Thursday, September 08, 2011: 11:53:15 PM

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‘Historic’ land acquisition bill fails to impress realtors

The housing industry is jittery about the new land acquisition bill as it fears rise in costs of land, housing units and limited growth of lower-budget housing

Land acquisition has been termed as the major deterrent for industrialisation, infrastructure development in India. Still, the government could do little about it. The issue related to governments acquiring land for private projects became so sensitive that it toppled a 35-year-old ruling government in West Bengal.

In an endeavour to bridge the gap in the existing legislation, the UPA government introduced the much-awaited ‘Land Acquisition, Rehabilitation and Resettlement Bill, 2011’ in the Parliament on September 7, 2011. The bill was cleared by the Union Cabinet on September 5.
Terming the bill ‘historic’, Rural Development minister Jairam Ramesh said that the bill would bring about a balance between the objective of faster industrialisation and the need to protect land owners and livelihood losers. Under the draft bill, the definition of livelihood losers has been changed to mean people, who have been employed in the acquired land for 3 years or more. The provision, therefore, allows farm wage workers to seek immunity and keeps squatters on public land out of the loop.
The new law may be a milestone for the Congress government, but has failed to impress the country’s real estate fraternity. Developers, industry associations, property consulting firms and real estate agents are all jittery about the new land acquisition bill.
The bill, which seeks to replace colonial era legislation, offers generous compensation for land owners but brings in troubles for property developers.
The bill proposes a monthly subsistence allowance of Rs 3,000 per family for a year and a monthly annuity of Rs 2,000 per family for 20 years.
The housing industry believes that the bill might escalate costs of land, housing units and restrict growth of lower-budget housing. In short, the bill invites very little enthusiasm for the real estate industry and potential buyers.
Industry speak
According to Prashant Solomon, joint managing director of Chintels India, a premier real estate group in the National Capital Region (NCR), “The land acquisition bill passed by the government needs much to be desired. There is an immediate need for the government and key stakeholders to relook at the bill before formalising it.”
The new bill might lead to escalation in the cost of the land, which will be acquired from the developers from now on for construction purposes. However, with some improvements and modifications in place, this will be an important bill considering the fact that India is fast progressing and infrastructure development and urbanisation are the key components in the growth story, added Mr Solomon.
Santhosh Kumar, CEO (Operations) at international property consulting firm Jones Lang LaSalle India, said, “The new bill is likely to increase the cost of housing units because developers will pass the additional costs they incur onto the end users. This will potentially put a crimp in the supply pipeline of lower-budget housing. The only solution to that is for the government to create infrastructure and open up land parcels to address the demand-supply mismatch.”
CREDAI-India president Lalit Kumar Jain said that the bill has too many points of conflict. By bringing private land acquisition under the act, the bill restricts land development.
According to the new law, 80% people must agree to the land acquisition, unless the project is being developed in public interest. Terming this as a big mess, Mr Jain said that if a developer can take 80% consent, he may as well take 100%.
Championed by Sonia Gandhi-led National Advisory Council, the bill would update the Land Acquisition Act of 1894.

Jeeta Bandopadhyay

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