The Times Of India, June 12 2014, New Delhi: A majority of state finance ministers, including some from Congress-ruled states, have called for easing restrictive provisions of the land acquisition, a demand which may prompt the Centre to find ways to make it easier for infrastructure and affordable housing projects to acquire land.
While no formal decision has been taken, a view is emerging within a section of the BJP led government that a strategy will have to be drawn up to ensure that critical infrastructure projects do not get blocked due to issues related to land acquisition.
During their meeting with finance minister Arun Jaitley, several state finance ministers raised the issue of the Land Acquisition Act as a stumbling block for projects.
India Inc has already complained about the restrictive Land Acquisition Act which they say will push up project costs significantly and cause delays.
Industry groups have said the Act is “a major irritant” and needs a comprehensive overhaul. All political parties had joined hands to get the Act approved in Parliament. It has been hailed as a fair law which takes into account the interest of farmers and ensures they get adequately compensated.
Gopinath Munde, who died in a road accident, had said he was ready to reduce the number of notices and timelines for processes of acquisition to cut delays that the industry fears. “We can reduce the periods given for notices to be responded to, like from 15 days to a week,” Munde who was rural development minister had said while taking charge of his ministry. But he had ruled out any easing of the consent clause for acquisition saying the approval from villages would be needed.
Munde had also backed the compensation clauses in the Act saying farmers should be adequately compensated. The land bill prescribes that compensation will be twice the market value in urban areas and four times in rural areas. The industry has said this will push up project costs.
Sources said the government may not want to rush in to amend the Act given the political repercussions of such a move. But faced with a slowing economy and stalled projects, the priority would be to get the engines of growth roaring again.
The urgency to revive the economy, therefore, may prompt the government to find ways to skirt around the restrictive clauses and give enough headroom to industry to press ahead with projects.
The massive affordable housing plan of the new government, which is expected to boost the construction sector, may also benefit from any moves to ease restrictive aspects of the new Land Acquisition Act.
Several road projects would also benefit. The road building body has also cited the Act as a major obstacle for road projects saying the cost of acquisition will rise four fold.
Similarly, the Department of Industrial Policy and Promotion has strongly backed the need to water the stringent provision of the Act to fast track mega industrial projects.
The department has said that land acquisition for large projects have come to a halt because of “too many approvals and too many committees”, which it says has made the law bureaucratic.
It has argued that the provisions are not farmer friendly and amendments are needed if manufacturing has to get a boost. The department has also said that amending the Act would help in the endeavour to attract more foreign investment in large industrial projects and townships.