Rising cost of land a major roadblock in national highway expansion

NEW DELHI: Land acquisition cost for national highway projects has shot up sharply in the current financial year on account of the new land acquisition law that came into force in 2015, dealing a blow to the government's ambitious plan to crisscross the country with top quality roads. The government paid Rs 1.35 crore per hectare in 2014-15, which has gone up 65% to Rs 2.22 crore per hectare in the current financial year.

About 1.5 hectare of land is needed to build one kilometre of a four-lane highway.

The road transport and highways ministry has seen an increase of 30% in total cost of highway construction in the current financial year on account of high land prices and increased labour costs.

"Earlier, land accounted for 10-15% of the total project cost. It has now gone up to 40%," said a senior official at the ministry. The ministry expects the land cost to be around Rs 2.5 crore per hectare on an average in the next financial year.

Under the new land acquisition law, the government has to pay twice the price of land in urban areas and four times the price of land in rural areas.



In 2014-15, the government acquired 6,500 hectare for highway projects and paid aroundRs 9,000 crore in compensation. This year, the government has acquired 9,000 hectare for Rs 20,000 crore. The target of land acquisition for the next year is expected to be 12,000 hectare.

"That much increase in land cost certainly acts as a stress point for available budget for highway sector. However, these lucrative prices remove the resistance of farmers and other sellers, who get much better value of their land," said Vinayak Chatterjee, chairman at Feedback infra.

For building a greenfield two lane national highway, the government spends around Rs 10 crore a km, which includes the land and construction cost. For a four-lane highway, the cost comes out to Rs 16 crore per km.

The National Highways Authority of India is the land acquiring agency in most states except in hill states, where the National Highways and Infrastructure Development Corp does land acquisition for highways.

SOURCE: ETRealty.com