New Delhi: Fearing the prospect of spiraling land prices and cumbersome acquisition procedures that could push up cost of projects, India Inc is unhappy with the Land Acquisition Rehabilitation and Resettlement Bill 2011 that was cleared by the Group of ministers(GoM).
The captains of industry are also concerned about the retrospective application of the Bill.
Rajeev Talwar, executive director of real estate giant DLF said the Bill, which is expected to be tabled in the winter session of Parliament, could hurt business.
"When land prices go up, it will push up project cost by many times over. You will not see big projects now as not many developers can afford resettlement and rehabilitation," he said after the Sharad Pawar-led GoM made the basic features of the draft public.
Federation of Indian Chambers of Commerce and Industry (FICCI) president R.V. Kanoria was more measured in his response. "While we have not got the details about the changes to be brought out, FICCI's stand has been very clear that this Bill should not apply relief and rehabilitation provisions to private purchase transactions at all," he said.
A FICCI release said that the relief and rehabilitation provisions should be applicable only when government acquired land for industry.
Even here, the relief and rehabilitation amount needed to be reduced so that it did not put "an unfavourable burden on the industry".
Union Rural Development Minister Jairam Ramesh conceded that there were concerns over the passage of the Bill which will lead to an increase in land prices. "We were under pressure as there was a belief in certain sections that the Bill will make urbanisation and industrialisation more expensive," Ramesh said while addressing a press conference with deputy chairman planning commission Montek Singh Ahluwalia.
The current version of the Bill proposes that in rural areas the minimum compensation should be four times the market value for land while in urban areas it should be twice the market value. This would be in addition to a solatium.
Former president of the Confederation of Indian Industry (CII) B. Muthuraman has highlighted the concerns of industry on the land Bill after it was tabled last year. In March this year, when he was still CII president, he had said that industry would have to spend five times more for the purchase of land if the Bill became law. He had demanded that the government be allowed to procure land for industry as a "public cause".
Regarding the "element of retrospectivity" that is provided in the draft prepared by the GoM, FICCI's Kanoria emphasised that the Bill "should be applicable on prospective basis only".
Former Reserve Bank of India governor Bimal Jalan believes the legislation must not be applied with retrospective effect.
"Retrospective application of any law is not a good idea. After a transaction has been completed, the terms and conditions cannot be changed," he said.
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