Costly land aggregation can frustrate affordable housing (Comment)

August 17th, 2011 - 1:20 pm ICT by IANS  

The recent trouble in Noida shows how unfair and opaque guidelines on land acquisition can not only derail real estate and infrastructure development in the country but also sour the common man’s dream of owning a home in a bustling suburb, seen as as the Mecca of affordable housing.

The Noida fiasco proved to be an eye-opener as the ticking time bomb of land acquisition threatens to engulf the entire development process across the country. In the absence of a unified code of conduct to make land aggregation process simple and dispute-free, many key infrastructure projects in the country have been derailed due to disputes.

Considering non-contentious land aggregation is key to real estate and infrastructure development, the National Land Acquisition and Rehabilitation and Resettlement Bill of 2011, to replace an antiquated law of 1894, may well address the issues, despite some grey areas. The bill integrates acquisition with relief and rehabilitation, meeting the aspirations of land owners to a large extent.

The existing land acquisition law paid a pittance to land owners but the proposed legislation also has a provision for very high compensation that could adversely impact the process of speedy urbanisation. In fact, the high cost of land acquisition will make homes much costlier, dealing a big blow to affordable housing.

The government and apex real estate bodies need to work together to devise strategies to minimise the impact of enhanced compensation and rehabilitation package on real estate developers and home buyers. Developing special residential zones with tax incentives on the lines of special economic zones and liberalising the density norms could be some of the strategical measures in this direction.

The ban on acquiring irrigated multi-crop land in the new land acquisition policy could also pose serious problems in land aggregation. The developers of townships of 100 acres or more may find the going tough. In fact, the new national manufacturing policy calls for several investment and manufacturing zones spread across 5,000 hectares and getting such large tracts of land could be a real challenge, especially in the absence of any urgency clause.

According to McKinskey, India needs to develop 700-900 million sq mt of residential and commercial space by 2030. Under the federal government’s urban renewal programme to augment infrastructure in 65 select cities, Rs.120,536 crore is required over the next seven years. Considering the shortage of over 25 million urban homes, there is an urgent need to develop new cities. For all this, judicious use of land resources, without compromising on the food security, is need of the hour.

The Reserve Bank of India has expressed concern that investments would slide unless land issues are sorted out. The recent dip in foreign investment flows is already worrisome. Equally worrying is that India Inc is dragging its feet on domestic investments and looking for overseas opportunities.

All these underscore the urgency to deal with land acquisition problems. There is also the uncertainty over the introduction of the bill in the current session of parliament. The government has also brought no legislative clarity on the issue so far by way of consultations with political parties, state governments and civil society.

Any further delay will further complicate matters. There is an urgent need for a fine balancing act between land owners and industrialists, as also realtors and investors, to come up with a fair and transparent land acquisition mechanism to satisfy all stakeholders.

(Vinod Behl is editor of Realty Plus monthly. He can be reached at vbehl2008@gmail.com)

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