Landowners Welcome India’s New Compensation Laws But Businesses Cautious

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Burhaan Kinu / Hindustan Times / Getty Images

Farmers wash their hands after sowing paddies in their fields on July 29, 2013 in Noida, India

It took six years of feasibility studies and seven hours of debate, but the upper house of the Indian Parliament yesterday finally passed a pivotal land bill, providing farmers and owners with greater rights over their land and fairer compensation to those whose land is being acquired in the name of urban or infrastructural development.

The new legislation (known as the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill) replaces the archaic 1894 Land Acquisition Act, and mandates the consent of 80% of the people living on the land for any acquisition to go through. It also provides for improved compensation for landowners — four times the market price in rural areas and two times in urban areas.

Calling the step a historic one, the Congress said that there was “national consensus” on the need for the legislation.

Analysts say that both this bill and a recently passed food subsidy bill, which aims to provide cheap grain to almost 800 million Indians, are populist attempts by the ruling Congress party to strengthen their postition for the 2014 general elections.

Business groups in the country, however, warned that increased cost of land as a result of the new bill might make industrial projects unfeasible.

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