Balancing act for India in overhaul of archaic land law
Aug 29, 2012
Source : The Economic Times

 

MUMBAI: More than a century after it was drawn up by British colonial rulers, India's land acquisition law is finally set for a revamp that promises to breathe life into scores of frozen industrial and infrastructure projects and help lift the sagging economy. That's the optimistic scenario. The reality is that the new law will make the cost of land much higher for businesses and is unlikely to put a stop to protests by millions of people determined to defend their livelihoods or get fair compensation for losing their land.
 
The new bill will govern land acquisition by the government for itself and by private firms to provide public services. This will embrace a wide range of projects in sectors from power and telecommunications to transport and education. Among the major projects which have stalled awaiting the new legislation are 12-million-tonne steel plants planned by Posco and ArcelorMittal and a six-million-tonne steel plant of Tata Steel in Odisha, as well as Coal India's mine expansion in Chattisgarh. More than 80 highway projects are also running behind schedule.
 
Despite the promise of greater transparency and better regulation, corporate India is worried about cost. The new law may force them to pay four times the market price for land in rural areas and twice the market price in urban areas, and give displaced people homes, jobs, monthly stipends and even a share of their profits in some cases. Even if companies enter into private negotiations for land, they will be required to rehabilitate people if they acquire over 100 acres of rural land or 50 acres in urban areas.
 
The Confederation of Indian Industry lobby group estimates that this will increase land acquisition costs by 3-3.5 times, affecting the viability of projects across the board. Companies are bracing for increased costs and may tweak project plans, but they're unlikely to ditch projects altogether, having invested years negotiating with state governments and landowners. ArcelorMittal's boss Lakshmi Mittal said recently his India projects were unlikely to see light for several years because of unresolved policy issues. But a spokeswoman said they were continuing negotiations despite likely cost increases.
 
The government has tried twice to amend the 118-year-old legislation, but until now it has failed to balance demands for an end to the regulatory minefield that confronts developers with a popular clamour to protect the poor. Even as the government prepared last week to introduce its latest version of the Land Acquisition act in parliament, social activists gathered in New Delhi to protest against a law their leaders said falls "far too short of democratic expectation". 

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