ARVIND NANDAN - LARR

KEY DIFFERENCES:

LAND ACQUISITION ACT 1894

21 November 2013

LAND ACQUISITION ACT 1894

VS.

RIGHT TO FAIR COMPENSATION & 21 November 2013

TRANSPARENCY IN R&R RULES

BLACKARROW CONFERENCES

C&WI PRESENTATION

THE BACKGROUND

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C&WI PRESENTATION

EVOLUTION OF LAND ACQUISITION LAWSTHE HISTORY…

1824

BENGAL REGULATION

ACT

1857

Extended to Undivided British

I di

1894

LAND ACQUISITION

ACT

1962/67/84

Major Amendments to

LAAACTTo free up salt

pan etc

India ACT LAA

2007

R ttl t &

2009

LAA

2011

N ti l

2011

LARR Bill i L k Resettlement & Rehabilitation

Bill

LAA (Amendment)

Bill 2007 passed in Lok Sabha but

lapsed due to

National Advisory Council

(NAC) recommendation integrating land

LARR Bill in LokSabha for

replacing LAA 1894

pdissolution of Lok Sabha for

elections

g gacquisition and

R&R

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C&WI PRESENTATION

EVOLUTION OF LAND ACQUISITION LAWSAND IN THE HISTORY…

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C&WI PRESENTATION

EVOLUTION OF LAND ACQUISITION LAWSBUT WHY….

NO SAY OR PARTICIPATION

MONEY IS NEVER

ENOUGH

SHORTCHANGED: MULTI-FOLD INSECURITY

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C&WI PRESENTATION

RENTAL, SUPPLY & ABSORPTION TRENDS

WHAT IT PROPOSES

Combines Rehabilitation & Resettlement (R&R) with Land AcquisitionCombines Rehabilitation & Resettlement (R&R) with Land Acquisition• Proposes monetary as well as material compensation

Public purpose – once stated, can’t be changed• Consent of 70-80% of the project affected families if govt. acquires land for private companies

for “public purposes”• Govt. will not acquire land for private companies for “private purposes”

Land Acquisition Price• 2 times MV for Urban Land• 4 times MV for Rural Land

Multi crop or irrigated land – can’t be acquired

Allows for exceptional ‘Urgency’ acquisition by govt. by surpassing provisions

Land returned to the original owner – if not used in 5 years

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C&WI PRESENTATION

KEY DIFFERENCES VIS-À-VIS LAA 1894

Premise

Procedure

Urgency Clause

Rehabilitation & ResettlementRehabilitation & Resettlement

Compensation

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RESEARCH AND BUSINESS ANALYTICSKEY DIFFERENCES

The PremiseThe Premise

LAA NEW RULES

• COVERS ONLY LAND ACQUISITION

ACQUISITION BY THE GOVERNMENT

• COVERS LAND ACQUISTION + R&R

• TRANSFER MODEs• ACQUISITION BY THE GOVERNMENT FOR PUBLIC PURPOSE & SEPARATELY FOR COMPANIES

• PUBLIC PURPOSE:

• TRANSFER MODEs• COMPULSORY (PUBLIC PURPOSE),• PART-COMPULSORY (NEEDS 80%

CONSENT FOR PROD. OF PUBLIC GOODS/PPP/PVT. CORP FOR PRODUCTION OF PUBLIC GOODS)• PUBLIC PURPOSE:

• VILLAGE SITES, TOWN OR RURALPLANNING,

• ‘PLANNED DEVELOPMENT• RESIDENCE OF POOR / LANDLESS

PRODUCTION OF PUBLIC GOODS)• PRIVATE SALE (100/50 ACRES IN

RURAL/URBAN AREAS) – ONLY R&R

• PUBLIC PURPOSE• RESIDENCE OF POOR / LANDLESS

DISPLACED BY NATURAL CALAMITIES/ GOVT. SCHEME

• SCHEME OF DEVELOPMENT’ LOCATING APUBLIC OFFICE/ CORPORATION OWNED

• STRATEGIC PURPOSES; • INFRASTRUCTURE (RAILWAYS, HIGHWAYS, PORTS,

POWER STATIONS, IRRIGATION PROJECTS)• PROJECT AFFECTED PEOPLE; • DEVELOPMENT;

BY THE STATE;

• RESIDENTIAL USE BY COMMUNITIES AFFECTED BYNATURAL CALAMITIES/GOVT. SCHEMES

7CUSHMAN & WAKEFIELD

C&WI PRESENTATIONKEY DIFFERENCES

The Procedure of Land AcquisitionThe Procedure of Land Acquisition

LAA

• Preliminary notification by Distt

NEW RULES

• 3 Steps preceding the process of LAA• Preliminary notification by Distt. Collector

• Invitation of objections

p p g p

• Appropriate govt. to conduct Social Impact Assessment (SIA) in consultation with Gram Sabha or equivalent urban body. SIA report valid for 1 year.

