The decision by the Union Cabinet on Monday to take the ordinance route to bring amendments to the Land Acquisition Act has been welcomed by the Indian real estate sector.
The draft ordinance envisages that the projects in the field of defence, rural electrification, rural housing and industrial corridors would be exempted from seeking 80 per cent approval from affected persons as earlier required. Farmers will continue to be compensated at four times the market rate for land in rural areas and twice the rate in urban areas.
Private hospitals, private educational institutions and private hotels are to be included in the definition of public purpose. These would also be exempt from social impact studies which the industry felt delayed project approvals. Also 80 per cent of land owners affected in a sale will have to provide consent for land acquisition for a private project. The ordinance will have to be cleared by the next parliamentary session commencing February 2015.
The chronic delays with regard to approvals has been a major obstacle for projects and any pick up in infrastructure will have a beneficial ‘knock-on’ effect for the realty sector, industry felt. “It is a welcome development and will hopefully ensure that land acquisition is done for the desired purpose, that it is speedy and remains viable for the developer,’’ L.K.Jain, Chairman, Confederation of Real Estate Developers Associations of India (CREDAI) said adding that infrastructure and realty projects in excess of $ 300 billion had been held up.
“It is a very positive and bold step and would boost sentiments,’’ said Sunil Mantri, President, National Real Estate Development Council (NAREDCO) said. “There has been a huge emphasis on infrastructure development by the government and any step to simplify procedures will have a beneficial impact for the real estate sector. There were too many hurdles dis-incentivising large scale projects earlier.’’
The Act which came into force on January 1, 2014 under the previous government was perceived to have put in place stringent restrictions leading to large number of projects in areas such as railways, steel and roads being held up.
