Land Bill's consent clause removal major win: Mah Lifespace

Sonia: How much of a relief do you think it is as far as land acquisition is concerned going ahead and do you see a lot of construction projects increase now in terms of quantum and the ease of doing work as well?

A: I must confess that my knowledge is limited to what’s been put on the media. I have not seen the text of the ordinance but it is a welcome move because what they are trying to do is protect the interest of the farmers and at the same time taking away the nuisance of the act because this consent term getting the farmers’ consent term was going to be an impossible task and also the social impact study. What I make out in the press is that certain segments of the industry especially things like rural housing, affordable housing, rural electrification, rural projects, defense and public private partnership (PPP) projects and that’s the best part that I see.

I do not think it is going to give boost to the real estate sector because I do not think that is the intention. The boost will only come for affordable housing. So there will have to be specific land acquisition for affordable housing to meet Mr. Modi’s desire to have house for everybody but from an industry perspective I see a situation where the ownership of land will vest with the government under the PPP mode and the land will be made available to industry.

As I have said on your channel before – with 200 million odd young people coming to the workforce, we have to find manufacturing industry to grow and in the last few years dip in Index of Industrial Production (IIP) numbers is a combination of two things; yes, there is a consumer issue but there is also an issue that no manufacturing activity has started because there is no land to do manufacturing activity. Therefore, to sum up, it is a welcome move; it takes interest of the farmers because they are going to be protected from the compensation part of it but the irritable processes will be removed for certain segments of the industry is what I read.

Latha: Do you think that all the major irritants – it is not as if we are going to get anything more easily on land acquisition. Whatever the government could do has been done, things are not going to get any easier. So are you now confident at least those projects will start taking shape that you are going to see little more activity on infrastructure?

A: Unless I see the fine print, I cannot tell you but it clearly comes out that part of the ‘Make for India’ and doing ease of business, they are trying to remove irritants and the good part is that they have protected the farmers’ economic interest and taken away the right of consent which was impossible to get because there would have been -- what happens is the vested interest becomes blackmailers – that was the biggest concern we have and that would be taken care of is my view. Now whether the thing will happen, we will have to see how it is implemented and land is a state subject, so one will have to also see how the ordinance takes care of that because land is a state subject. You ultimately have to go to the state government.

Latha: They could have their own consent requirements maybe not as tall as 80 percent but they could impose something you think?

A: The states have the final say on the land matters.

Sonia: There has been no change made to the compensation clause so I was trying to ask you whether do you think that the financial burden due to increased compensation could be a big hurdle or a deterrent?

A: You want me to put on an individual hat or a corporate hat.

Latha: I want to know what the percentage cost of land is in any of your projects.

A: Land is less than 10 percent of the project cost, so if it goes up slightly its overall impact on the project cost is 1-2 percent or 3 percent. So I do not think we should make big deal about that issue. Ultimately the farmer whose main stay is the land, has to get fair compensation and two times in urban area and four times in rural area is fair and the best part as an individual is now the farmer will get it, we were still paying the price but the middleman use to make the money, now farmer will make the money. So that makes me happy as an individual.

Latha: Do you think this will be applicable to special economic zone (SEZ), no. No relief for them?

A: As I read it as I said I have not read the fine print. If the SEZ is in the PPP mode then it will be applicable to them.

Latha: Typically in PPP mode the land belongs to the government because that is one of the requirements?

A: Yes and both Chennai and Jaipur, we did it under PPP mode. The state has 26 percent stake in the project because that is why we succeeded and nobody else succeeded because we brought state as a stakeholder in the project because you need the private sector expertise and the state’s commitment for a thing to succeed.

Sonia: For the benefit of better understanding – resettlement and rehabilitation (R&R) scheme is still quite stringent. Will it be a very high administrative burden for many of the projects that are currently underway and also many companies will still have to go through this social impact assessment. How much of a hurdle would that be?

A: The social impact assessment is a hurdle but it’s a manageable hurdle because you have to do that. R&R, I think we will have to ultimately find agencies who will manage it for the manufacturers because it is not possible for Mahindra or Tata to concentrate on work and to manage R&R for two decades. I think either the government should create an agency or there could be NGOs or somebody. I have not thought through that but if I have to do it, I would probably get a well accredited agency to come and run it so that as far as the industry is concerned it becomes a financial cost but not the burden of paying compensation every month for two decades to people.