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'Various aspects of the new Land Acquisition Act unclear'

Archana Hingorani, CEO & Executive Director, IL&FS Investment Managers Limited, stresses that greater clarity is needed on the various provisions of the new Land Acquisition Act.

twitter-logoSarika Malhotra | June 3, 2014 | Updated 18:37 IST

Archana Hingorani, Chief Executive Officer & Executive Director, IL&FS Investment Managers Limited stresses that greater clarity is needed on the various provisions of the new Land Acquisition Act. Edited excerpts from an interview with Business Today's Sarika Malhotra.


"The  Land Acquisition Act 1894 suffered from various shortcomings such as the absence of appeal mechanisms to prevent unfair acquisition, no specific Resettlement and Rehabilitation (R&R) process, a highly misused 'Urgency Clause" and  outdated acquisition pricing etc.  The Land Acquisition Bill 2013, aims to remedy these by providing fair compensation to land owners and increasing transparency for land acquisition. While the steps articulated provide a much greater ability for a fair settlement for land owners, there are various aspects that are unclear, rendering greater uncertainty on the feasibility for such land acquisitions to be successfully completed by purchasers. The primary debate is about whether the larger government intervention and lengthy process of acquisition would make projects unviable.


Real estate, especially of large sized projects, would potentially witness cost escalations due to this Act. The wide definition of affected parties includes agricultural labourers, tenants, residents and any other person whose livelihood for the last three years was dependent on the said land. These stringent requirements of R&R are also expected to  increase costs  and result in delays. Ambiguity on size of projects coming under the Act, exact processes, etc., would mean a wait and watch approach by participants in this sector.

Land acquisition cases such as Tata Motors in Singur and Posco in Odisha have led to mass protests from farmers in the past. The current Act aims at avoiding such confrontation in future and bringing in more transparency and fairness in land acquisition. The provision of providing employment opportunities to the members of affected families along with resettlement provides a way forward. The new Act therefore requires continuous participation with the affected families even after payment. Lack of expertise in handling such issues could create hurdles in the minds of investors and derail investment flows. Core sector projects such as steel, power plants, oil refinery and mining among others that require large tracts of land for running a feasible operation are expected to be impacted in the near term by the new Act.

For the infrastructure sector, with an added layer of extensive Social Impact Assessment studies and determination of compensation to every affected family, the cost and time required to acquire land will increase significantly threatening the actual viability of the project."


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