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Infrastructure
Equity Research
New Land Acquisition Act could be a game changer
News
Over the past few days there have been media reports of some discussions
in the government on a new Land Acquisition and Rehabilitation Act that
may be likely tabled in the monsoon session of the Parliament (July-2011).
Analysis
Even though the final draft is yet to be presented, the preliminary changes
being discussed seem to address the core problems:
1) Restricted definition of ‘public purpose’ – from ‘any purpose useful to
general public’ to ‘acquisition necessary for strategic and infrastructural
purposes’. We believe the current broader definition has left room for
private purpose developments to interpret the current Act. The more
specific revised definition, however, could result in fewer
interpretations/disputes.
2) Compensation based on historical usage – could be changed to 6X of
historical notified value to fairly distribute the increase in value post NAC
(non agricultural usage clearance) between the existing owner
(agricultural) and prospective developer (industrial).
3) Compensation for non-owners – entitled to a grant amounting to 10
days of minimum wages per month for 33 years, from nothing earlier. This
could result in resolution of more disputes by indirectly impacted parties.
However, some of the recommendations may raise more debates such as:
4) Direct land acquisition by private sector – to not be allowed if more
than 400 families may be displaced. This could result in project delays. In
such cases, land would be acquired only by the government.
Implications
We see this as a positive for our construction and Infra coverage group as:
1) It addresses some of the structural problems that could allow for faster
land acquisition for the infrastructure space;
2) Even though compensation payout may go up, we believe faster
planning and on-time execution could more than compensate for any such
increased payouts.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Infrastructure
Equity Research
New Land Acquisition Act could be a game changer
News
Over the past few days there have been media reports of some discussions
in the government on a new Land Acquisition and Rehabilitation Act that
may be likely tabled in the monsoon session of the Parliament (July-2011).
Analysis
Even though the final draft is yet to be presented, the preliminary changes
being discussed seem to address the core problems:
1) Restricted definition of ‘public purpose’ – from ‘any purpose useful to
general public’ to ‘acquisition necessary for strategic and infrastructural
purposes’. We believe the current broader definition has left room for
private purpose developments to interpret the current Act. The more
specific revised definition, however, could result in fewer
interpretations/disputes.
2) Compensation based on historical usage – could be changed to 6X of
historical notified value to fairly distribute the increase in value post NAC
(non agricultural usage clearance) between the existing owner
(agricultural) and prospective developer (industrial).
3) Compensation for non-owners – entitled to a grant amounting to 10
days of minimum wages per month for 33 years, from nothing earlier. This
could result in resolution of more disputes by indirectly impacted parties.
However, some of the recommendations may raise more debates such as:
4) Direct land acquisition by private sector – to not be allowed if more
than 400 families may be displaced. This could result in project delays. In
such cases, land would be acquired only by the government.
Implications
We see this as a positive for our construction and Infra coverage group as:
1) It addresses some of the structural problems that could allow for faster
land acquisition for the infrastructure space;
2) Even though compensation payout may go up, we believe faster
planning and on-time execution could more than compensate for any such
increased payouts.
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