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Land disputes is costing India 100 Billion Dollars of Investment !

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We very well know the story of Tata Nano Land Dispute. What was West Bengal’s loss though was Gujarat’s profit. Nano’s are now coming out of the state.

India-Land-Industry

However, most of the projects are not as lucky as Nano to get a Land replacement. Did you know that 70% of total 190 projects that were supposed to be implemented have been stalled due to Land acquisition related disputes. The ECO Pulse study by ASSOCHAM has revealed this startling fact.

Most of these projects are basically International companies needing to set their shop in India.

For e.g: 22 major steel projects in the country worth USD 82 billion are being held up because of procedural delays in obtaining environmental impact assessment clearance and delays in land acquisition mainly due to public protests. One such project – Arcelor Mittal which nearly pulled out of building 2 steel plants that would pump close to USD 20 billion. The reason – They were unable to acquire land in Jharkhand and Orissa.

The study also revealed that, there are currently 18 strangled projects of India Inc to the tune of Rs.244,815.5 crore (Rs.2.45 trillion) remained on papers, in the form of memorandum of understanding (MoU) and agreements over the past three-four years.

If at all these projects had been implemented, it would have created Jobs for 164,000 people directly and 270,000 people indirectly !

Although, I do understand that it is important for farmers to safeguard their lands – But the compensation offerings are very much in line with Market & Real Estate conditions. I am not pointing here that Farmers should get a raw deal – Its their land, they have right to decide what to do with their lands.

What I do not understand here is why is government not intervening. This is a win-win situation. If Indian Government takes these projects seriously, I am sure there are plenty of solutions available to overcome these Land disputes.

What is your take?

  1. SEO Tips says

    +1 with TIP Guy :)

  2. TIP Guy says

    I always wondered, why do these big corporations always want agricultural land? why does local governments always agrees to MOUs for agricultural land? Politicians attempt to balance their donations (from corporations) and vote bank (farmers and amm janta)?

    Why doesn’t our government allocate only wasteland (in abundance all over the country) for such large projects. Probably, because, who would want to develop the infrastructure in far away lands? or If these big corporations have to partner on such a development, then their projects become a costly preposition.

  3. Arun Prabhudesai says

    Abhilash,
    impressed with your point of view – and very valid one at that.

    However, the bottomline of this post was that Government needs to take action to put policy in place so that these projects get implemented. This does not necessarily mean that take the land from farmer.

    Government itself has so much land that it make alternative arrangements, but it is not – Everyone looks for political mileage and Votebanks in these kind of issues. No one really cares about how it will affect at macro level – They just worried about their seat !

    Having said that, survey points out following 5 points that should be implemented for better management of implementation of such projects

    1. A broad based national political will to ensure smooth and timely introduction of the contentious land acquisition amendment Bill.
    2. A National Land Bank for land development and development of waste land for industrial projects to resolve the land acquisition related issues.
    3. Remunerative compensation for the acquired land to farmers and other land
    owners based on market price along with equity ownership in projects.
    4. State level forums to assess the economic, environmental, social and cultural viability of rehabilitation and resettlement programmes.

    5. Rehabilitation related programmes for the displaced land owners to be seen as a
    fundamental responsibility of the land acquiring company in question.

  4. Abhilash Kushwaha says

    Am I hearing you right? You want government intervention. I believe this is a slippery slope. No matter what the situation, I think asking government to intervene is not the right idea. In fact government intervening on behalf of Big corporations against small individual farmers is corrupt. If anything assuming that government wants to act in the interest of people and not some politicians acting in their self-interest; the government should be doing the opposite thing

    Now don’t get me wrong I want growth as much as the next person. However, as you say it is farmers land and they have every right to refuse. You mention that the compensation is in line with the current market conditions. However, you have to agree that for farmers the land is the only source of their livelihood. Now, if you have to give up your livelihood then you would require compensation over the current real estate price.

    To get geeky, if the market value of land is Rs 1,000,000 and the farmer makes Rs 200,000 per year then assuming discount rate of 10% the price that the farmer should get for the land is 10L + (2L/0.1) = 30L. Now if the companies are willing to pay a 200% premium on the land then they have a case.

    I am not sure how accurate the numbers are and what the appropriate discount rate should be but I think you get the idea. I am also assuming that the farmers revenue is not going up along with inflation (even if the output remains same). If we account that then the price of the land will be even higher.

    I think it indicates why farmers are unwilling to give up their land. At current market prices, the compensation is just not enough. Asking government to intervene in this case is not the right answer.

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