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Land acquisition problems delay major projects

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WAR AGAINST LAND RIGHTS: Anti-POSCO activists demonstrating in front of the company’s office in Bhubaneswar in Orissa.
WAR AGAINST LAND RIGHTS: Anti-POSCO activists demonstrating in front of the company’s office in Bhubaneswar in Orissa.

Industry calls for "flexible transparent" allotment policy

Except in States that have built up huge land banks over the years, the inordinate delay in the completion or commissioning of mega projects has caused concern among industries and investors. Though Maharashtra, Andhra Pradesh, Tamil Nadu, Rajasthan, Karnataka, and West Bengal are considered to be attractive investment destinations even now, industry sources say land acquisition in some of these States poses problems. Ideally, industry and investors like to deal with governments or their agencies to set up new units, and this will also include land.

Increasingly, State governments want investors to deal directly with private parties to acquire land, which has become a sensitive and political issue in the wake of the controversy kicked up by the special economic zones (SEZs).

Andhra Pradesh and Tamil Nadu have been touted as ‘industry-friendly.’ They have secured clearance for over 50 SEZs. But the zones that have taken off are specific industry related areas — mostly the IT parks. Where the level of land required or for acquisition was limited to 500 acres or less, the State governments have been able to manage the situation and enable the investors to kick off the projects. The industrial development agencies of the States have acquired vast tracts of land in different regions to enable all round development of the State. The problems become complex and complicated when it comes to multi-product SEZs, where the land requirement can be 1,000 or 2,000 acres, or even more. A whole lot of foreign developers have floated ventures in different States for the development of such SEZs.

Singur controversy

But after the controversy generated by the Nandigram and Singur projects in West Bengal, and the national political debate that they sparked, State governments have become wary of acquiring huge tracts of land, or even getting involved in facilitating this exercise by private investors. Government agencies now ask the developers to deal directly with the landowners.

Taking the case of Orissa for instance, Assocham President V. N. Dhoot asked: “Why is that projects are not taking off and what are the problems relating to land acquisition in Orissa? The cost of living here is much lower than States like Tamil Nadu, West Bengal, or Maharashtra, and that’s one reason why investors are coming here.” But promised investments to the tune of Rs. 5 lakh crore remained on paper, in the form of MoUs and agreements over the past three or four years.

All major projects, including POSCO, Tata Steel, Mittals, and the Vedanta group investments, the Assocham noted, were hanging for the past four years. In addition to the protests over land acquisition, environmental issues and objections were being raised, adding to the delays in the implementation of projects. These problems are not peculiar to Orissa.

With frequent elections in different States and the count down already begun for the elections to the Lok Sabha (due only in 2009), none of the political parties, especially those in power, wants to be caught on the wrong foot. If the ruling parties want to help industry and get a particular project through in the face of competition, the opposition parties launch a major offensive and protest against it.

Such an agitation puts the ruling parties on the defensive and they do not want to take any political risk on a sensitive issue such as land. Industry bodies and investors are not averse to dealing directly with private landowners, but the problem crops up when they have to handle small parcels of land with dozens, sometimes even over a hundred owners. That is where the role of a government agency becomes important. What they want is a “complete, transparent, and flexible land acquisition policy,” that can help both the investor and the landowner. On a case-by-case basis, a compensation package - land for land, jobs, equity share in the project and profits or royalty — will be mutually advantageous. Further, industry would like to see a political consensus evolve on the land acquisition issue so that irrespective of which party is in power, the projects can progress without a hitch or political vendetta.

More than anything else, land has become the most critical and costly input for the setting up of an industry or even the development of an SEZ.


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