• Adjudication of objections

• Issue of Final notification

valid for 1 year.

• Evaluation of SIA report by ‘Expert Group’: Members to ‘individually’ express opinion on whether to go-ahead or not

Issue of Final notification

• Acquisition by Distt. Collector• Examination of land acquisition proposal by a

7-member Committee appointed by Appropriate Govt.: Ascertain legitimacy and bonafide ‘public purpose’. Also verifies consent of affected familiesconsent of affected families

• Prelim Notification contains the statement of nature of public purpose & summary of SIA report

• Appropriate govt. issues declaration regarding public purpose

• Collector issues notification for R&R

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Urgency ClauseUrgency Clause

LAA NEW RULESLAA

• Govt can acquire land for ‘urgency’

NEW RULES

• Urgency can be ONLY for acquiring ‘minimum area’ for

• After 15 days from Preliminary Notice (even if Collector has not issued an award)

minimum area for• Defence of India• National Security• Natural Calamities

• NO DETAIL OF WHAT URGENCY CIRCUMSTANCES MAY BE

• Collector must allow 48 hours’ notice to

• The govt. may exclude SIA and R&R provisions

• Additionally, provides for another 75% affected persons & pay 80% of the estimated compensation

y, pof the market value of the property to be paid to a person so displaced

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R&RR&R

LAA

• Does not cover R&R

NEW RULES

• R&R IN 3 SCENARIOS:Does not cover R&R R&R IN 3 SCENARIOS:• ACQUIRED BY GOVT.

• ACQUIRED BY PRIVATE CORPORATION BY ITSELF• 100 acres in a rural area• 50 acres in an urban area• 50 acres in an urban area

• PRIVATE CORPORATION APPROACHES GOVT FORASSISTANCE IN ACQUIRING A CERTAIN PORTION

• R&R’s DISTINCT FEATURES• R&R s DISTINCT FEATURES• Settlement for Non-owners

• Recognizes Community Property Rights (CPR)

In urban areas families that have resided for• In urban areas, families that have resided for more than 3 years, or whose livelihood is affected

• PROCESS• Administrator surveys & prepares R&R draft:

Vetted by Gram Sabha or MunicipalityVetted by Gram Sabha or Municipality

• Draft sent to Collector

• Collector shares with R&R Committee and R&R Commissioner

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Commissioner


CompensationCompensation

LAA NEW RULES

• LAND ACQUISITION• Market value

• Quantifiable losses

• LAND ACQUISITION• Market Value is the basis, but

• 4 times the MV in rural areas• Quantifiable losses

• 30% of MV as solatium

• 4 times the MV in rural areas• 2 times of MV in urban areas• Plus, the value of assets fixed to

land• R&R COMPENSATION

• None • MV decided by ‘higher of registered sale deeds OR value in surrounding areas’g

• R&R COMPENSATION: • For all displaced people including

non-owners whose livelihoodnon-owners whose livelihood depends on land

• Includes subsistence allowance, annuity for 20 years, constructed house etc

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house, etc.

C&WI PRESENTATIONCOMPENSATION PACKAGE FOR R&R

Subsistence allowance: Rs. 3,000 / month / family for 12 months

Annuity: Rs. 2,000 / month / family for 20 years, with index for inflation

A t t d hA constructed house • 150 sq. mt. in rural areas• 50 sq. mt. in urban areas

Mandatory employment for one person or Rs. 5 lakhs settlement

Transportation: Rs. 50,000 per family

Exclusively for land owners parting with land• 20% of the appreciated value for every transfer of land within 10 years

20% f th d l d l d if i d f b i ti• 20% of the developed land – if acquired for urbanization• Offer of shares up to 25% of the compensation amount• 1 acre of land / family – if acquired for irrigation projects

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C&WI PRESENTATION

COMMERCIAL IMPACT ON PRICING, VALUATIONS AND INVESTMENT

Rural Land

Urban Land

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C&WI PRESENTATION


RURAL MATH-DYNAMIC-ONOMICS

SAMPLE WORKING FOR RURAL LAND 100 ACRES Rs per acre Rs. per sft

As per LAA 1894 (Existing)

