It’s my land, dude

Call it an old God-made snag or man-made trouble, acquiring land has always been a nightmare for Indian businessmen. With 2.4% of the total surface area (most of which is used for agriculture), Indian businesses have always been given a pitted treatment when it comes to the use of land for setting up factories or starting new projects. And the biggest bearer of this trouble is the infrastructure sector, which with all its verticals, finds it tough to comply with the land acquisition laws of India. Leveraging Public Private Partnerships, the road sector of the country has come up with some world class roads. The Build-Operate-Transfer concept has been very attractive for the private sector with many new companies wanting to enter the segment. The biggest hurdle companies face is that of land acquisition. Says G. V. Sanjay Reddy, Vice Chairman, GVK Power & Infrastructure Ltd, “When it comes to land acquisition, we face tough time from the government’s side. The policies are also not very supportive.” The same is the trouble with financiers of big projects as the criteria for investing in infrastructural projects by big investors is to find out whether the land issues have been settled or not. A lot of confusion persists in this area as India does not have a proper law when it comes to acquiring land for industrial purposes. The Land Acquisition Act of 1894 says that only government is allowed to acquire land for public purposes. The private sector has to buy 70% of the land and government help in getting holdouts will only be given in the 30% of the remaining portion. The solution perhaps lies in setting a standard law across India, apart from amending the age old Land Acquisition Act, which has been proposed for quite sometime now, but due to political pressure it doesn’t seem to be happening soon.

Niharika Patra

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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