As a New Year gift, the government on Monday cleared an ordinance to amend the land acquisition Act, which will ease the land acquisition norms for power, housing and defence projects and pave the way for commissioning of stalled projects worth throusands of crores of rupees.

Striking a balance between farmers’ interest and industrial growth, finance minister Arun Jaitley said land for defence projects, rural infrastructure, affordable housing, housing projects for poor, industrial corridors and infrastructure — including social infrastructure — would be exempted from some key requisites of the existing law.

In yet another important decision, the cabinet cleared the way for regularisation of unauthorised colonies that had come up in the national capital between March 2002 and June 2014, benefiting 60 lakh people living in 2,000 such areas.

The move comes weeks ahead of fresh assembly elections in Delhi in February.

The land acquisition Act enacted by the then UPA government in January had imposed several restrictions to protect the interest of landowners, which also held up projects worth almost $300 billion.

After the new government came to power, many states had asked prime minister Narendra Modi to overhaul the law. The amendments will make land acquisition easier by getting rid of provisions like assessment of social impact and impact on food security and consent of 80 per cent of landowners.

Defence, rural electrification, rural housing projects and industrial corridors will now not require consent of 80 per cent of the landowners. These sectors will also be exempted from holding a social impact study, involving public hearings. However, the compensation formula for land acquisition remains unchanged.

The exemptions will also be available for PPP projects, where land ownership will remain in the hands of the government. There will be no dilution of the provision with regard to rehabilitation and resettlement provided to displaced landowners, Jaitley said, adding that the changes have been brought about after extensive consultations with the states.

The government chose to bring in the changes through an executive order, as it needed to implement them before the December 31 deadline and there was no Parliament session till then. “Governments must act with determination. The government must have the desire to implement its decisions,” Jaitley said , responding to criticism by opposition parties that such ordinances undermine the parliamentary system in a democracy. Industry experts welcomed the move, saying it would facilitated infrastructure development and help bring down skyrocketing realty prices.

Neeraj Sharma of Walker Chandiok said: “The development comes as a major boost for the construction and infrastructure sectors. Easing of the provisions relating to social impact assessment and consent requirement will significantly speed up land acquisition for national security and infrastructure development, including development of industrial corridors and for affordable housing. One can now see real activity on the ground.”

However, C Shekar Reddy, national president of real estate lobby group Credai, said the government approval to the ordinance would push up land prices. He said relief and rehabilitation should be only for government projects and private sector firms should be exempted from the R&R package as they buy land from sellers at an agreed price. The move will remove barriers for power, defence and public-private partnership projects where land is owned by the government.

Ram Reddy, general secretary of Credai (Hyderabad), said the land acquisition Act would not put those losing their land at a disadvantage. They will be entitled for fair compensation. Jaitely said the law would ensure right to fair compensation and transparency in the land acquisition, rehabilitation and resettlement Act. The amendments were necessitated as the land law created many difficulties to various projects, an official statement said, adding that the changes were brought in to further strengthen the provisions to protect the interests of the ‘affected families’. In addition, procedural difficulties in the acquisition of lands required for important national projects needed to be mitigated. The amendments met the twin objectives of farmers’ welfare and expeditious completion of strategic and developmental projects, the official statement said. Section 105 of the existing Act had kept 13 most frequently used Acts for land acquisition for central government projects out of its purview.

These acts were applicable for national highways, metro rail, atomic energy and electricity-related projects, among others. Thus, a large number of farmers and affected families were denied the compensation and R&R package as prescribed under the Act. The present amendments bring all those 13 exempted Acts under the purview of this Act for compensation, rehabilitation and resettlement, benefiting farmers and affected families. The changes are expected to make developmental and security-related works faster without compromising on the benefits to be given to the landowners.

“While ordinances can be reissued once they lapse, they may not be perceived as a stable solution by investors wanting secure property rights,” HSBC Securities analysts wrote in a note. “However, we believe it is an important step to signal that the government is serious on reforms.” For regularisation of unauthorised colonies in the NCR, the cabinet cleared necessary amendments to the existing guidelines, as proposed by the urban development ministry. This followed several rounds of discussions that urban development minister M Venkaiah Naidu had with the lieutenant-governor, chief secretary and others.

Delhi had earlier observed that regularisation of the unauthorised colonies would help planned construction in these colonies under the existing building bylaws and other applicable rules.

The article appeared in the Financial Chronicle. The article can be found here.