THE STATE OF REAL ESTATE

Just framing new rules for proper implementation of the land acquisition policy will not do, a lot of challenges continue to confront us if we want to implement the provisions in letter and spirit

The Right to Fair Compensation and Transparency in Rehabilitation and Resettlement Act 2013 commonly referred to as the Land Acquisition Act has come into force from January 1, 2014. The rules of the new Act that replaced the old archaic Land Acquisition Act of 1894, will be the guiding principle for all land acquisitions under the Central and the state governments. The Act through its set of rules now brings in stricter norms and increases the compensation of displaced landowners significantly.

According to the new Act, state governments will have to set up at least six bodies, including the state-level Land Acquisition Rehabilitation and Resettlement Authority, to hear disputes arising out of projects where land acquisition has been initiated by the state or its agencies. Further, as per the rules of the Act, the state governments will take immediate steps to create and establish the State Social Impact Assessment Unit, the office of the Commissioner Rehabilitation and Resettlement, and the State Level Monitoring Committee.

The salient feature of the Act, however, is that developers acquiring land for projects will need the consent of up to 80 per cent of people whose land is acquired for private projects and of 70 per cent of the landowners in the case of public-private partnership (PPP) projects. It also provides for compensation of as high as four times of the circle rate in rural areas and two times in urban areas. This clause in particular would impact the calculation of the overall project and will eventually impact property pricing.

Due to the proposed calculations to reach the final value, the total cost of land acquisition is bound to go up for all projects, irrespective of them being government or private or PPP projects.

Consent clause will also add to the delay of projects. The clause of mandatory consent of 80% of owners for private projects and consent of 70% landowners for PPP projects will delay the process of land acquisition and the projects in turn.

A country which is already battling problems of policy impediments and regulatory bottlenecks at the time of project approvals might not get enough support from the new Act.

Due to the proposed calculations to reach the final value, the total cost of land acquisition is bound to go up for all projects, irrespective of them being government or private or PPP projects.

Further, consent clause will also add to the delay of projects. The clause of mandatory consent of 80 per cent of owners for private projects and consent of 70 per cent landowners for PPP projects will delay the process of land acquisition and the projects in turn. A country which is already battling problems of policy impediments and regulatory bottlenecks at the time of project approvals might not get enough support from the new Act.

Moreover, before setting the regulation over the land acquisition process, it was indeed a requirement that we have clear land titles. Unfortunately, most cities, talukas and villages still do not have a very well documented land and property records in place. Though the work has begun on improving the records across several parts of our country, it would take some time to change the current situation of ambiguity over title deeds.

In case of large-scale projects involving infrastructural developments, the Act will substantially delay the entire process. Infrastructure projects often involve huge land parcels and huge investments. Delay in approvals, sanctions and now the added burden of the consent of almost 70 per cent land owners will further put pressure on the agency executing the project. Chances are that large scale projects may get stalled in the event of any litigation or delay. The infrastructure sector is already facing problems of funding. Any problem arising out of these impediments like the ones mentioned above would add to the overall pressures. This could also affect the participation of the private sector, which is already shying away from taking such projects on account of problems such as reduced funding and regulatory hurdles.

Moreover, the history of litigation’s in the country tells us that even after successful resettlement and rehabilitation in the country, there is no guarantee that the there will not be any further dispute and any litigation against the developer or the government in following years of acquisition. The safeguard however, is that Central law would prevail in case of a conflict. For successful implementation of the Act, it is thus imperative that state governments work fast towards setting up the machinery within.

This could also affect the participation of the private sector, which is already shying away from taking such projects on account of problems such as reduced funding and regulatory hurdles.

The history of litigation’s in the country tells us that even after successful resettlement and rehabilitation in the country, there is no guarantee that the there will not be any further dispute and any litigation against the developer or the government in following years of acquisition.

(The author is Managing Director, RICS South Asia)