13-04-14
If the ratio is not revised, it would make ongoing as well as future projects unviable
By Kartik Lokhande
The new land acquisition law, under which compensation for land to be acquired is to be paid at market rates, is making the ongoing as well as proposed projects financially ‘not viable’. Considering this serious implication for a region like Vidarbha, the provisions in the law have triggered a demand for revision of benefit-cost ratio for various public projects.
Under the new law Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, the project-affected persons or whose land is to be acquired for a particular public project are to be paid compensation that will be four times the prevalent rates in rural areas and two times in urban areas. Though the law’s implementation is yet to pick up, the agencies like Public Works Department (PWD), Water Resources Department (WRD) etc have started studying the provisions of the law.
In case of Vidarbha, at least the above-mentioned two departments are already facing problems of project viability as they have to take care of payment of net present value (NPV) if forest land is being acquired for a project. In such condition, the provisions for increased compensation in the new land acquisition law may spell doom for projects in the region as many of those would become ‘unviable’.
In fact, sources in the Government said that acquisition of land for public projects may become almost impossible in near future. This will affect the development of specially the under-developed regions like Vidarbha. In case of irrigation projects only, the viability factor comprises cost of payment of NPV and compensatory afforestation for forest land, catchment area development plan etc. Against this backdrop, a high-level meeting was held recently at Delhi. The representatives from all the States across the country were asked to give their opinions on the provisions of the new law. There, sources said, representatives of almost all the states including the ones from Maharashtra pressed for revision of benefit-cost ratio to make projects viable. The benefit-cost ratio is the ratio of benefit derived against cost of a project. For instance, in case of irrigation projects, it is 1 for drought-prone areas and 1.5 for other areas. This means, if Re 1 is spent as cost on a project in drought-prone area, the benefit from that project also should be Re 1 to make it a financially viable proposition.
A senior officer, who is in the know of things in this regard, told ‘The Hitavada’ on the condition of anonymity that the representatives of various states made a request to the Planning Commission of India to revise benefit-cost ratio. “Unfortunately, in case of Maharashtra, the State Government has not made any communication with Planning Commission of India so far,” he said. As far as irrigation projects in Vidarbha are concerned, NPV could be included in cost factor but the compensatory afforestation and catchment area development should be considered as benefit. “The demand has come up as assets are being created through compensatory afforestation and catchment area development,” said an officer of WRD.
Besides, compensation for land acquisition is to be four times of the prevalent rates in rural areas and two times in urban areas, this payment will have a social impact. “Hence, the amount of compensation to be paid to project-affected persons must be treated as ‘social cost’ and it should not be considered as ‘cost’ while calculating benefit-cost ratio for projects,” said the source.
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