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Land-Acquisition Issues Stall 8% Industrial Projects

Prachi Salve,
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About 8% of 804 industrial projects—with a planned investment of Rs 421,062 crore ($67.91 billion)—across India are in limbo because of land-acquisition problems, according to data released by the finance ministry.


The data complement a 2014 Comptroller and Auditor General report that says 38% of land acquired for special economic zones has not been used.


The leading causes for stalled plans were unfavourable market conditions (98 projects)—in other words, a slow economy—lack of promoter interest (96 projects) and lack of funds (83). These reasons accounted for 34% of stalled projects.


Land acquisition problems stalled 65 of the 804 stalled projects, first mentioned in the Economic Survey 2014-2015.


Details of this figure, revealed in a right-to-information (RTI) application, lend some perspective to an increasingly-heated debate over a new land-acquisition bill that Prime Minister Narendra Modi’s government insists is a pre-requisite for economic growth, even as political opposition to the proposed law fuels resentment among farmers.


The project data were extracted from a database of the Centre for Monitoring Indian Economy (CMIE), an independent think tank, the finance ministry said in its April 17 reply to Venkatesh Nayak, who filed the RTI and works with the Commonwealth Human Rights Initiative, an international NGO.


“The data collected by CMIE show that almost 20% of the projects are stalled due to other reasons,” said Nayak. “The government has tabled this information in the Economic Survey, but no one has cared to ask either in the government or in the Parliament: What are these ‘other reasons’?”


Why Projects Were Stalled
Reason No. Of Projects Stalled
Other 160
Not Available 130
Unfavourable markets 98
Lack of promoter interest 96
Lack of clearances 94
Lack of funds 83
Land acquisition issues 65
Supply problem 36
Lack of environmental clearance 33
Natural calamity 8
Total 804

Source: RTI response from Ministry of Finance


Out of the 804 projects, about 160 (almost 20%) are stalled due to “other” reasons, followed by 130 projects stalled for reasons not available.


Another popular reason cited for stalling of projects is lack of environmental clearances. However, only 33 projects, or about 4% of those stalled, were for environmental reasons.


The government issued an ordinance on December 31, 2014, amending the Right to Fair Compensation & Transparency in Land Acquisition, Rehabilitation & Resettlement Act, 2013 (LARR), first introduced by the previous government.


The ordinance, according to this report, brought in a key change: It exempted land acquisition for many sectors, such as defence, infrastructure—including public-private partnership projects—industrial corridors, private health and educational institutions and affordable housing, from conducting public hearings, assessing social impact, and securing the consent of citizens who lived and worked on the land.


Of the stalled projects, 630, or 78%, are from the private sector, while 22% are from the public sector.


Stalled Projects: Private Sector vs Public Sector
Reason No. of Private-Sector Projects stalled No. of Public-Sector Projects Stalled
Other 100 59
Not Available 120 11
Unfavourable markets 95 3
Lack of promoter interest 83 13
Lack of clearances 68 26
Lack of funds 66 17
Land acquisition issues 39 26
Supply Problem 26 10
Lack of envt. clearance 26 7
Natural calamity 7 1
Total 630 173

Source: RTI response from Ministry of Finance


Of the companies with stalled projects, Sahara India has 18 housing projects (Rs 8,150 crore), held up due to ‘other’ reasons, according to data released by the finance ministry.


Land acquisition ranks seventh as a reason for stalled private-sector projects (39).


Here is a look at where the stalled projects are:


Maharashtra Leads The Way
State Stalled Projects Projects Stalled Due To Land Acquisition
Maharashtra 125 13
Gujarat 63 7
West Bengal 55 5
Karnataka 52 4
Telangana 52 2
All-India 804 65

Source: RTI response from Ministry of Finance


Maharashtra has the highest number of stalled projects at 125 (96 private and 29 public), of which 13 are stalled due to land-acquisition problems.




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  1. er vijay sharma Reply

    May 4, 2015 at 5:26 pm

    It would be worth the effort to look at each project again rather than just rely on information furnished by Govt. You may get a surprise!!

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