Governance: Three-fold spike in land costs over five years puts brakes on highway development

The average rate of construction of National Highways (NHs) per day has come down from 22.5 km in 2016-17 to 20.7 km in 2017-18 (data till December 2017), according to fresh data compiled by the Ministry of Road Transport and Highways.

Written by Anil Sasi | Updated: April 3, 2018 6:19:50 am
highway development, national highway, Nitin Gadkari, land costs, real estate sector, land acquisition costs, NDA government, indian express While cost per hectare consistently rising since 2012-13, a pronounced jump visible since January 2015.

A 300 per cent surge in land acquisition costs over the last five years, up from Rs 0.8crore per hectare in FY13 to Rs 3.20 crore during the first nine months of FY18, has impacted new projects in the country’s highways sector — one of the few infrastructure success stories under the NDA government.

While the land cost per hectare has been consistently rising since 2012-13, a pronounced jump is visible since January 2015, when the First Schedule to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act, 2013, kicked in.

The average rate of construction of National Highways (NHs) per day has come down from 22.5 km in 2016-17 to 20.7 km in 2017-18 (data till December 2017), according to fresh data compiled by the Ministry of Road Transport and Highways. The sharpest rise in land prices has been reported in Maharashtra, Punjab and Haryana.

The slackening of the progress is also evident in the fact that the Roads Ministry has been able to complete a little over one third of the overall target of completion of NHs till end-December, 2017 — 5,680 km of NHs against the overall target of 15,000 km for the financial year 2017-18. The pace of land acquisition has also come down sharply over the last three years.

Alongside the highways sector, an escalation in land compensation cost for airport projects has also been reported, where state governments are now increasingly reluctant to part with land and give it the Airports Authority of India (AAI) for expanding capacities of terminals and bays at airports, primarily in view of the high payout for acquiring land.

Land cost in the highways sector, which used to be around 10 per cent of the total project cost about a decade ago, is now more than 100 per cent of the civil cost in a number of sections.

In the highways sector, apart from an increase in land prices, what has compounded matters is that a dozen states levy a percentage of compensation as administrative charges for acquisition of land for National Highways. Cumulatively, for 22 major states, the compensation paid for land acquisition for projects has shot up from Rs 9,027 crore in FY15 to over Rs 19,600 crore in FY17, according to the data.

Alongside the introduction of provisions of the RFCTLARR Act for the determination of compensation for land, in case of these 12 states that levy a percentage of compensation as administrative charges for acquiring land, the expenditure on compensation has also resulted into further increase in expenditure on administrative charges levied by state governments for acquiring land.

The NDA government had, in December 2014, amended the Right to Fair Compensation and Transparency in Rehabilitation & Resettlement Act, 2013 to provide higher compensation, resettlement and rehabilitation benefits to landowners. Land for the construction of NHs including flyovers thereon in the country is acquired under the provisions of the National Highways Act, 1956 in consonance with the applicable provisions contained in the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. However, under section 3G(5) of the NH Act, 1956, if the amount of compensation so determined, is not acceptable to the landowner, there is a provision for determination of the amount by the arbitrator to be appointed by the Central Government on an application by the party.

The trend of levying compensation charges is widespread, with all states levying administrative costs or charges for acquisition of land for the NHAI projects. Bihar, for instance, charges 20.5 per cent of the compensation amount as administrative costs, while Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Gujarat and West Bengal levy 10 per cent of the compensation amount. Haryana levies Rs 1 lakh per acre as per clause 19 of Government of Haryana notification dated 09.11.2010. Maharashtra charges 6 per cent (3 per cent AC to be deposited with state government and 3 per cent to be deposited in the office of land authority.

Land acquisition expenses, on an average, have tripled as compared to pre-January, 2015 acquisition however, administrative charges being levied by the state government have not been rationalised. The matter has been taken up by the NHAI and the Ministry of Road Transport and Highways with these states requesting for rationalisation of these administrative charges.

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