Price of land for highways have grown 6 times since 2011

The much discussed land acquisition law has now become even larger in terms of capital. A recent report published in Economic Times refers to the land cost which has grown six times since 2011.

The report addresses the price estimation by National Highways Authority of India (NHAI) with an initial price per hectare at around Rs 3 crore during the current financial year, compared to Rs 56 lakh in 2011-12.

As compared to the previous year, the average cost of a hectare land was Rs 1.35 crore which has gone up to more than double, resulting in the overall cost of constructing a kilometer of a four-lane highway rising to almost Rs 16 crore, compared to Rs 11-12 crore a few years ago.
The overall cost for building a kilometer stretch includes construction expenses and the compensation paid during land acquisition.
A steep rise in the project cost has implications for the toll that users pay.

If sources are to be believed, the expenditure towards land acquisition for building bypasses could be even higher — as much as Rs 10-11 crore a hectare in certain pockets of the country — as land around urban clusters is more costly. Also, bypasses need more land for construction compared to upgrading an existing two-lane stretch to four lanes. The higher cost of land also has implications for several green field expressways that were planned around the country.

Earlier in 20110-12, land was around 10% of the total cost of constructing a highway which has grown up to 45% now. With government targeting to announce the construction of at least 10,000 km highways over the next two-three years for their widening, there would be more acquisition.

Officials, however, concede that thanks to higher compensation, landowners are more willing to offer land for acquisition. "The provisions of the new land acquisition law have become applicable for NH projects from January. Though our outgo is increasing significantly, there are positive indications that now there are fewer objections from owners as farmers are also getting greater financial benefit," said a government official on condition of anonymity.

As a result, it has sought relief under Schedule-II of the new land acquisition law that deals with resettlement and rehabilitation of affected families. The ministry has put up a case that it should be allowed to make one-time payment to the affected families instead of annuity payments spread over decades. Further, it has sought exemption from Schedule-III of the law that requires the acquires to provide 25 per cent additional services to affected families by building schools, health centres, roads and providing safe drinking water facilities, said a ministry official. These provisions are expected to push up the cost further.
Image: indiatimes