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The proposed new land acquisition bill has become a hotly contested
debate in the political/social and corporate circles of India. The new bill
seeks to replace the currently archaic land acquisition act of 1894.
Farmer protests on under-compensation, issues on large-scale land
requirement for industry/urbanization have prompted this move by the
government. While the core premise of the bill (i.e. to ensure “adequate”
rehabilitation for project-affected people and fair compensation) seems to
be good in principle, the debate in the media suggests that there are a
number of devils in the detail.
Key highlights of the bill- The bill primarily rests on the premise of
“Relief and Rehabilitation” (R&R) for all project affected people
(including landless labor) and overall seeks to minimize the government
role in acquisitions given that political repercussions of the state being
“land broker” haven’t been rewarding (West Bengal/Noida). Land
pricing/annuity compensation norms for both urban and rural land
acquisition have been suggested and the government will be stepping in
only in cases where 80% of land has been acquired. The bill is proposed
to come in from retrospective effect which means that it will cover all
ongoing acquisitions (but not where they are already complete).
Views are divergent between social/political activists and industry.
Social/political activists are contending a loose definition of "public
purpose" which could be misused. R&R and compensation terms are also
suspect (given past experience and in a bid to appease farmers ahead of
crucial UP elections next year). Industry on its part is contesting that
certain norms such as no acquisition of multi crop irrigated land/some
compensation terms could be stumbling blocks, thus making it harder for
industrialization/urbanization to happen.
Impact- Overall, in our view, the proposed bill will likely make new
acquisitions expensive but if it also comes with lower
timeline/approval/litigation risks, then we think it should be good for the
industry, overall. The law additionally requires an efficient “land
market”, which we believe is lacking right now. Specifically for the RE
industry, the land banking model will likely go away (given restrictions
on holding period/cost). However, current “land owners” could stand to
benefit as it would serve to make existing parcels (especially contiguous
ones) much more valuable. Given varying views and strong opposition to
certain sections of the act, the bill, which has currently been placed in the
public domain, may not get passed this year but would likely be up for
resolution next year.
Table 1: Key highlights of the bill
Scope of the bill - All govt acquisitions.
Pvt acquisitions for more than 50 acres in
urban areas and 100 acres in rural areas.
No multi crop irrigated land to be
acquired by the govt. Need consent of
80% of families for acquisition to happen
Minimum compensation- 2x MV of land
in urban centers and 6x in rural centers.
If land acquired for urbanization 20% of
land to be given to owners and 20% of
appreciation over a 10-year period to be
shared with the original land owner.
Relief and Rehabilitation- Very strong
focus on this. Subsistence allowance for
affected families (land owner and
landless) has been suggested.
Mandatory employment/Infrastructure
amenities to be provided. Amenities
higher in case land acquired from
scheduled tribes.
Urgency clause- Only to be exercised in
rarest of rare conditions.
Source: LARR Bill
Table 2: Key highlights of land acquisition bill
Key issues Land bill Key points of debate
Scope of the bill All govt acquisitions. Pvt acquisitions for more than 50
acres in urban areas and 100 acres in rural areas.
Some states esp. in North India have said
that acquisition of multi crop land is
restrictive. Also differences in opinion exist
on if the minimum consent should be 80%
or higher/lower.
No multi crop irrigated land to be acquired by the govt.
Need consent of 80% of families for acquisition to
happen.
Minimum compensation 2x MV of land in urban centers and 6x in rural centers.
If land acquired for urbanization 20% of land to be given
to owners and 20% of appreciation over a 10 year
period to be share with the original land owner.
This may increase land cost on an
incremental basis, which could potentially
affect project IRRs and returns. Since most
pvt acquisitions are done on market prices
industry wants the restrictions to go away
for private deals.
Relief and Rehabilitation Very strong focus on this. Subsistence allowance for
affected families (land owner and landless) has been
suggested. Mandatory employment/ Infrastructure
amenities to be provided. Amenities higher in case land
acquired from scheduled tribes.
Social media believes more needs to be
done for displaced families as land is the
main source of livelihood for farmers.
Limitations on land usage and
acquisition
Definition of public purpose to be decided by a
committee. Change in use not permitted. Land to be
returned to the owner if not used in 5 years for the
purpose for which it was acquired.
Definition of public purpose is too loose.
Govt has said off late that this will be
tightened. Bill clearly aims to discourage
land speculation.
Urgency clause Only to be exercised in rarest of rare conditions. Given vast amount of land requirement for
industry/ urbanization, does no role of govt
make acquisition process easier and also
does it necessarily lead to more equitable
distribution of wealth? Experience in Noida/
WB for the state govts hasn’t been good.
