Land acquisition may need right price, reason

NEW DELHI: Acquiring cheap land by piggyriding on government’s shoulders, thanks to the Land Acquisition Act, 1894, is set to end soon. What’s more, private sector companies will now have to shell out higher prices as a new Act will ensure hiking circle lands by almost 10 times.

The new overhauled Land Acquisition Act proposes to disallow states to acquire land on behalf of the private sector. It also seeks to tighten the definition of public purpose - for which the state has the power to compulsorily acquire land from owners - by restricting it to just a handful of sectors.

Other issues including fixing compensation packages for the displaced due to commercial and public projects will also be tackled by the new Act. “There are so many issues related to acquisition of land to be dealt with that it may not be possible to address all through amending the existing Act. The government is, therefore, seriously considering replacing the existing Act with a new one,” an official said.

At present, state governments have their own definition for what constitutes public purpose. The ambiguity may go. The new Act is expected to define public purpose narrowly by including just strategic purposes related to defence and other work vital to the state and public infrastructure such as electricity, communication, mining, water supply and public facilities.

“The list may be widened after inter-ministerial discussions, but it is not going to be long,” the official said. The new Act is going to be hard on the private sector. Not only will companies won’t be able to secure government help to acquire land for industrial projects, market value of the land would be suitably enhanced by increasing the circle rates, that are at present low, a source said. “Land prices may increase up to 10 times once the new rates are fixed,” the source said.

As per the rural development ministry’s proposal, the state must take into consideration the purpose of buying private land while fixing the quantum of compensation to be awarded to the land owner. For commercial projects, the compensation to the land holder would be in accordance with the project’s size.

State-level appellate bodies would be formed comprising officials from both central and state governments to scrutinise the projects and fix the appropriate market value for purchase of the land. Moreover, the land would be reclaimed by the state government if it is not utilised for three years.