Higher cost of land on outskirts of cities may hurt low-margin affordable housing projects. Still, there are those who believe acquisition must be made harder not just for the sake of farmers, but also for food security

The new Land Acquisition Rehabilitation and Resettlement Bill, which was tabled in parliament today, will have little near-term impact, but if the proposed high compensation rates are implemented, it would result in developers having to shell out much more, according to Nomura Financial Advisory and Securities (India).

"Under the proposed set of rehabilitation and resettlement guidelines, the developers' cost of acquiring land greater than 100 acres is likely to increase by 25%-35% depending on current costs, in our estimates," the brokerage said in a report on the proposed legislation. While the cost will increase manifold for large-scale developers, it is a fact that right now not many are interested in acquiring more agricultural land.

Most big developers like DLF and Unitech are sitting on large tracts of land without making progress on projects, and they are even looking to sell land to cut debt. Some others, like HDIL, are more interested in acquiring land vacated by industries within the city limits.

Nomura said, "Large affordable housing projects can get impacted by this as a large amount of land is yet to be acquired on the outskirts of the city. Any increase in the land cost will further weigh on low-margin affordable housing projects. However, developers still interested in purchasing large-sized land parcels for township development, or SEZs, could possibly divide their land acquisition amongst various subsidiaries to stop breaching the 100 acre mark."

According to the Bill, the value of land would be determined either by the stamp value or average sale price for similar deals or similar tracts in the vicinity. In urban areas, the cost of acquisition will be at least twice the market value, whereas in rural areas, it will not be less than six times, although this could be revised downwards to four times.

Developers have expressed their displeasure over the proposed legislation, saying it is 'impractical' and 'anti-development.' In the past few years, many large projects have been delayed due to agitations and judicial action against acquisition of land or inadequate compensation.

The new Bill does not stop private developers from buying land directly from farmers at an agreed price, but in case the size of land acquired is more than 100 acres, the developer will be liable to provide rehabilitation and resettlement benefits.

The Bill has also been criticised by activists and citizens' forums.

"It is extremely unfortunate that a key legislation is being pushed in such a hurry and the Cabinet further dilutes some of the positive developments in the earlier draft," the National Alliance for People's Movement (NAPM) said. "It is ironic that when the mood in the country is against land acquisitions, the Cabinet has brought in the provision that if a private company is acquiring land over 100 acres for a public purpose, all land will be acquired by the government." The organisation has called on the ministry to hold a public consultation on the issue at the regional and central levels before adopting the Bill.

NAPM has also rejected the approach to the matter by market value of the land, saying that this is never fully worked out and that it does not automatically ensure attainment of alternative sources of livelihood, especially for adivasis and dalits. Instead, provisions should be made for alternative livelihood or mandatory employment for the project-affected people. It also says that the 'urgency clause' should be done away with and be limited only to natural calamities or for defence purposes only in the time of war.

Former finance and power secretary EAS Sarma, too, is against the acquisition of land by anyone for private corporations. Acquiring of agricultural land must be made difficult not only for the sake of farmers, but also for food security. In a letter to rural development minister Jairam Ramesh, Mr Sarma said, "The area limit beyond which the government will step in could be reduced to 20 acres. Also, this Bill will not address a host of other dimensions of people's displacement. Displacement occurs even in alienation of public lands to private parties and due to mining franchises."