Source: LARR Bill , Economic Times, Times of India
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
The proposed new land acquisition bill has become a hotly contested
debate in the political/social and corporate circles of India. The new bill
seeks to replace the currently archaic land acquisition act of 1894.
Farmer protests on under-compensation, issues on large-scale land
requirement for industry/urbanization have prompted this move by the
government. While the core premise of the bill (i.e. to ensure “adequate”
rehabilitation for project-affected people and fair compensation) seems to
be good in principle, the debate in the media suggests that there are a
number of devils in the detail.
Key highlights of the bill- The bill primarily rests on the premise of
“Relief and Rehabilitation” (R&R) for all project affected people
(including landless labor) and overall seeks to minimize the government
role in acquisitions given that political repercussions of the state being
“land broker” haven’t been rewarding (West Bengal/Noida). Land
pricing/annuity compensation norms for both urban and rural land
acquisition have been suggested and the government will be stepping in
only in cases where 80% of land has been acquired. The bill is proposed
to come in from retrospective effect which means that it will cover all
ongoing acquisitions (but not where they are already complete).
Views are divergent between social/political activists and industry.
Social/political activists are contending a loose definition of "public
purpose" which could be misused. R&R and compensation terms are also
suspect (given past experience and in a bid to appease farmers ahead of
crucial UP elections next year). Industry on its part is contesting that
certain norms such as no acquisition of multi crop irrigated land/some
compensation terms could be stumbling blocks, thus making it harder for
industrialization/urbanization to happen.
Impact- Overall, in our view, the proposed bill will likely make new
acquisitions expensive but if it also comes with lower
timeline/approval/litigation risks, then we think it should be good for the
industry, overall. The law additionally requires an efficient “land
market”, which we believe is lacking right now. Specifically for the RE
industry, the land banking model will likely go away (given restrictions
on holding period/cost). However, current “land owners” could stand to
benefit as it would serve to make existing parcels (especially contiguous
ones) much more valuable. Given varying views and strong opposition to
certain sections of the act, the bill, which has currently been placed in the
public domain, may not get passed this year but would likely be up for
resolution next year.
Table 1: Key highlights of the bill
Scope of the bill - All govt acquisitions.
Pvt acquisitions for more than 50 acres in
urban areas and 100 acres in rural areas.
No multi crop irrigated land to be
acquired by the govt. Need consent of
80% of families for acquisition to happen
Minimum compensation- 2x MV of land
in urban centers and 6x in rural centers.
If land acquired for urbanization 20% of
land to be given to owners and 20% of
appreciation over a 10-year period to be
shared with the original land owner.
Relief and Rehabilitation- Very strong
focus on this. Subsistence allowance for
affected families (land owner and
landless) has been suggested.
Mandatory employment/Infrastructure
amenities to be provided. Amenities
higher in case land acquired from
scheduled tribes.
Urgency clause- Only to be exercised in
rarest of rare conditions.
Source: LARR Bill
Table 2: Key highlights of land acquisition bill
Key issues Land bill Key points of debate
Scope of the bill All govt acquisitions. Pvt acquisitions for more than 50
acres in urban areas and 100 acres in rural areas.
Some states esp. in North India have said
that acquisition of multi crop land is
restrictive. Also differences in opinion exist
on if the minimum consent should be 80%
or higher/lower.
No multi crop irrigated land to be acquired by the govt.
Need consent of 80% of families for acquisition to
happen.
Minimum compensation 2x MV of land in urban centers and 6x in rural centers.
If land acquired for urbanization 20% of land to be given
to owners and 20% of appreciation over a 10 year
period to be share with the original land owner.
This may increase land cost on an
incremental basis, which could potentially
affect project IRRs and returns. Since most
pvt acquisitions are done on market prices
industry wants the restrictions to go away
for private deals.
Relief and Rehabilitation Very strong focus on this. Subsistence allowance for
affected families (land owner and landless) has been
suggested. Mandatory employment/ Infrastructure
amenities to be provided. Amenities higher in case land
acquired from scheduled tribes.
Social media believes more needs to be
done for displaced families as land is the
main source of livelihood for farmers.
Limitations on land usage and
acquisition
Definition of public purpose to be decided by a
committee. Change in use not permitted. Land to be
returned to the owner if not used in 5 years for the
purpose for which it was acquired.
Definition of public purpose is too loose.
Govt has said off late that this will be
tightened. Bill clearly aims to discourage
land speculation.
Urgency clause Only to be exercised in rarest of rare conditions. Given vast amount of land requirement for
industry/ urbanization, does no role of govt
make acquisition process easier and also
does it necessarily lead to more equitable
distribution of wealth? Experience in Noida/
WB for the state govts hasn’t been good.
Source: LARR Bill , Economic Times, Times of India
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