land acquisition India assignment

1. REPORT ON LAND MARKETS IN INDIA
5th March 2012

2. One of the biggesthurdlesinthe storyof growthof Indiais the issuesrelatedtolandandits
acquisition.The land acquisition issueshave ledtodelayorcancellationof anumberof projects
whichhave hinderedthe progressof notonlythe companiesbutalsothe nationasa whole. These
uncertaintiesandrisksof the projectshave mushroomedfromthe protestsandresistance of the
populationaffectedbylandacquisitions.
These protestsare resultof variousfactorsincludingcultural issues,impropermonetary
compensation,environmental issues,etc.
Let’slookat an example:Tehri DamProject.
Source: Google Images; Protests against the construction ofTehri Dam
The above picture depictsthe protestsenvironmental organizationsandlocal peopleagainstthe
constructionof a dam inTehri,Uttarakhand. This issue wasmore thanjustthe monetary
compensationasthe OldTehri wasthe capital of the Garhwal Kingdomandhence had an immense
historical importance forthe peopleof thatregion.Apartfromthe resistance basedonthe historical
importance,there were alsoresistancesfromthe religiousfrontasthe construction of damrequired
initiallyblockingthe Bhagirathi Rivertofill upthe dam.Thisdidn’tgo downwell withthe religious
sentimentsof manypeopleastheywere opposedtothe ideaof blockingone of the tributariesof
holyGanges. Thisultimatelyresulted inthe delayof the projectandcostoverruns.LandAcquisition
has made a numberof otherprojectsfinanciallyinfeasible.
No twopiecesof landissame is a fact whichimpedesthe natural emergenceof landmarket.
A private developerorsponsorof the projectbasicallytwowaysof acquiringland:Market
AcquisitionorAcquisitionusingeminentpowersof the state. OwingtoissuesresultingfromLand
AcquisitionProjectDeveloperspreferusingeminentpowersof the state overmarketacquisitionof
land.
The problemwithlandacquisitionhasalsoarisesfrompoorlandadministrationinIndia. Duringthe
BritishRule,recordswere onlypreparedforthe agricultural landbutnoproperrecordswere
maintainedforthe residentiallandsandthe spatial recordswere neglected.PostIndependence,low
prioritywasgiventoagricultural landrecordsas landrevenue arisingfromthislanddeclinedin
importance.Also,multiple agencieshandledlandrecordswithnointerconnectivitybetweenthem.
Computerizationof landrecordsalsofocusedonlyon‘computerization’perse ratherthanto
maintainaccurate and upto date records.All these factorsledtolackof clarityinlandtitlesleading
to disputesandlitigations.A buyerwouldalwayswanttopreventthese risks.

3. Alsothe transactioncost isprettyhighinIndiaas comparedto global average. The average stamp
dutyin Indiais9-10% of transactionvalue.Thisleadstoinformal agreementsandunderreportingof
transactionvalue. The landuse control measureslike limitonFARratio, alsoaffectthe value of land.
These factorsmake it difficulttoestimate the correctmarketvalue of a piece of land.
Anotherimportantfactoristhe Non Agricultural Use Clearance neededtouse an agricultural piece
of landto non-agriculturaluses.NACisgenerallynotawardedtoafarmeras theyusuallydon’thave
abilitytouse the landfor non-agricultural issues.Thismeansthat,purchasers(builders) are able to
extractmore value outof the landas comparedto farmersand there isa wealthtransferatthe cost
of the agriculturist,whocan’tgetNACfor hisland.The pointis,if the marketnegotiationswere
permitted,farmerscanbargainforhisland.
One of the landacquisitionissuesfromrecentmemory isNoidaLandAcquisition issue.The land
acquisitionwere carriedoutbythe state of UP as perLand AcquisitionActforindustrial purposes.A
total of about2000 hectaresof farmlandwere acquiredbythe governmentatRs850/sq ft and then
soldfor more thanRs 10000/sq ft to the developersforresidential purposes. Thisledtounrest
amongstthe farmerswhofelttheywere ill treatedasthe landwastakenfrom themat dirtcheap
ratesin the name of developingindustrial area;insteadthe landwasresoldatmuchhigherratesto
the developersforresidentialpurpose. Hence,notonlythe farmersbutalsothe commonmiddle
classpeople who purchased apartments fromthe private builders were affected.
Source: Google Images; Farmer agitation against land acquisition in Noida
Usually,the landisidentifiedandacquiredbythe DistrictCollectorandhe/she hasdiscretionover
selectingthe rightvalue forthe land.Theyuse marketprice basedonthe stampduty whichis
generallyunderreported.Hence,there isnoconceptof independentlandevaluatorsinIndiaand
alsono legislationexistwhichapprovessuchprofession.The creationof suchexpertswouldmake
the landacquisitionprocessfairforthe losersof the land.
Often,there isa longgap betweenthe promise andfulfilmentof processof rehabilitationand
resettlement(R&R) whichisamajorreasonfor distrustagainstlandacquisition.The processshould
beginalongwiththe issuingof firstnotificationunderthe AcquisitionAct. Onlydemonstrating
successful implementationof R&Rwill reduce this distrustlevel.

4. References:
 Land Markets inIndia: By SebastianMorrisandAjayPandey
 Securityof Title toLand in Urban Areas: By Swati Ramanathan
 Mega projectsinIndia:Environmental andLandAcquisition Issuesinthe RoadSector:G.
Raghuram,SamanthaBastian,Satyam ShivamSundaram;W.P.No.2009-03-07 March 2009
 Land AcquisitionIssuesinNoidaDistrict: Backgroundto‘Land Wars’ inIndia;Hajime SATO
 LANDACQUISITION ISSUES;M.M.K. Sardana