| Most of the companies have approved of one of the GoM's most critical recommendations that state governments be allowed to acquire 30 per cent of land required to enable private projects to meet contiguity norms. |
| "It will keep at bay some troublesome elements that try to throw spanner in entire process of land acquisition," said a senior official from Mumbai SEZ Pvt Ltd, the Reliance Industries subsidiary that is setting up a 12,300-acre special economic zone (SEZ) in Maharashtra's Raigad district. |
| Given that land acquisition is a sellers' market, the scope for such "troublesome elements" is wide. In Tamil Nadu, for instance, the implementation of one SEZ was delayed because a landowner with 20 acres in the middle of the site demanded nearly 15 times the price that was being paid to other landowners. |
| "In that sense, the proposed R&R policy will not allow zones to be held at ransom," said Deepak Dhanak, senior manager, PricewaterhouseCoopers, who has been associated with SEZs in 15 states. |
| But the recommendation is unlikely to impact Tata Steel, Essar Steel and fertiliser cooperative IFFCO that are setting up projects on tribal lands in the eastern state of Chhattisgarh. |
| This is because the Chhattisgarh Land Revenue Code restricts transfer and purchase of land owned by tribes. Section 170 (A) of the code does not allow non-tribal people to buy tribal land without the state government's permission. |
| This means that the state government negotiates with the tribes for land on behalf of the company which pays the compensation. |
| The Chhattisgarh government, however, has proposed a land-for-land proposal for land-losers, officially referred to as project affected persons (PAPs). |
| This has not proved a huge success for Tata Steel's 5 million tonne steel plant in the tribal-dominated Bastar region to acquire 5,340 acres of land The problem, as former MLA and CPI leader Manish Kunjam explained, is that the government has not specified where the PAPs will get land in return for the land they will vacate for Tata Steel, which signed a memorandum with the state in June 2005 but is yet to acquire any land. |
| The problems are likely to be repeated for Essar's steel plant in Dantewada district, which needs 1,485 acres and IFFCO proposed 1,000 Mw power unit in the Sarguja district (2,282 acres). |
| State intervention, however, does not guarantee lower acquisition costs for private developers. "In fact, it costs the company more if the state government acquires land compared with a company directly negotiating with the PAPs," said Rakesh Jindal, vice-president, Jindal Steel and Power Ltd. |
| The company had acquired about 1,500 acres of land in recent years for expansion projects in its Raigarh facility by directly negotiating with the people. Jindal said the company paid the market rate of Rs 1.5 lakh to Rs 3 lakh per acre, which was cheaper than the government rate that includes interest, solatium, service charge to the government and other charges. |
| Typically, cost of land in Chhattisgarh account for 1per cent to 2 per cent of a project's start-up costs. JSPL sources said costs probably go up to 4 per cent if the state intervened and acquired land. |
| Officials confirmed that land acquisition by the state did not mean lower prices. "For the 770-acre Honda-SIEL project in Alwar, the average price at which we acquired land was around Rs 22 lakh per acre, while the circle rate was around Rs 14 lakh per acre," said a Rajasthan State Industrial Development and Investment Corporation Ltd official. |
| Inevitably, land prices also go up once the state or a company evinces interest in an area. Jindal said there is a sudden change in villagers' attitudes once they discover that an industrial house wants to acquire their land. |
| "The price skyrockets as soon as the company approaches them. But we still manage to finalise amicable deals," he added. |
| Reliance's SEZ in Raigarh faced a similar issue when it acquired land for its SEZ. The last 100 acres cost three times the acquisition cost of the first 100 acres. |
| All in all, the GoM's R&R policy recommendations are expected to yield mixed results for land-losers. While the issue of tribal lands, especially in the mineral-rich eastern states of Chhattisgarh and Jharkhand, remains a problem, land- losers elsewhere appear to have gained significantly. |
| For instance, a farmer who owned 20 acres of land near the Nokia (SEZ), near Sriperumbudur, Tamil Nadu sold the plot for Rs 5 crore. |
| That enabled him marry off all his five daughters, something he would never have been able to achieve before, since his annual income was Rs 30,000. Had the Nokia SEZ not come up, he would have earned barely Rs 2 lakh for his plot. |
| Additional reporting with Rituparna Bhuyan & Makarand Gadgil |
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