Land is one of the most crucial factors of production in an economy. As such, clear and appropriate land laws are important to ensure smooth and fair land acquisitions. Unfortunately, India has suffered from antiquated and vague laws pertaining to land ownership and acquisition. But last month, the Parliament passed the Land Acquisition Bill.

As per an article in Business Standard, corporates seem very disappointed with this new Bill. What are the reasons? Here are some highlights of the bill. The bill proposes higher compensation for land acquisition. For rural areas, it will be 4 times market value, while for urban areas it will be 2 times market value. Many corporates are of the opinion that such high acquisition costs would either make projects too expensive or simply unviable. In fact, Ajit Gulabchand, the chairman of infrastructure firm Hindustan Construction Company has said that he would not initiate any new project for the next two to three years.

But that's not all. The new Bill requires a new layer of approval by way of social impact assessment. As a result of this, the project life cycle would increase by at least one year. In addition, it could be challenged in the court at every stage. There are several other requirements such as the provision of rehabilitation and settlement for all affected families that will add to the costs. All in all, the new Bill means high acquisition costs, longer project cycles and more litigation.