What does the land acquisition ordinance mean for industry?

The government on 29th December, 2014 introduced an ordinance to bring major reforms in the Land Acquisition Act, 2013. This ordinance is seen as a course correction strategy by the NDA government as the Act championed by the UPA was termed restrictive by the industry bodies and was hurting growth. Though through the ordinance, the government has tried to balance the interests of both farmers and industries, yet it has also created a difficult situation for the landless laborers.

Here come the major changes the ordinance has brought in the Land Acquisition Act and what it means for the industry.

Removal of consent and Social Impact Assessment (SIA) Clause

The key amendment has been made in the Section 10 A of the Act. Government has expanded list of sectors where Social Impact Assessment (SIA) and landowner consent is not required while procuring land. The list now includes rural infrastructure including electrification, industrial corridors and affordable housing apart from national security and defense. PPP projects where ownership of land continues to be vested with the government are also exempted from the clause. Earlier, a written consent from 70 percent of the affected families was mandatory before progressing with other transaction formalities.

Exemption from SIA clause will kick start long stuck infrastructural projects which are essential to improve GDP growth rate. The assessment clause in the original act implied compensation for everybody (not only landowners) who will be impacted by land acquisition. But, according to the new ordinance, only land owners need to be remunerated. This also indicates that whether the land is fertile or not it could be acquired if it is needed for the above mentioned categories.

No change in Compensation Packages

To contain the interest of affected farmers, the compensation entitlement has not been changed, despite several recommendations being made by numerous state bodies. It is four times the market price for rural land and two times for urban land.

Ordinance addresses the issues of Farmers Country-wide

The waiving off of the consent clause has been balanced out by including 13 other excluded Acts under the purview of the main Land Acquisition Act. Till date, land acquired under these Acts followed no uniform policy.

The Acts include the Coal Bearing Areas Acquisition and Development Act 1957, the National Highways Act 1956, the Ancient Monuments and Archaeological Sites and Remains Act 1958, the Petroleum and Minerals Pipelines Act 1962 and the Damodar Valley Corporation Act 1948. The Electricity Act 2003, Land Acquisition (Mines) Act 1885, Atomic Energy Act 1962, the Indian Tramways Act 1886, the Railways Act 1989, Requisitioning and Acquisition of Immovable Property Act 1952, the Resettlement of Displaced Persons Act 1948 and the Metro Railways Act 1978.

So, now farmers whose lands are acquired under the above legislations would be compensated according to the provisions of the Land Acquisition Act, 2013

The Future Course

As it is just an ordinance and not a full-fledged Act, the proposal will now face the test in upcoming budget session in the parliament in February. Presently, the main opposition UPA is against the ordinance. However, if we go by the current media reports this won't be hurdle for the ordinance to become a law. Despite having a lower numbers in Rajya Sabha, the current government has a majority in Lok Sabha. The government is expected to go for a joint parliament session to get the ordinance passed.

For the meantime, one can say that the ordinance is a positive move by the government which reflects its pro growth and pro industry orientation.