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ITPI WZC PAPER (presented on 8th October 2011)

Ensuring land availability in the long term for public purpose projects                                                                            

M.D.Lele

 Abstract:

Procuring land for urban development today is a difficult task. Further, in case of projects which require land in phases or wherein potential is visualized only after a lapse of certain period, the protection of land after only a portion of land is used initially or to take up new project, is a major issue. The proposed expansion of Mumbai’s Chhatrapati Shivaji International Airport (CSIA) area is facing many challenges on this count. There is a case for ensuring land availability for such projects which require large tracts of lands. This paper advocates an innovative model termed “Land Availability Insurance Model” to achieve the desired objective.

Background:

India’s economy is booming thanks to the policy of liberalisation, privatization and globalization.  Tier-II and Tier-III cities are witnessing massive growth in manufacturing and service sectors.  Even smaller towns are poised to see lot of action on this front.  It is leading us to believe that travel demand across the hub and spoke urban centres will grow drastically.  As income levels rise, so will air travel demand, leading consequently to the requirement of newer airports or expansion/ modernization of the existing ones.  This premise is substantiated by the phenomenal growth over the last decade.

The Government of Maharashtra has anticipated increase in air traffic at Nanded Airport a decade down the line considering the overall growth of economic activities in its hinter land.  It is in this context, there are plans to expand the airport once the demand justifies.  However, unless some measures are taken to ensure that vacant land is available for the expansion of the airport at a later stage, it may be very difficult to meet the objective and therefore in such a scenario, there is a need to think of a mechanism whereby it could be ensured that large tracts of lands are available physically to expand the airport at a later date and that there is enough scope to do so in legal terms as well.

This issue is worth delving given the travails of Mumbai’s Chhatrapati Shivaji International Airport (CSIA) area. Recently, the Mumbai Metropolitan Regional Development Authority (MMRDA) has prepared draft development plan for the CSIA. It’s interim draft for the 1,982 acres CSIA Notified Area includes land which is encroached and where around 85,000 slum dwellers reside. Slums take up 15.58 per cent of CSIA-notified area, which comes to 308.95 acres. The plan is facing a road-block since it involves relocating the slum dwellers. The Airport is presently using 1164 acres of the total area. The slums, for a variety of reasons, have come up on the area which was earmarked for Airport but not developed for the same purpose. Now a delay in the project would lead to utter chaos in handling the passenger growth, which is estimated to cross 40 million by the end of 2013.

Even as things come to such as passé, the moot point is after acquiring lands and only using part of them how can the concerned parties protect rest of the land. 

Competing Uses:

Acquiring lands for public purpose on a large scale is an uphill task, but after taking possession protecting these lands from illegal constructions, encroachments, etc is an equally daunting task.  Moreover, there are demands coming from all sections of the people in the society for competing uses on such lands. There is thus substantial pressure on the public authorities to release such lands for a variety of uses.

Many a times the pace of development and the demand for the land required for the same belies the expectations of the public authorities/ planning authorities resulting in the land remaining unused for a long time. At the same time, it becomes necessary to ensure that the land is available in future for development, looking to the overall development trends in terms of accelerated economic activities, major infrastructure projects, improved accessibility etc. in the proximity.

New Model:

Therefore, there is a need to devise a mechanism by which the objective of ensuring availability of large tracts of undeveloped, unencumbered lands will be achieved. It is suggested that the following mechanism may be adopted to meet such objectives of a public authority/planning authority.

The authority concerned will earmark the lands required in the long term for expansion/development of the project after having declared in clear terms the specific public purpose.

A notification to this effect shall be issued in the media and individual notices to the land owners concerned should be served, declaring the intention.

An agreement for sale should be executed with each of the land owners concerned to the effect that they will not sell the land for any other purpose to anybody during the agreed tenure of 10 or 15 years.  Moreover, they themselves will not carry out or cause to carry out, with or without due authorization from the planning authority any kind of development on their land but will continue to cultivate it and also take income out of such an activity till such time the public authority/planning authority notifies the requirement to take possession of the land to start the project.

The agreement shall ensure remuneration of a fixed amount per year per acre of land held by the land owners, based upon the land value as on the date of notification. An in-built clause to enhance the remuneration depending upon the rate of inflation plus the savings bank rate for a given year shall be incorporated.

