Land acquisition will be a time-bound activity: Reports

NEW DELHI: Two leading financial institutions have countered industry’s claim that the new land acquisition law will raise costs and acquisition time, in assessments that seem to back the government’s view that such concerns may be overstated.

According to Kotak Institutional Equities and ICICI Bank’s Treasury Research Group, the biggest plus of the new legislation is clarity of process. “Land acquisition will now be a timebound activity and will involve massive local population,” they say. This would require industry to deal with the reality of fragmented negotiations.

While a defined and timebound process is seen as a “positive development” by the financial institutions, they acknowledge that industry may not appreciate the “new situation of fending for itself”. While both assessments acknowledge the time-bound process set out in the law, and suggest that acquisition should not take more than 18 months, ICICI Bank’s report raises some concerns about possible bureaucratic hurdles.



The three specific instances where such a problem may manifest are: composition of the independent expert committee to evaluate the social impact assessment report; differences or lack of coordination between panchayats, industry and the expert committee; and delays at the level of the collector. Concern has also been expressed about the mandatory social impact assessment.

The absence of a threshold area would mean any acquisition, no matter how small, would have to go through this process. This could delay implementation of certain government programmes. The ICICI Bank report suggests that the law is likely to exclude most retail and commercial real estate projects from its provisions. The retrospective application of the law has been another red flag for industry. Both assessments suggest that the concerns in this regard are overblown.

ICICI Bank’s assessment stresses that retrospective applicability of the bill “is only on selective cases” and “only pertains” to compensation and not resettlement and rehabilitation or procedure. The report by Kotak, however, points out that in case the final award for land acquisition has not been made under the 1894 Act, then “provisions relating to compensation and resettlement as per the new law would apply”.

Both reports make clear that the procedure laid down in the 2013 land acquisition law would not apply in these cases. On prices, ICICI Bank is of the view that “concerns” over setting the compensation rate higher than market price is “largely out of place”, as market price, as set out in the Act, is the price as per the official records, “which are generally underreported”.