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Millennium Post

On the lookout for land

The new bill on land acquisition recently tabled in Parliament is well intentioned but seriously flawed. Its principal defect is that it attaches an arbitrary mark-up to the historical market price to determine compensation amounts. This will guarantee neither social justice nor the efficient use of resources. The Bill also places unnecessary and severe conditions on land acquisition, such as restrictions on the use of multi-cropped land and insistence on public purpose, all of which are going to stifle the pace of development without promoting the interests of farmers.

The post-liberalisation economic boom continues to create a voracious appetite for space to meet the demands of industrialisation, infrastructure building, urban expansion and resource extraction.

Finding a way to balance the needs of economic growth, equitable distribution and human rights, rescuing these complex and sometimes conflicting objectives from the demagoguery of single issue advocates  and political opportunists, is perhaps the greatest challenge facing our democracy.

Eminent domain is one of the most controversial and politically sensitive instruments of state power anywhere in the world. Depending on how it is used, it can clear the way for rapid economic transitions, technological progress and inclusive growth, or it can trample on property rights, the economic interests of poor and vulnerable groups, and fundamental principles of justice. Despite its good intentions, the draft Bill misses out on an opportunity to promote growth and prosperity while protecting the vulnerable.

The realty space is caught, in fact, in quite a Catch-22 situation. The new Land Acquisition and Rehabilitation and Resettlement (LARR) Bill is expected to increase the cost for industries, infrastructure development, real estate developers by a whopping amount thus ultimately increasing cost to the consumer and fueling inflation.

India is growing at a tremendous pace according to the aforementioned research by McKinsey Global Institute. According to the report, the urban population of India would soar to 590 million by year 2030 from 340 million in year 2008, and form about 40 per cent of total population. This will translate to a net addition of 250 million urbanites, which approximates to an impending demand of 50 million new dwelling homes. These homes cannot be built by 2030 if the recent bill is to stay.

Indian economy needs to sustain the momentum of growth that it has built up in the last 40 years. In a research conducted by McKinsey Global Institute, it is  estimated that by 2030, 70 per cent of the jobs created in India, would be in the cities and metropolitan areas, which would produce more than 70 of the total GDP of India, and drive a near fourfold increase in the per capita income across the nation.

This makes the need of rapid urbanisation in India palpable to us, which most definitely cannot be achieved without the help of the real estate builders and developers.

China stood in a similar juncture in the 1950s to build homes for its rapidly increasing population, and it chose development over other pursuits and the rest is Chinese history. The People’s Republic of China now boasts of newly built cities like Shenzhen, Guangzhou, Tianjin, Chongqing, etc. that provide  dwelling units for the urban population of China. India can now either buckle its belt and tread on a path of development similar to China or hold itself back to lesser ends like resettlement issues between farmers, developers, industrialisation, infrastructure providers and slower growth.

China and India are in the vanguard of a wave of urban expansion that is restoring the global prominence that Asia enjoyed before the European and North American industrial revolution. By 2025, nearly 2.5 billion Asians will live in cities, accounting for almost 54 per cent of the world’s urban population. India and China alone will account for more than 62 per cent of Asian urban population growth and 40 per cent of global urban population growth from 2005 to 2025.

In 1950, India was a more urban nation than China (17 percent of the population lived in cities, compared with China’s 13 per cent). But from 1950 to 2005, China urbanised far more rapidly than India, to an urbanisation rate of 41 per cent, compared with 29 per cent in India.

China’s quick development and its presence in the global scenario can most conveniently be attributed to the fast pace of urbanisation taking place there.

The starkest contrast between the two countries is that China has embraced and shaped urbanisation, while India is still waking up to its urban reality and the opportunities that its cities offer for economic and social transformation.

The government needs to exercise its discretion in times like these and not be biased towards one side, to look over the pettiness of these issues to move towards the greater good of the nation.

Sushil Ansal is the chairman of Ansal API
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