A hard ‘land’ing The Lok Sabha has passed the Land Acquisition Bill, 2011 (renamed as the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill 2012) on 29th August, 2013. Although high on intent, we view the Bill as an incrementally negative development for real estate, infrastructure projects (ports, airports and power assets) and manufacturing-intensive sectors such as autos and mining. Our major concern is not the higher compensation proposed for land owners/project-affected people, but the entire acquisition process getting delayed. This is owing to (1) requirement of consent of 70-80% of landowners (2) creation of multiple bureaucratic layers to approve acquisition (3) absence of proper land title records in India (4) difficulty in ascertaining market value of land and (5) identification and rehabilitation and resettlement of not just landowners but also project-affected people. We believe that the requirement for compliance with the Land Acquisition Bill and requisite environmental clearance will likely result in any new project taking 4-5 years for entire acquisition process to be completed. We believe that listed realty companies may only be marginally affected owing to existing land bank of 15-25 years. However, setting up new projects in the industrials/ manufacturing space may face significant hurdles.
Major features of the Bill The salient features of the Bill include (a) Rehabilitation and Resettlement (R&R) made part of the Land Acquisition Bill (b) Allows government to acquire land for private companies for public purposes without specifying minimum land (to be acquired) by private companies (c) Compensation package includes 4x higher of registered/minimum land value for rural areas and 2x for urban areas (d) R&R package includes land losers as well as livelihood losers (e) Consent of 80% of land owners in case of private projects, 70% in case of PPPs and (f) Special additional provisions for displacement of STs. Impact : Increased costs and delays for projects We believe that the cost of land acquisition will increase 3-4x for companies as a result of the passage of this Bill. In addition to the enhanced compensation for land, inclusion of other costs such as subsistence allowance, annuity payments, transportation & resettlement allowance and compensation in lieu of employment are dampeners. Additionally, the Bill requires for 25 infrastructure facilities to be provided in the resettlement areas including health centres, schools and drinking water. The Bill envisages creation of multiple layers of clearances required to complete the land acquisition process similar to environmental clearances. As a result, we are of the view that the entire land acquisition process for a project may take 4-5 years. -- -- For Anything related with Stock market be Online at http://www.niftyviews.com/ Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234 FOR TRIAL STOCK/NIFTY/OPTION CALLS You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group. To post to this group, send an email to [email protected] To unsubscribe email [email protected] for more info visit http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB . This is Not a Spam Mail. Disclaimer :- "The opinions expressed by the members on this board are based on their individual experience and perceptions and to share information with other members with the best of intentions to help fellow members in investment decisions as equity investment is a risky venture." --- You received this message because you are subscribed to the Google Groups "TEAM STOCKRESEARCHERS" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/groups/opt_out.
