GOVT EASES STRINGENT CONDITIONS Land Acquisition Bill Gets Industry-Friendly

In an attempt to woo industry, govt proposes not to implement law with retrospective effect The government has made key changes to the proposed legislation for land acquisition, making it more attractive for industry by easing some of the stringent conditions, a person privy to the draft told ET. The rural development ministry has proposed to not implement the legislation with retrospective effect, besides relaxing the requirements of consent from landowners, and tightening the definition of market value. The amended Bill has been rechristened 'The Right to Fair Compensation, Resettlement, Rehabilitation and Transparency in Land Acquisition Bill'.  The ministry has also rejected the Standing Committee's recommendation that the government should not be involved in acquiring land for private companies or public-private partnership projects, even in cases where "public purpose" is involved. The changes are aimed at boosting industrial growth, which had suffered because of the enormity of challenges associated with acquiring land, the person quoted earlier said. "The changed economic growth scenario can no longer be ignored in whatever we do. The Bill as it stands now still reflects a fine balance," said a senior official, who did not wish to be named. Since the ministry has dropped the plan to apply the proposed legislation retrospectively, the ongoing projects, for which the acquisition is on but land has not been awarded, will not have to start the process afresh. This has been one of industry's main demands.  Similarly, the government has decided to relax the consent requirement for PPP projects and private companies. Private project developers will now have to obtain the consent of 80% of the landholders, instead of 80% of the project-affected families. The proposed change, if approved by the Cabinet and Parliament, will mean that private developers will have to get fewer people to agree to the acquisition. The ministry's final draft also proposes that the government will have a role in land acquisition where PPP projects or private companies are involved in the "production of public goods or the provision of public services for physical infrastructure, social infrastructure and human development projects including those involving the production of intermediate goods and services for these purposes". Definition of Market Value Amended  The ownership of land acquired for PPP projects will rest with the government. In keeping with the parliamentary panel's recommendation, the Bill determines the minimum compensation but leaves it to the states to set up land pricing commissions to top up the amount and manage the process. In the event that the "urgency" clause is invoked, as may be the case with acquisition for defence purposes, an additional 75% compensation will be provided. The ministry has amended the definition of market value to ensure that the acquisition price doesn't form the basis for compensation and calculation in future acquisitions. The compensation will not be taken as the basis for circle rate for subsequent acquisitions either, ensuring that there is no speculative price spiral. Industry bodies had suggested that solatium or compensation should not be imposed over and above the multiplier on the market rate. The Bill takes that into consideration, keeping compensation at two times the market rate, including solatium, for urban areas. For rural areas, the proposed compensation ranges between two and four times the market rate, including solatium. The exact rate will be determined on the basis of a sliding scale reflecting the distance of the project from urban areas. For families in rural areas closest to urban areas, the compensation will be two times the market rate, and those in areas farthest from an urban centre will get four times the market rate as compensation. The precise slabs of the sliding scale will be determined by the states. In line with the Standing Committee's recommendation, the Bill leaves the issue of setting threshold for the use of multi-crop irrigated land and restrictions on diversion of net sown area entirely to the states.  The amended Bill incorporates the suggestion by the roads ministry and provides for a one-off payment for rehabilitation and resettlement by the acquirer, who will put the entire amount in an escrow. Ongoing commitments such as annuities and benefits will be administered by a state agency.