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Highway Upgradation & SEZ development: Land costs more than double on higher payout.

Date: 23-08-2017
Subject: Highway Upgradation & SEZ development: Land costs more than double on higher payout
Land acquisition woes have hobbled the upgradation of the 125-km Patna-Buxar national highway project, with the cost of acquiring land for developing the 33-km first phase of the upgradation project in Bihar — at Rs 1,189 crore — proving to be over 200 per cent of the estimated construction cost of Rs 556 crore for the section. The cost to acquire land for the first section, post the implementation of new compensation norms, was even higher than the original cost for the entire project, pegged at Rs 1,129 crore, and initially awarded to a contractor in 2012.

The surge in land cost of sections such as the Patna-Buxar epitomises the increase in the price of land for projects such as highway upgradation and SEZ development since January 2015, when the First Schedule to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 kicked in.

In two years, land acquisition costs, measured in terms of compensation paid for every hectare of land acquired, shot up from Rs 0.9 crore in FY14 to Rs 2.05 crore in FY16 for highway development. What has compounded matters is that 12 states levy a percentage of compensation as administrative charges for acquisition of land for National Highways. Cumulatively, for 22 major states, the compensation paid for land acquisition has shot up from Rs 9,027 crore in FY15 to over Rs 19,600 crore in FY17.

Alongside the introduction of provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act, 2013, for determination of compensation for land, in case of these 12 states that levy a percentage of compensation as administrative charges for acquiring land, the expenditure on compensation has also resulted further increase in expenditure on administrative charges levied by state governments for acquiring land.

The NDA government had, in December 2014, amended the Right to Fair Compensation and Transparency in Rehabilitation & Resettlement Act, 2013 to provide higher compensation, resettlement and rehabilitation benefits to landowners. Land cost, which used to be 10 per cent of the total project cost about a decade ago, is now more than 100 per cent of the civil cost. The sharpest rise in land prices has been seen in Maharashtra, Punjab and Haryana.

Land for the construction of National Highways (NHs) including flyovers thereon in the country is acquired under the provisions of the National Highways Act, 1956 in consonance with the applicable provisions contained in the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. However, under section 3G(5) of the NH Act, 1956, if the amount of compensation so determined, is not acceptable to the landowner, there is a provision for determination of the amount by the arbitrator to be appointed by the Central Government on an application by the party.

The trend of levying compensation charges is widespread, with all states levying administrative costs or charges for acquisition of land for the NHAI projects, with the states of J&K, Punjab, Rajasthan, Karnataka, Andhra Pradesh, Telangana and Tamil Nadu being the only exceptions.

Bihar, for instance, charges 20.5 per cent of the Compensation Amount as “administrative costs while Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Gujarat and West Bengal levy 10 per cent of the compensation amount. Kerala charges about 20 per cent on cost of land, Haryana levies Rs 1 lakh per acre as per clause 19 of Government of Haryana notification dated 09.11.2010. Maharashtra charges 6 per cent (3 per cent AC to be deposited with state government and 3 per cent to be deposited in the office of land authority.

Land acquisition expenses, on an average, have tripled as compared to pre-January, 2015 acquisition however, administrative charges being levied by the state government have not been rationalized. The matter has been taken up by the NHAI and the Ministry of Road Transport and Highways with these states requesting for rationalisation of these administrative charges.

Awarding activity has suffered given weak land acquisition during the last financial year. In FY17, the NHAI awarded road projects for 3,000 km (at slightly over 8 km/day) and constructed 2,350km. While this is well below its initial target of awarding 15,000 km and constructing 8,000 km, Motilal Oswal has, in a report quoting channel checks, suggested that momentum should pick up significantly in FY18. From the current rate of 8km/day, awarding activity is expected to reach 15km/day in FY18 (5,475km). Construction too is expected to increase from 6.5km/day to 10km/day in FY18 (3,650km).

Source: indianexpress.com

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