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Political Play
CA Dr Sunil Gupta
New Land Acquisition Law - Merits and concerns 15 April, 2014
With a view to inject much-needed transparency and to address the concerns of land holders, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 has replaced the more than a century old Land Acquisition Act, 1894. The prime motive is to facilitate land acquisition for industrialization, infrastructure, and urbanization on one hand and to address the concerns of dependent livelihoods on the other.
Surely, the well being of the land owners has been taken care of extensively, the chief objective of acquiring land is somewhat deserted. The acquirers and end-buyers of the infrastructural projects would appreciate the transparency; however more than justified and lucrative benefits to the land owners are tend to slower the pace of infrastructural development. Discussed hereunder are some of the highlights of this new revolutionary-termed Act.

Let’s focus on the special provisions of the Act for the benefits of the farmers. The Collector is bestowed upon with the responsibility to ensure that no other unutilised land is available prior to considering any land acquisition. Farmers will be entitled to up to 4 times the highest sale price (though this would add to the cost for the end-buyers). For ensuring fair acquisition, a clause has been added that demands prior-consent of at least 70 percent land losers in case the government looks to acquire land for public-private partnership projects and 80 percent in case of private companies.

Above all, the share from increased land value when acquired land is sold off to another party has been set to 40 percent which shall be distributed amongst the farmers. Land that is acquired if used for urbanization purposes would result in offering of 20 percent of the developed land to the farmers in proportion to the area of their land acquired at a price equivalent to cost of acquisition and development. Amounts accrued are exempted from Income Tax as well as Stamp Duty.

Other prominent factors include payment of compensation within a period of three months from the date of the award, plus monetary and infrastructure R&R entitlements within six months and eighteen months respectively from the date of the award. Considerable to note, mandatory employment for one member per family, or INR 5 lakh per family, or INR 2000/month as annuity for 20 years are the options that can be availed by the affected families.

Surely, the concerns of the land owners have been addressed to maximum possible extent; however the coin has the other side too. Benefits that have been showered upon the land owners would add to the cost of acquisition which subsequently would be extracted from the purchasers of the projects. Another bottleneck for the acquirers will be the time duration for receiving consents from the authorities, Gram Sabhas, and the requisite percentage of the land owners. The move of the Government has been much appreciated by the land owners and experts.

In a country wherein approvals from the authorities are the chief bottlenecks towards effective project implementation, the new law seems to enhance such disturbances. To assure that the infrastructural development moves with an accelerated pace, the authorities will have to realign their procedures and guidelines. Time-driven approvals and sanctions are much-required. The new government that will be looked upon as the driving force for infrastructural development will have to face the challenges brought in by this new piece of legislation. The real intention of urbanization and industrialization can thus remain unachieved.

The incapability of developers to acquire land for such high consideration is rare to serve any purpose. Not just the developers, the Infrastructure Finance Companies (IFCs) and lending institutions would suffer from the unjustifiable increase in the compensation and other perquisites. The servicing of debt by the developers can become problematic in case the end-buyers find it uneconomic to invest/ buy.

The law-makers' progressive thinking and strategic management skills are somewhat missing. The upcoming union government would be clueless to manage something that has promised too much for land owners who would now resist to any modifications, with hindrance to the much-needed infrastructural and economic growth.

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
About The Author
A Chartered Accountant by profession and Director on the board of Punjab National Bank (PNB), General Insurance Corporation of India (GIC) and Rural Electrification Corporation Limited (REC). Dr. Sunil Gupta is working flawlessly for the economic and social prosperity of India. His Linkedin and twitter handles are @cadrsunilgupta. Facebook page is CADrSunil.
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