required to make a recommendation to the effect that the project should be abandoned and no further steps for acquisition of land should be initiated.

To balance the pro-development move, the government extended the applicability of the requirement of paying compensation and providing rehabilitation measures, on acquisition of land in several sectors, which was earlier exempted, for instance, in sectors like electricity transmission, railways, atomic energy.

Although the definition of ‘affected families’ is not clear, one can say from the proposed changes that the compensation, which will go to the farmers or the landowners, will be very high. There may still be practical issues in acquiring land for affordable housing where the land and acquisition prices are very high. However, the intention of the government seems to be to acquire land in faraway places where prices are not very high and to create connectivity and infrastructure in such areas over a period of time. This is the concept of smart cities which can be developed. The question, however, remains whether the developers will be keen to move to such faraway places, where there is no or very little development, and invest there?

Another significant move is the relaxation in case of validity of land acquisition proceedings concluded under the old legislation, which has been extended to 10 years as opposed to five years, as was the case earlier.

With the above changes in the land acquisition laws, one can expect moderation of prices—as the supply-side can be expected to improve—and improvement in infrastructure. Further, one hopes that large projects, worth billions of dollars, that had been stagnated, could finally see the light of day. The commitment of the finance minister to ease land laws, labour laws, entry norms to do business in India, along with easier taxation regime for revival of manufacturing activities in India, is clearly a move towards making in India a possibility.

By Sidharrth Shankar

Priyam Singh, associate with J Sagar Associates, Advocates and Solicitors, contributed to this article

The author is partner, J Sagar, Associates, Advocates and Solicitors. Views are personal

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