Track2Realty Exclusive: The Union Cabinet has cleared the Land Acquisition Bill, the realty sector is debating its pros & cons but the home buyers are apprehensive whether the house prices will shoot up in proportion of the higher cost of fresh land acquisition. The Bill cleared by the Union Cabinet makes the consent of 80 per cent of owners mandatory for private projects.
In the case of public-private-partnership (PPP) projects, the bill makes mandatory obtaining of consent of 70 per cent of the land owners. Besides consent, the bill proposes higher compensation and rehabilitation package to land owners.
Realtors assert land prices will escalate leading to rise in housing price if the Land Acquisition Bill is passed by Parliament. Confederation of Real Estate Developers’ Associations of India (CREDAI) National President Lalit Kumar Jain says if the Bill gets Parliament’s nod, developers will also hesitate to go for big projects.
“It is not a good development for the industry. This will definitely increase land cost and housing prices,” Jain says.
Expressing similar sentiments, National Real Estate Development Council (NAREDCO) President Navin M Raheja says the Bill is not an industry friendly one.
“While farmers’ compensation issue is taken care of, the government should have looked at the overall growth of the country. Unfortunately, that is not the case here,” he added.
However, Hiranandani Constructions Managing Director Niranjan Hiranandani says with higher compensation to farmers, resistance in acquiring land will reduce in future. He nevertheless sounds apprehensive with the cost factor.
“Definitely land prices will shoot up. Now whether we will get land for affordable housing is a big question mark,” says Hiranandani.
The country’s largest realty firm DLF said the reaction and how it will affect the consumers, have to be seen after the Bill comes into effect.
“There has to be a debate in Parliament for this bill before the final approval. We will see how the situation unfolds in coming days as that will be crucial for any future decision,” DLF Group Executive Director Rajeev Talwar said.
Many within the sector also question the government’s lack of vision in making a difference between acquisition and purchase. Anil Sharma, CMD of Amrapali Group says when the act does not clearly define if I am going to buy wilfully from the landowner in a free market, how come it falls under acquisition.
“The land acquisition act of 1894 has got a thoroughly colonial essence. Unfortunately, after 115 years, we have been acquiring land only on the basis of that act, and taking the basis of that act to formulate a Land Acquisition Bill in 2012. You need to thoroughly change the entire hangover of that old view. Then the law is being formulated from the central point of view, it is a Parliament act being given to the state. Every state has different demographics, different land record systems. In India, our land record system is much behind different countries,” says Sharma.
Most of the developers assert they acquire land with full consent of the owners, and some of them are apprehensive of Centre & State relations coming in the execution leading to the Bill going the way of National Counter Terrorism Centre (NCTC) way.
Harmit Chawla, Managing Director of HCorp Realty says every stakeholder has his own view. State has its view, Centre has its view in terms of the policy and the sector has its view as to what is beneficial to them at the end of the day as far as the working is concerned.
“Going by the point that we have been debating on the land, the fact has always been that it has been a federal issue. The state has said that the land belongs to the state and at the end of the day they have the final call in terms of how things are going to move on that. And hence the land bill has not been through despite of being debated for long,” says Chawla.
Sector does not seem to be unanimous over many other clauses of the Bill. For instance, some point a doubt over the proposed Bill saying that the provisions would be applied retrospectively if the award of compensation has not yet been made. By award of compensation, one would assume that the land owner has actually received the funds into his bank account.
If the land owner in question has not accepted or otherwise received payment, it does not count as award of compensation. The implication is that if the land owner has not received compensation for any reason at all, he can bargain for a higher price and thereby hold up the process and also contribute to further land inflation.
Neeraj Gulati, MD of Assotech Realty, however, defends the bill and calls it of great importance to the real estate sector, a win-win situation for all stake-holders.
“The draft is the replacement for the outdated bill which was in effect ever-since the British era, the development in its clause like 80% consent of land owner made mandatory in case of private acquisitions while 70% consent in case of Public Private Partnership projects is highly appreciated. Further the aspect of segregating retrospective clause from the bill will definitely bring in transparency and speedy redressal on issues pertaining to land acquisition in recent times. This Bill is of great significance, not only for realty sector but for the entire infrastructure industry and will chart the future growth of the nation,” says Gulati.
Some industry watchers point out that the idea of the Bill was to ensure that land owners get fair and timely compensation and also resettlement options. But since the circle rates in most parts of the country are much lower than the actual market price, it may not serve the desired purpose. Others suggest it would need further tweaking to ensure that there is no potential for land owners to drive up land prices in the bargain – which, in turn, would mean that the cost of the houses go up unrealistically high.
