The Hindu Business Line : At arm's length

The abolition of a whole section of the Land Acquisition Act dealing with the purchase of property on behalf of companies, a proposal currently under Government's consideration, may not really limit the establishment's role in securing land for private industrial projects. The relevant chapter of the law that deals with certain procedural requirements speaks of administrative actions that can be initiated only after obtaining the consent of the Government or only after the beneficiary company has executed an agreement with the Government.

Even the ostensibly more stringent proviso spelt out in the relevant chapter — that the Government shall not acquire land for a `private company' except for workers' housing — is a toothless stipulation because the term `private company' will have the same meaning as ascribed to it under the Companies Act. The definition of a `private company' under that law is somewhat narrower confining it to to closely-held entities that are essentially proprietary concerns except in name. In the event, the prohibition would not apply to the vast majority of large private corporate organisations, which look to the government for land to set up industrial projects. Moreover the amendments to the Central legislation do not cover land acquired through a State industrial development corporation. The proposed amendment will, at best, serve to deflect the criticism against the ruling alliance and its supporters that are threatening to extract a heavy political price.

The farther the Government stays from any direct involvement in land acquisition for private projects the better it is for all concerned. The private corporate sector and its agents in the realty industry on the one side and private landowners on the other are eminently capable of settling land deals between themselves to their mutual advantage. It may mean the corporate paying a higher price than the archaic `fair' market value currently applied in public acquisitions. Indeed, the coming together of a set of landowners and a company for setting up a new project is not dissimilar to the merger of two businesses for `synergy' gains. The Government need confine itself to notifying an area currently classified as agriculture as eligible for industrial use once the company and the landowners have entered into an agreement. It could aid the corporate cause by ridding the land of any encumbrances to the title. A reform of the current high rates of taxation of registration of land ownership would not hurt either. If there is requisite political will, the country may, in time, acquire an efficient market for land.

More Stories on : Editorial | Real Estate & Construction

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
At arm's length

Inflation: No great expectations

Inflation and growth dynamics

Lifting Bharat out of economic quagmire

Crop protection measures — Needed, a policy armour

Polymers: The crude chain reaction

Data crazy, not analysis savvy

In-house attack on social evils

Land market