The new bill in its current form is seriously flawed in some ways

Land acquisition is the single most important reason for Mumbai's much-awaited, dispute-ridden metro rail to be repeatedly postponed and for the cancellation of its second line. Sumit Banerjee, CEO-Infrastructure, Reliance Infrastructure and Vice Chairman at Reliance Cement, explains to Shashidhar Nanjundaiah whether the current Land Acquisition Bill could have helped.

Reliance Infra's partnership with its public partner MMRDA has been rocky. After an originally planned line from Colaba to Charkop was diverted, RInfra also faced pressure from MMRDA to complete its project. Unable to cope with the pressure from MMRDA and the disappointing pace of clearances and RoW, RInfra pulled the plug in January this year from the second line of the project.

How much did land acquisition impact your decision to put the brakes on Mumbai Metro?
Acquiring land for projects in rural areas is a tricky affair by itself, but what proves trickier is acquiring land for projects in urban areas. Scarcity of land and abundance of encroachments have peppered holes in all attempts to obtain land for vital projects in cities like Mumbai within the specified time. Both the mass transit projects in Mumbai, Line 1 and 2, were plagued with land acquisition issues.

On Line 1, the identified pocket of land for construction of the depot was under dispute with a private builder. Upon resolution, the pocket of land provided to the developer was of a completely different contour, requiring changes in design and increasing both project cost and time.

Likewise, Line 2 project had problems of unencum¡bered land for construction of depots at two locations (Mankhurd and Charkop). Both the pockets of land fell under the Coastal Regulation Zones (CRZs). This again warranted changes in design to cater to conditions prescribed by the MoEF, which included construction of depot on stilts. This change of design was costing additional Rs 800-1,000 crore. As per the concession agreement, 100 per cent unencumbered land (RoW) was to be provided to the developer prior to the appointed date, which is yet to be delivered.

So definitely land acquisition issues were the most instrumental in Mumbai Metro Line 2 not seeing light of day. However, we must remember that the land acquisition issues are markedly different in urban settings vis-a-vis rural situations.

What are some of the ways the new Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill 2012 will affect infrastructure project implementation in the short, medium and long run?
Even though well intentioned, the new Bill in its current form is seriously flawed in some ways. While it safeguards the land owners to the greatest extent possible, it leaves the acquirer feeling short changed. The foremost shortcoming of the Bill is that it provides an arbitrary mark-up to historical market prices in order to determine compensation amounts. Also, it provides a number of entitlements to potentially unlimited number of claimants. So, the short term effect will be developers taking their foot off the pedal to factor in such associated costs in their business models and see financial repercu¡ssions of the same. So, we might get to see reduced activity in project development in the short term.

Another area of concern of the Bill is that it warrants an upfront payment by acquirer to the land owner. With a massive amount of claimants involved, once the payment is made, one or more of the affected families may seek to delay the progress of the project to extract additional compensation, thereby adversely affecting those who chose long term employment in the affected families. Hence, in the medium term we might get to see a substantial number of projects stalled because of long drawn negotiations with certain percentage of land owners.

The definition of public projects needs to be widened in the interest of infrastructure development. The Bill mandates obtaining the consent of 80 per cent of the land owners for developing infrastructure projects executed through the public-private partnership (PPP) route, whereas, infrastructure projects executed by government do not require any such majority consent. Obtaining the consensus of such a large number of families/individuals will prove to be a colossal task going forward and will delay the kick off of vital PPP projects across all domains and sectors.

What is the one thing you could change about the Bill (e.g., lease rather than outright purchase/R&R policy, etc) that can pave the way for speedier and more cost-effective project implementation?
The Bill in its current form favours a privileged minority of land owners as the Bill mandates above market prices for their land plus an expensive rehabilitation package. However, a process by which the time involved in land acquisition can be reduced from current levels of years is nowhere proposed or thought of, in the bill. In order to make land acquisition fairer to both parties to the transaction, the bill can be amended to allow free market forces to take effect like, competitive land auctions. Conversely, the concept of Land Regulator or Land Resource Commission can be mooted to achieve a balance between the interests of the seller and the buyer.