Thus spake the industry

Development will take a hit

The land acquisition bill would lead to further holding up of the infrastructure projects where many projects are already languishing due to the failure of authorities to acquire the necessary land for development. The linear and multiple process norms will make land acquisition difficult and may result into even dropping of development idea itself in some cases. Securing consent of 70-80 per cent of land owners may take 3-5 years, during which any change of heart by land owners would put a spanner in the works, making land acquisition an even more herculean task.

With many open-ended issues, there is a very high risk of multiple litigations even after the project has seen substantial investment will force Investors to be extra cautious. The bill will add to all round escalation in the cost of projects and would have cascading effect on the future of development in the country.

Rajgopal Nogja, Group Chief Operating Officer, HCC

Fair but pricey

Some of the aspects of the Bill are good, but some are rather bureaucratic. There are two major issues with the Bill, relating to compensation and R&R.

There will be delays in the short-to-medium term, because of such decision making problems. As time goes by, the project owners will realise the permanence of this law. But until then, we are likely to see a sluggish activity.

While fair compensation is a good thought, it will have a bearing on the prices. In some states, land prices have already been brought to current market levels. In Andhra Pradesh, for example, the prevailing registration value is higher than the market value. So giving an abnormal price for land may actually create an artificial value.

The multiples-of-market prices clause could have an impact on the planned growth of industrialisation. While the R&R clause gives a boost to livelihood and employment, the issue is that it is mandated even in cases where negotiated purchase-not forced acquisition-has ensued between two private parties and the land owner has willingly sold his land [applicable for 100 and 50 acre or more in urban and rural areas, respectively].

Processes as a result of the enactment of this Bill may actually become quicker-most revenue-related processes in our country are predefined.

Although the Bill will not affect our existing projects, we may need to go back to the drawing board to re-project our finances.

The Bill should have provided for compensation at a small increment over the prevailing market value of land. I would also have taken out R&R in cases where land is purchased by voluntary sale, not acquired by force.

The Bill’s R&R is otherwise justified and provides a better social justice. In the long run, the industry will grow to accept the Bill.

– Goutham Reddy, ED, Ramky Infra

Price escalation is not an issue

The general public is happy about the Bill, while the contractors and the developers are not comfortable with it. Now there will be delays because of the Bill’s provisions, and we have to go back to the drawing board in legal and social terms. The Social Assessment Impact is unsurprising, because an infrastructure project needs to have social impact. The cost impact will also be there as a result of the delays. Land gets appreciated when a project comes up-regardless of whether the Land Acquisition Bill is there or not.

– JP Rao, Director Corporate Marketing Strategy, (India-Construction), Shapoorji Pallonji Group

Grid parity just got farther

The industry is very upset with the time and cost that will now increase. The process of land acquisition will now take much longer-perhaps years. Our calculation is up to 60 months. The Social Assessment Impact will take a minimum of 12 months. R&R and Social Impact Assessment should ideally not be a part of a land Bill-these are project-related. How are these rules made? Do the panchayats-now an essential part of the decision-making process-have the requisite knowledge and expertise to do so? The Bill has created various loopholes where the implementation is prone of misuse.

There is no national map of India with defined land categorisation. The vision to empower the land-owners, especially owners of barren land, is welcome, but does our bureaucracy down the line understand this? For industries such as solar energy, the acquisition of barren land just got more difficult, and grid parity just got farther than we had thought. So while the time we need to establish a solar plant is six months, but the process prior to set it up can extend to a year and a half, or more. (Views are personal)

– Disha Banerjee, Vice President-Business & Policy Affairs, Welspun Energy

Definitive but unviable

The law will bring more certainty on a critical issue impeding infrastructure development. While this Bill seeks economic outcomes for the nation, there are financial impacts too, which the government-rather than the private partners-must take upon itself to address. The government may need to bear the cost of land acquisition since user charges may not be able to bear the cost in all cases. This balance between cost to tax-payers and users remains critical in the design of PPPs.

That said, in most infrastructure projects, the government does acquire land. So the impact of this aspect of the Bill on infrastructure projects may be limited. It is the timelines for acquisition, though, that may be worrisome.

– Manish Agarwal, Executive Director-Infrastructure, PwC India

Trade timeline guarantee for extra cost

Industrialists won’t begrudge the cost of acquisition. Already, acquisition cost is pegged to the market value in a company-related acquisition. So I cannot understand what is being achieved because of the extra cost.

From an investor’s perspective, the Bill is completely lopsided. If land cost is multiplied four times [or two] without a proportionate incentive to the private player-for example, through accelerated processes in acquisition, or a tax break for the land acquired-it then poses a big challenge. Land is a state subject, but the state is not a stakeholder. The government needs to create a body that can commit itself to a timeline for land acquisition.

Moreover, most of the land is with moneylenders who may have lent money to underlying farmer whose land is under acquisition. The moneylender is the one trading-and so the margins will be in the hands of middlemen, unless genuine empowerment in ensured, resulting in the landowner’s having better leverage with the moneylender.

– Ramesh Vaidyanathan, legal counsel for infrastructure industry