Land Acquisition Bill 2015: Impact On Indian Real Estate

The contentious Land Acquisition Bill has been a talking point since 2013, when the then United Progressive Alliance (UPA) government announced it in Parliament. Recently, the new Modi government has suggested some amendments to the Bill, which has met with acclaim for some parts but criticism from most people. Opposition parties were left baffled by the Bill, and parties like Congress, Samajwadi Party, Trinamool Congress and Biju Janata Dal walked out of Parliament, which might lead to it being stuck in the Rajya Sabha because of a lack of a clear majority. Controversy aside, the Land Acquisition Bill 2015 is likely to have a massive impact on the real estate industry of India.

Heralding India's Industrial Revolution

Some of the amendments made to the Bill are aimed at facilitating industry and developing a robust infrastructure. For instance, land acquisition can be only be done for the industrial corridors which are proposed by the government and the land acquired for the industrial corridor cannot exceed one kilometer. Also, social infrastructure projects will be exempted from the consent clause and social impact assessment. Another one of the Land Acquisition Bill's highlights is that, compared to the non-amended Bill, the new amendments will help out companies stuck in land acquisition by making the process easier.

Effect on Indian Real Estate

The Land Acquisition Bill 2015 will directly affect real estate in India because it will make the process of land acquisition easy so that the land which is acquired can be used in the development of industrial areas and major highways and expressways. As the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which replaced the Acquisition Act of 1894, got stuck, real trouble came to industries which in turn get stuck in the land acquisition process. This has a bad impact on the stock market, especially those of power and infrastructure.

It also affects the real estate business, especially the planned infrastructures like roads, airports and residential projects in India. Although, the quicker the amendments are passed, the earlier these companies can access the land and build new projects. This will directly benefit the real estate industry as it will see a huge boom with an increase in the number of projects and the passing of land for ongoing projects in India.

Exercise Caution

The Bill is being termed as “anti-farmer” and since India is traditionally perceived as an agro-based economy, its obvious industrial bias is the major reason why it is facing such a backlash leading to delays in its being passed. Nevertheless, if the rules are followed, the amendments have made sure that the farmers would not suffer because of land acquisition. The government has curtailed the land which can be acquired for industrial purposes to within one kilometer of designated railway lines or roads to help the farmers. Care has also been taken for the farmers who would be forced to give their land for industrial development by providing them employment opportunities to ensure that their source of income is not harmed.

That being said, the amendment might not be that fruitful for the proposed smart cities, especially along the DMIC (Delhi-Mumbai Industrial Corridor). Reactions to the amendments to the Land Acquisition Bill 2015 are mixed, but in terms of boom to the real estate and the overall economy, passing of the amendments is extremely important.