The Hindu on January 4, 2014 writes:
The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (LARR) Act, 2013, is the first law on acquiring land post-Independence. Does this ordinance amending the law before it was even fully implemented make the acquisition of land more transparent and fair?The SEZs, along with private health and educational institutions, are in the broad category of public-private social infrastructure projects now exempted from the SIA’s scrutiny and consent clause under the ordinance.It is to be noted that the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, was brought in last year by the previous UPA government and was criticised by the industry for making land acquisition more tedious.
The LARR Act was passed unanimously by all political parties last September. Commenting on the changes back then, Vinayak Chatterjee, Chairman, Confederation of Indian Industry’s National Task Force on Infrastructure, said: “The term ‘public purpose’ has now been clearly defined. The misuse of this clause under ‘eminent domain’ was the bane of the earlier legislation. It led to forcible, heartless acquisition programmes as well as ‘lazy acquisitions where acquired land was hugely in excess of needs or just left unutilised.’”
After the ordinance was passed last week, Mr. Chatterjee maintained, “All I can say is I am positive about the ordinance as it includes public-private partnership for social infrastructure in the exempt category.”
Among the main changes, the ordinance exempts special categories of projects from the requirements of social impact assessment (SIA) and obtaining consent of affected families mandated by the LARR Act. It dilutes the time limit of five years put on projects, after which if land remained utilised, it would go back to the landowner. Instead, the period of five years has been substituted by unspecified period. Another dilution is of the “retrospective clause” to exclude time spent under litigation in cases where a stay order has been passed.
The ordinance also expands the scope of infrastructure to include private hospitals and educational institutions, which were left out in the original Act. The original Act, while defining infrastructure projects for which land can be acquired, says “excluding private hospitals, private educational institutions and private hotels”. The ordinance also replaces the term “private company” with “private entity”, which means while earlier acquisitions for private purposes was limited to private companies registered under the Companies Act, it can now be extended to any private entity. Crucially, the original law gave the government the power to take any action necessary to implement the law for two years after its passage, which has been extended to five years by the ordinance, thus increasing the period available with the government to remove difficulties in implementing the Act.
The five projects excluded from consent and SIA requirements include projects for defence and defence production, rural infrastructure including rural electrification, Affordable Housing and housing for the poor, industrial corridors as well as infrastructure and social infrastructure projects, including Public Private Partnership projects wherein the ownership continues to vest with the government. Defence is defined as “projects vital to national security”. The provisions relating to compensation, relief and rehabilitation will remain the same.
Around couple of months back, there were media reports, that Privilege Power and Infrastructure Private Limited, a wholly owned subsidiary of Housing Development and Infrastructure Ltd, received the environmental clearance from State Environment Impact Assessment Authority, Government of Maharashtra for its project 'Planet HDIL' which is an Affordable Housing project situated in the suburbs of Mumbai (Virar). The Union Budget 2014 has already given us a road-map, to incentivize development of low cost housing in the country. Moreover, raising of I-T exemption limit, deduction of interest on self occupied properties, allocation of Rs.8,000 crore for NHB programme for development of rural houses, has already created a favourable environment for Affordable Housing in India.
Earlier, the government of India relaxed the norms for foreign direct investment in the sector by reducing the minimum built-up area and capital requirement besides facilitating easier exit. Most Analysts then said that although FDI in construction is a positive for the entire industry, not all companies are likely to benefit from the relaxation of norms. The government's move is to encourage smaller projects and Affordable Housing for public. Hence, only those companies which are into smaller projects will benefit from the easing of FDI norms.
It is worth mentioning here that the companies such as HDIL, DB Realty and Delhi-based Parsvnath Developers, once plunged around 90% from their peak--now is the time for their upward journey, as the Indian economy gathers steam and certain rules are relaxed. The government's move to reduce the minimum size of investment to $5 million from $10 million and relax lock-in period of investment will be an added advantage to the foreign investors rather than large Indian players, according to analysts.
Anyway, the recent ordinance brought about by the NDA government, could further benefit the companies like HDIL which are into AFFORDABLE HOUSING segment too.