During the 10 or 15 years period, till such time the authority actually takes possession of the land, the Collector/Revenue Authority concerned will not allow any sale transactions and it will also not allow acquisition of these lands by any other public authority for any other purpose to ensure that these notified lands are available for development at the time considered appropriate by the Public Authority to take up the intended development.

Before taking possession of these lands, the public authority concerned shall pay compensation to the land-owners for purchase of these lands as per the market rate prevailing at that point of time for the given land parcel.

In case, at the end of the 10/15 years’ period, the public/planning authority considers scrapping it once for all, due to any reason, the lands shall thereafter be released for normal development and the freeze on the land transactions within the notified area shall be withdrawn.

Thereafter the landowners will be free to either continue cultivation of their land, themselves develop their land as per the regulations, zoning provisions of the planning authority concerned or sell the land to any buyer for his use at whatever rate these lands may fetch at that point of time in the open market.

No compensation other than that paid as insurance for securing land till the time of scrapping the project shall be paid.  

In case the project is taken up for implementation, over and above the insurance amount paid to the land owner in the interim period, he shall also be entitled for the compensation at the market rate prevailing as on the date of taking possession of the land.  However, he will not be entitled for any additional compensation in terms of job / annuity / developed land / undeveloped land / enhanced compensation/share in the project/resettlement package etc.

In the eventuality of the project being scrapped, the public purpose declared earlier could be changed and the area notified for the same shall be declared necessary for another specific public purpose.  The Government will have to however seek public opinion in general and invite suggestions and objections specifically from the owners of lands notified earlier for the initially declared public purpose.  However, in no case these lands shall continue to remain unused for a period of more than 3 years thereafter. In such an event, the Government shall declare the public authority that will implement the proposed new project and the public authority so notified shall also pay land availability insurance amount to the land owners concerned on the aforesaid lines mentioned in paragraph no(4) above till such time it takes possession of the land.    

Salient Features of the Model:

Through this mechanism, undeveloped land shall remain vacant and without any encumbrances at the appropriate time for the public authority to take up the project envisaged earlier considering the future scope for development.

This mechanism could be treated as one that guarantees the availability of vacant, undeveloped and encumbrance-free lands for development at the opportune time, to the public authority for the given public purpose project.

At the same time, heavy investment on one time purchase of land coupled with the hassles of protecting it from encroachments, illegal constructions, etc could be avoided.

A reasonable remuneration is granted to the land owners till such time the acquiring body actually takes the physical possession of land.

In fringe areas of cities, where there is considerable pressure of urbanization, in the intermittent period the land owners can benefit by continuing to take income through agricultural activity on their lands till such time the Public Authority actually takes up the development on the land for the given public purpose.

This mechanism is likely to attract criticism in the eventuality of such a major public project being scrapped altogether upon realization that it is technically and/or economically not feasible to launch the same.  However, it has to be recognized that this mechanism is to be treated as a purely risk management response while taking up projects of vital public importance.  In case of large complex projects, there are project execution risks due to which the success of this project cannot be assured before-hand.  In the scheme of things proposed above, a major risk of non-availability of land at the opportune time is covered through this “Land Availability Insurance Model”. At the same time it has to be seen that reasonable remuneration is given to the prospective land losers in advance, for their economic sustenance and their sustained interest in the project. And this comes at a cost.  However, it is a small cost to pay to make a large public purpose project happen and hence the authorities concerned in the Government sector should view this option in the right perspective and not consider it a drain on the public exchequer.

Conclusion:

Amongst various measures and statutory dispensations presently available or being contemplated in future to chalk out the future strategies for procuring land for urban development, the “Land Availability Insurance Model” suggested above could also be considered as a viable option - particularly, in case of projects requiring reasonably large tracts of lands such as Airport Projects, Nuclear Power Stations, Defence Installations, strategically located Science and Technology research stations etc.  However, this mechanism may not be an appropriate choice in other situations such as township projects, SEZs, industrial estates etc,  wherein the stake holders may prefer joining hands with the promoters for sustained share in the prosperity. Suitable option for land procurement will have to be exercised   based on the context and the type of the project to be taken up. Accordingly the statutes, land development models etc. will have to be applied judiciously.

Mr. M.D. Lele is Chief Planner of CIDCO. The views expressed herein are his and not necessarily of the organization he works for.

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