Rs. Per sft

MV Of Land 40,46,823 93 93

Compensation for Land as per LARR (4 times) 1,61,87,200 372 121

Value of Fixed Assets 6,53,396 15 15 Compensation per family occupying the land (additional for 1 year) 72,000 2 -

Annuity for 20 yrs 10,32,851 24 -

Transportation @ 50,000 per family 1,00,000 2 -

Settlement @ 5 lakhs 10,00,000 23 -

Construction Cost of House (150 sq.mt plinth area) 27,44,820 63 -

Total LA & R&R 2,17,90,267 500 136

New Construction cost 4,35,59,755 1,000 1,000

Administrative costs 1,08,89,939 250 250

Total cost of development 7 62 39 961 1 750 1 386Total cost of development 7,62,39,961 1,750 1,386

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C&WI PRESENTATION



LAND PROCUREMENT: > 5 TIMES OF MV



Rs. Per sft

LAND PROCUREMENT: > 5 TIMES OF MVMV Of Land 40,46,823 93 93



Annuity for 20 yrs 10,32,851 24 -




Total LA & R&R 2,17,90,267 500 136




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C&WI PRESENTATION






Rs. Per sft


ACQUISITION: > 3.5 TIMES COSTLIER

MV Of Land 40,46,823 93 93



Annuity for 20 yrs 10,32,851 24 -




Total LA & R&R 2,17,90,267 500 136




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C&WI PRESENTATION


RURAL MATH-DYNAMIC-ONOMICSD il’ Ad L d C l


Devil’s Advocate: Land Cartels



Rs. Per sft


ACQUISITION: > 3.5 TIMES THANCURRENT LAA VALUE

LAND TO COMPRISE >23% OF PRICE

MV Of Land 40,46,823 93 93



Annuity for 20 yrs 10,32,851 24 -




Total LA & R&R 2,17,90,267 500 136




Final Price with 20% return 9,14,87,953 2,100 1,663

Rentalized Value (Rs./month) 9,14,880 21 17

• Land comprises 8% of price as per existing LAA

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C&WI PRESENTATION





Rs. Per sft






LAND TO COMPRISE 23% OF PRICEAnnuity for 20 yrs 10,32,851 24 -




PRICE SWING: 25% UPWARDS

Total LA & R&R 2,17,90,267 500 136






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C&WI PRESENTATION





Rs. Per sft






LAND TO COMPRISE 23% OF PRICEAnnuity for 20 yrs 10,32,851 24 -




PRICE SWING: 25% UPWARDS

YIELD COMPRESSION: 12% -- sub 10%

Total LA & R&R 2,17,90,267 500 136






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C&WI PRESENTATION


URBAN MATH-DYNAMIC-ONOMICS

SAMPLE WORKING FOR URBAN LAND 50 ACRES Rs per acre Rs. per sft

As per LAA 1894 (Existing) Rs. Per

sft

MV Of Land 8,09,36,000 1,858 1,858

Compensation for Land as per LARR (2 times) 16,18,72,000 3,716 2,415

Value of Fixed Assets 1,79,68,399 412 412 Compensation per family occupying the land (additional for 1 year) 6,55,582 15 -year) 6,55,582 15

Annuity for 20 yrs 94,04,414 216 -



Construction Cost of House (50 sq.mt plinth area) 1,37,21,323 315 -

Total LA & R&R 21,36,37,547 4,904 2,828



Total cost of development 32,25,36,935 7,404 5,328

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C&WI PRESENTATION



LAND PROCUREMENT: > 2 5 X OF MV



sftLAND PROCUREMENT: > 2.5 X OF MV

MV Of Land 8,09,36,000 1,858 1,858


Value of Fixed Assets 1,79,68,399 412 412 Compensation per family occupying the land (additional for 1 year) 6,55,582 15 -year) 6,55,582 15

Annuity for 20 yrs 94,04,414 216 -




Total LA & R&R 21,36,37,547 4,904 2,828




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C&WI PRESENTATION





sftLAND PROCUREMENT: > 2 5 X OF MV

MV Of Land 8,09,36,000 1,858 1,858


Value of Fixed Assets 1,79,68,399 412 412 Compensation per family occupying the land (additional for 1 year) 6,55,582 15 -

