Infrastructure firms chant change mantra for land acquisition barrier
Land... should flow freely from the owner to the buyer without much of an administrative interference
Feb 19, 2015
Source : Business Standard


New Delhi:  The one issue that companies, both public and private, have always faced in India and are still reeling under is land acquisition. This was also a starting point for the Business Standard Infrastructure Summit 2015, where the delegates were brimming with ideas to address the conundrum.

The common sentiment was land as an asset should flow freely from the owner to the buyer without much of an administrative interference. The topic evoked given that the government has promulgated a new just a few weeks back. The discussion aligned to give feedback to the current government trying to make changes in the "feudal-era" land laws.

"Whether or not I agree to sell my land should be my choice. The government should not interfere. We need to have linkages to the land - road, railway and water. Some states have the right of routes, so you can use the land, pay the land owners annual royalty and keep using their land. But this law is not uniformly available," said Arup Roy Chowdhury, chairman and managing director, NTPC.

Echoing him, Ravi Uppal, chief executive officer, Jindal Steel & Power, said in the last five years, has become highly political. It is under the same pressure that the first land act bill came, having some very severe provisions. "This is not at all productive. It almost sounded like anyone who wants to get land, it becomes a lifetime obligation to keep servicing those who sold it."

An associated problem is of land grabbing and sentimental values attached with it. "In some cases, the land is wet and there is an emotional connection. The bare minimum land should be identified," said Uppal.

Santosh B Nayar, chief of IIFC, the key lender to the infrastructure sector said there needs to be merit in acquisition of land, else there would always be some discrimination or the other on the basis of public-private party, etc. "I think there is sector-based discrimination about how many people's consent you need, depending on whether or not it is a public or private or a public-private partnership project," said Nayar.

The expert panel unanimously accepted that the new land ordinance is vital for growth. "We cannot dream of eight or nine per cent gross domestic product (GDP) growth if we do not have a smooth land acquisition policy," said Rathin Basu, country president, Alstom India & South Asia.

Aniruddha Ganguly, president (strategy and development) in GMR group said that though the sentiments are positive "but if you ask the question in real time, the answer is no, not yet."

"While the recent ordinance is a quick move, it has a six-month life and it needs to pass through the joint session of Parliament and get validated. The sooner it does, from the industrial point of view or from developers' point of view, the better it is," said Basu.

Vinayak Chatterjee, a trusted analyst in the infrastructure sector, gave an interesting twist to the discussion by highlighting that most of the points debated were redundant post the new land ordinance. "The new land ordinance clearly states that infrastructure is public purpose and amenable to acquisition without social assessment impact and consensus," said Chatterjee.

No discussion on infrastructure can be complete without an argument between state-run and private sector companies. "I would say that the public sector is privileged because they are the public sector. The public sectors land acquisition process is positive by the states. Unlike the private sector, they have fairly less hurdles," said Basu

Chowdhury, the sole man representing public sector in the panel, said there are several aspects involved for a state-owned company, which are not faced by the private sector. "For PSUs, the three more aspect invoked in land acquisition are social, economic and political. Each issue has to be taken separately and can't be bunched together."

The new land ordinance shelves the idea of social impact study by project developer before acquiring the land. "I think that we have a social and moral responsibility, outside the law for a social assessment of the projects. Even if it's not required under the law, it's imperative," said Chatterjee.

Offering a possible solution to the ongoing tiff between the projects developers and the policy makers, Ganguly talked about the under-utilised provision for land banks. "States have not fully utilised the idea of the land banks. Not many states have done it though but it presents a great opportunity for them to acquire land and then take it up for future development," said Ganguly.


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