India Inc, already braving an uncertain economic environment and low investor confidence, gave a thumbs-down to the land acquisition Bill, cleared on Thursday. The second legislation in a row aimed at aam aadmi, after the food Bill on Tuesday, prompted the corporate world to scream "anti-industry".
Companies were united in giving their verdict that the move was likely to push up land prices, thereby hitting industrial projects and the overall economy.
According to Confederation of Indian Industry (CII) president S Gopalakrishnan, the cost of land acquisition is likely to increase by three to three-and-a-half times, making industrial projects unviable and raising costs in the overall Indian economy. "Industry has serious concerns on some of the provisions of the Land Acquisition Bill," he added.
Indicating the frustration of India Inc, Rahul Bajaj, chairman, Bajaj Auto, argued that industry might look abroad for expansion now. "Hundreds of countries acquire land but these countries do not make it so difficult for industry to acquire land as this bill proposes to do. I fear industry may be forced to look abroad for expansion and diversification."
(Read the complete Land Bill)
DLF group executive director Rajeev Talwar said with land acquisition getting difficult and time consuming, prices would shoot up. "We have got huge land parcels already. But if the new law makes land acquisition difficult and time consuming, the value of land will go up and ultimately impact the prices."
In the current form, it will delay the land acquisition process further, said Talwar. "If land availability is in surplus, then one would make affordable projects but if its availability is curtailed, one would be forced to raise property prices."
GVK group chief financial officer Issac George agreed project costs for companies would go up, and so would cost of houses for individuals. "So, I have my reservations on whether it's pro-industry."
Despite the government thrust on infrastructure projects, even those would be adversely impacted,said company executives. Rajgopal Nogja, group chief operating officer, HCC, said the legislation would lead to further holding up of the infrastructure projects.
Many projects are already languishing due to the failure of authorities to acquire the necessary land for development. The linear and multiple process norms will make land acquisition difficult, Nogja said, adding companies might have to drop the idea of development in some cases.
Securing consent of 70-80 per cent of landowners, a mandatory requirement in the Bill, might take three to five years, making land acquisition a herculean task, according to the HCC official.
Companies also indicated that the legislation would bring in a high risk of multiple litigations.
Supertech chairman R K Arora also said land acquisition process would be delayed further as consent of 70 to 80 per cent owners would be required. "It will impact the overall growth in all the sectors." Arora added house prices would definitely increase.
It is better to give back farmers some portion of developed land than outright compensation, quipped Lalit Kumar Jain, president, Confederation of Real Estate Developers Association of India.