The Hindu Business Line : Acquisition of land by Govt for private cos to stop

New Delhi March 27 Call it the SEZ-Nandigram effect. The Centre is all set to table, in the current session of Parliament, a Bill that puts a virtual stop on future governmental acquisition of lands for private companies and restricts the definition of `public purpose' under the Land Acquisition Act, 1894.

Budget Session

"The note proposing the necessary amendments to the Act is being circulated among the Ministries concerned (Commerce, Water Resources, Power, Environment, Rural Development, etc). It would then be put before the Cabinet and perhaps a Group of Ministers. The idea is to place the Bill when the Budget session reconvenes on April 26," highly placed sources told Business Line.

The Bill, they said, plans to dispense with Part VII of the Act, specifically dealing with governmental land acquisitions for `companies' (in the private sector). This is in contrast to those made on behalf of State-owned companies and departments, purportedly for `public purposes'.

Holdout Ratio

"Once the amendment is carried out, there will be no Part VII. The Government would have no further role in acquisitions for corporates. An exception may be made in certain holdout case, where the latter has already bought 90 per cent or so of the required land. The holdout ratio for the Government to step in may be set between 10 and 30 per cent," the sources added.

They, however, clarified that the proposed amendment would have only prospective effect and "will not impact past Government-aided acquisitions, including for the already notified Special Economic Zones."

The distinction between land acquisition for `companies' and for `public purpose' was originally made in a 1984 amendment to the Act. While Government purchase of land in general requires a declaration that it is intended for a `public purpose', there is no such need if the acquisition is made for a corporate.

Sovereign Power

"When the 1984 amendment was introduced, there was a felt need to promote industries in backward areas and for which the Government had to facilitate acquisition of land even if it was not for a so-called public purpose. But today, companies are on their own venturing out to create land banks and any Governmental involvement is proving politically hot, as in Nandigram and a few other SEZs," the sources pointed out.

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