Split verdict on Land Acquisition ordinance

Split verdict on Land Acquisition ordinance

The government seems to have stuck to its reform agenda by approving the Land Acquisition ordinance. While the industry seemed happy at large about the ordinance, brokerages seem to have a split verdict about it.

“The ordinance highlights the government’s intent of bringing in major reforms for the infrastructure/ manufacturing sector. The same would go help the government in executing several of its marquee projects like 100 smart cities, DFC and DMIC amongst others,” Religare said in a note.

Several projects been awarded by NHAI/PowerGrid were done with 70-80 per cent land acquisition and some of them were stuck/delayed due to problems in acquiring the balance portion of land and this ordinance should provide ease in final completion of these projects. In the short term, we believe the major beneficiaries would be sectors like roads, railways and power transmission, Religare added.

HDFC Securities believes that the ordinance does a world of good for players involved in BOT works and also for companies implementing affordable housing projects.

“The road sector, especially the BOT sector will be the main beneficiary. NHAI will have more teeth to speed up the land acquisition process. Relaxed provisions will help augment supply for affordable housing. The recent FDI relaxation for affordable housing will also pick up with the easier availability of land. Infrastructure stocks like L&T, IRB, Ashoka, NCC, KNR and Sadbhav should benefit,” HDFC Securities said in its note.

Batlivala & Karani (B&K) Securities, however, believes that corporates should brace themselves for legal battles under the Land Acquisition ordinance.

“We do not see it to be a big a game changer as issue of higher compensation stays. Even bigger concern is, having done away with the consent clause would mean that chances of being dragged into the court of law stand increased,” B&K said in a note.

It appears too much a cost to pay for 8 months of relaxation in timelines (act specified timelines of 8 months to achieve consent and do social impact assessment). “We would have preferred ways to have a tighter control on timelines/ways to stick to timelines; as seldom do we Indians stick to implementation timelines,” the note added.

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