LAND PROCUREMENT: > 2.5 X OF MV

ACQUISITION: ~ 1.7 X OF LAA VALUE

year) 6,55,582 15

Annuity for 20 yrs 94,04,414 216 -




Total LA & R&R 21,36,37,547 4,904 2,828




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C&WI PRESENTATION


URBAN MATH-DYNAMIC-ONOMICSD il’ Ad L d C l



sftLAND PROCUREMENT: > 2 5 X OF MV

Devil’s Advocate: Land Cartels

MV Of Land 8,09,36,000 1,858 1,858



LAND PROCUREMENT: > 2.5 X OF MV


LAND TO COMPRISE 55% OF PRICEyear) 6,55,582 15

Annuity for 20 yrs 94,04,414 216 -




Total LA & R&R 21,36,37,547 4,904 55% 44% 2,828





Rentalized Value (Rs/sqft/month) 38,70,443 89 64

• Land comprises 44% of price as per existing LAA

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C&WI PRESENTATION








LAND TO COMPRISE 55% OF PRICE

MV Of Land 8,09,36,000 1,858 1,858



PRICE SWING: 37% UPWARD

year) 6,55,582 15

Annuity for 20 yrs 94,04,414 216 -




Total LA & R&R 21,36,37,547 4,904 2,828






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C&WI PRESENTATION








LAND TO COMPRISE 55% OF PRICE

MV Of Land 8,09,36,000 1,858 1,858



PRICE SWING: 37% UPWARD

YIELD COMPRESSION: 12% -- sub 9%

year) 6,55,582 15

Annuity for 20 yrs 94,04,414 216 -




Total LA & R&R 21,36,37,547 4,904 2,828






CUSHMAN & WAKEFIELD

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C&WI PRESENTATIONSOCIO-CULTURAL AND EXECUTION WORRIES

FOR THE OWNER/ DISPLACED

S i l C t E i it i l

IN IMPLEMENTATION

A i t t i t i iti• Social Cost: Earning capacity, social structures, cultural identity, political power: PARETO vs KALDOR-HICKS?

• Does R&R cover all risks:

• Acquirers may try to circumvent acquisition for projects requiring more than 100 acres

• Sale deeds / registered land values may not reflect the MV• Does R&R cover all risks:

homelessness, food insecurity, increased mortality, insecurity, loss of CPR, etc.

• Cost of asset replacement is a source of trouble

M t ti i l t l• Does ‘public purpose’ sufficiently include/excludes the displaced ‘public’

• Equality: STs comprise about 40% of

• Monetary compensation is almost always perceived as insufficient leading to subsequent problems

• Demand – Supply imbalance in certainthose displaced, while they comprise only 7.5% of the population

• Limited participation by the public in decision making: SIA though landmark

Demand Supply imbalance in certain segments

• Acquisition, Rehabilitation and Resettlement – accounts for 25-55% of the total project costs a difficult proposition fordecision making: SIA, though landmark

step, is controlled by the govt.

• Ownership transfer in residential properties would be challenging

total project costs –a difficult proposition for the market

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properties would be challenging

C&WI PRESENTATION

WHY DO IT AT ALL THEN…!!

I d t d E d tIndustry and Economy need space to grow; The Displaced need more convincing alternatives;

The Mess is getting too big for LAA 1894 to handle it now

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C&WI PRESENTATION


TO SUM UP…

The legislation represents a change in the legislative approach from LAA

For the first time introduces SIA, recognises non-owners

A mode of acquisition requiring consent of the displacedode o acqu s t o equ g co se t o t e d sp aced

Non monetary benefits and statutory entitlements for resettlement

Compared to LAA it defines the grounds for urgency clauseCompared to LAA, it defines the grounds for urgency clause

SIA process still allows for arbitrary decision-making & lack of meaningful participation

S i l t i i i ti i till t l t l l l dd dSocial cost minimization is still not completely or clearly addressed

R&R still depends on market value

Pricing dynamics will change, possibly irreversibly

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C&WI PRESENTATION

IS IT A STEP FORWARD OR BACK?

THE JURY IS STILL OUT

BUT,

A START HAS BEEN MADE

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THANK YOU

Acknowledgements & References:

1. Cushman & Wakefield Research2. The Land Acquisition Bill, 2011: One step forward and two steps back

by Nihal Joseph & Shrinidhi Rao3. The Land Acquisition, Resettlement and Rehabilitation (LARR) Bill

2011: Providing Solutions or Raising Questions? By Amitendu Palit

Queries & Feedback [email protected]

ARVIND NANDAN - LARR

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