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Ordinance to amend Land Acquisition Act: Impact on Home buyer and Land owner

Ordinance to amend Land Acquisition Act: Impact on Home buyer and Land owner

Ordinance to amend Land Acquisition Act: Impact on Home buyer and Land owner

In a move to ease the process of land acquisition, the Union Cabinet has recommended an ordinance to amend the Land Acquisition Act, 2013. The Act of 2013, which has replaced the earlier Land Acquisition Act of 1894, has been criticized by industry players for making land acquisition a more difficult process. In a bid to make the act industry friendly the government has bought the following amendments in the Land Act:

  • The Union cabinet has included five new categories of projects that would not need prior consent from affected families and Social Impact Assessment (SIA). These include projects related to rural infrastructure, defense and industrial corridors.
  • The amendment also includes 13 legislation that are currently exempted under the purview of the Act in the compensation, rehabilitation and resettlement provisions.
  • The land ordinance, will dilute the consent clause for Public-Private Partnership (PPP) projects - either abolish it or bring the requirement down to 50% of land owners.
  • In Government projects, where the land will remain with the government - no consent will be required.
  • Compensation will be calculated from the date of first notification of the land acquisition, earlier, the compensation amount was based on the date of social-impact assessment study.
  • No change in the compensation clause. Currently compensation of up to four times the current market value in rural areas and twice the market value in urban parts is offered.
  • The term 'affected family' could also see some changes. Currently, the definition is too broad and it even includes people whose livelihood was affected for three years before the acquisition of land.
  • Social-Impact Assessment (SIA) clause could also be diluted for large and PPP projects to ensure that there is no delay the land purchase process.
  • The clause, which states that the land acquisition proceedings will annul if compensation is not paid or possession is not taken within a given timeframe, will be changed or diluted.
  • The act will come into effect from January 1 2015.


New rules and impact on Home buyers:

  • Most property developers have land parcels for next few years of construction and development; however, with the amendment of Land Act the compensation will now be calculated from preliminary notification, this might reduce the cost of projects, their viability and later possessions.
  • The cost to be paid for acquiring a land has not been reduced, this will ultimately be reflected and will put the burden on the homebuyers’ pockets. Eventually, there will be an increase in the sale price of the properties thus becoming an affordability issue for the Indian home buyers.


New rules and impact on land owners:

  • The Land Act has not changed the rules for compensation for land acquired for infrastructure projects and industry. As compensation, the new bill provides for up to four times the market value of land acquired in rural areas and twice the market value in urban areas. This is good news for land owners.
  • Term ‘affected family’, Social-Impact Assessment (SIA) clause and consent clause for PPP projects could be diluted. This could adversely affect land owners.
  • Compensation will be calculated from the date of first notification of the land acquisition, this might adversely affect compensation package of the land owner.
Last Updated: Tue Dec 30 2014

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