As the Revenue Department is finalising a new land acquisition policy to fit in Samajwadi Party’s election promise of acquiring land at six times the circle rate, several government departments have expressed concern that any such move would artificially inflate the market rate thereby creating an obstacle to development activities. It will make projects unviable and hamper urban development when population pressure is increasing, several departments have conveyed this to the revenue department.
Among the departments that have raised the red flag are industry y, irrigation, public works and housing which undertake most of the land acquisition for various purposes.
Facing an almost unanimous concern over the issue, the Revenue Department has asked the departments and concerned authorities to work out the likely rise in the cost of the acquisition for the developer and the final purchaser, and how it would affect projects, if farmers were compensated six times the circle rate.
The idea of paying six times the circle rate was the SP’s response to farmers demand for higher compensation in western UP. The party argued that the rates at which various authorities sold land to developers and the rate at which developers further sold land to individuals were much higher than the one paid to the farmers.
Describing the argument as erroneous, an official said that it did not take into account factors like the investment made at every stage for value addition, the land that is left aside for common facilities, and the developer’s profit.
He pointed out that besides the rate paid to farmers, there are several factors which push up the cost of the land. Acquisition expenses, interest on loans taken for making the purchase, implementation of rehabilitation and resettlement policy, contingency costs, development expenses and other costs are added to the land cost when it is sold to a private developer or even when acquired for a government project. Further, the developer undertakes his part of development activities.
“What we are trying to explain is that raising the cost of acquisition six times will backfire’’, said a senior officer.
The circle rate of land is determined at the District Magistrate’s level after a survey of existing market rates at which land sales have taken place in the area and feedback from different people, including builders. The tentative rate list is made public and objections are invited. After consideration of the objections, the circle rate is notified. Under rules, the survey should take place at least once every two years, but in areas where market rates are changing fast, the rate is revised once or even twice a year.
Before the Mayawati government came to power, compensation for land acquisition was determined on the basis of latest land deals in the area. The Mayawati government enforced the implementation of rules which prescribed that the rate should be decided after an agreement between the farmers and the district administration.
Usually, this rate does not exceed two times the circle rate. “In fact, I have not seen an agreement beyond 1.5 times of the circle rate”, said an senior officer, adding, “Nowhere can the market rate be six times the circle rate, otherwise the very purpose of determining the circle rate would be defeated.”