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The age old law of land acquisition act, 1894 has been replaced with a more stringent law to protect land owners. Many real estate developers feel that the new law will increase prices and affect the growth of our economy. With the pressure on rupee and ever reducing GDP figures, the new law may be labeled as the right law coming at the wrong time.


The new law will affect infrastructure projects due to increase in compensation for land acquisition. Any land acquired in rural areas will demand four times the market rate, while for urban areas it will be twice the market or guideline value. Apart from the increase in compensation, the new law requires consent from 80% of people whose land is acquired for private projects and 70% of people for public-private partnership projects.

Many land owners feel that the market price or guideline value may not reflect the actual market price and this may need attention. This law may be a politically correct decision but may have some impact on the diminishing GDP growth.  The effect of this law may bring confidence for the land owners but may affect margins for developers who are yet to amass large land banks.  Many developers feel that the end consumers may have to pay more due to this new law but the actual effect may depend on the growth of realty sector. It will be interesting to see the effect of this bill on consumer buying habits. As a consumer, will this law allow you to purchase a piece of land without the fear of acquisition? The new bill must be passed by the upper house to become a law.


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