Power Grid, Container Corporation, L&T to benefit the most from amendments to Land Acquisition Act: Goldman Sachs

NEW DELHI: Indian Infrastructure sector overall would be a key beneficiary as the Narendra Modi-led government made good on its pledge to amend the land acquisition law, Goldman Sachs said in a note.

The cabinet recommended promulgating an ordinance making changes to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Infrastructure projects related to rural infrastructure, electrification, industrial corridors and PPP projects being exempted would result in faster land acquisition and result in movement of projects which have been stuck for want of land for a long time, added the report.

Key highlights include - land acquisition for Defence, Rural Infrastructure including electrification, affordable housing, Industrial corridors and Public Private Partnership (PPP) infrastructure projects would be fast tracked, and may be exempted from the requirement of Social Impact Assessment (SIA) and mandatory consent clause.

The global investment bank said that we would consider this as only partial relief as: 1) we expect manufacturing/industry would still have to go through the process of SIA and obtain mandatory consent;

2) administrative burden related to rehabilitation and resettlement (R&R) would continue to impact both infrastructure and industrial projects and now also includes the earlier exempted 13 acts.

They also highlighted in the past that financial burden due to increased compensation may not be a significant negative as long as land acquisition becomes swifter.

Direct cost related to land acquisition will rise as a result; however, faster land acquisition would result in indirect cost savings for infrastructure projects, added the report.

Within their coverage, Goldman expects Power Grid to find it easier to get right of way (RoW) for T&D projects, Container Corporation of India to benefit through faster implementation of industrial corridors and for L&T as execution on PPP projects picks up pace.