THIRUVANANTHPAURAM: A land bond scheme, in which the land owner will get a share of the future appreciation in the value of land, will soon be put in place to mobilise money for land acquisition required for major KIIFB projects. Under the scheme, the returns from the bond will appreciate in proportion to the increase in the value of the land. The scheme is inspired by the 'Land Pooling Scheme' now being implemented to create Amaravati, Andhra Pradesh's new capital. Andhra had pooled 34,000 acres of land from farmers in 60 days in the land pooling scheme.
Finance minister Dr T M Thomas Isaac held talks with officials here the other day on the steps to be taken to issue land bonds. Official sources said that the state would have to acquire nearly 650 acres for various KIIFB projects. “Land acquisition is the biggest hurdle before a development process. No project will be funded without land acquisition being complete,” a top KIIFB official said.
Land acquisitions face a lot of resistance even in cases where attractive compensation in terms of prevailing market rate is offered. In many cases, people are reluctant to sell their land because they know the land value will appreciate in future as a consequence of the development activities carried out in nearby areas. “It has also been observed that a lot of anti-acquisition agitations have been held on the grounds that the project affected people are deprived of a share of the land value that enhances after a project comes into being,” the KIIFB official said.
This has prompted KIIFB to think in terms of offering compensation in the form of market-linked land bonds. The principal amount will be pegged to the market rate of land acquired. It is estimated that the value of a land that costs ` one lakh will appreciate to ` 4 lakh in five years. The value of the bond in the hands of the holder will rise proportionately to the market value. The bond holder can also redeem money at specific intervals. If the person is faced with a sudden crisis, he can exercise the redemption option. In the Amaravati experiment, which takes the participatory approach to a new level, a farmer is given back a portion of the developed land for residential and commercial purposes.
A market-linked land bond has become inevitable considering the increasing land acquisition costs. There could be a three or four-fold increase in acquisition costs. If the state had spent ` 400 crore on land acquisition during 2011-12, it had burgeoned within three fiscals to `900 crore in 2015-16....