Solution for land acquisition cost to build national highways
Indian Govt. has set target of building around 50kms of new Highway Road per day for the 2022–23 financial year, this means a massive amount of land acquisition from farmers / owners who need to be compensated before the work starts.
In the budget about INR 7.5Lakh Crore has been allocated for Infrastructure & assume 70% of the money is towards road construction. It seems like an average 55–60% of the road construction cost goes towards land acquisition payment to farmers.
Is it possible to look at an alternative way of compensating the land owners that would help the government & would be beneficial for the land owners?
Pay As You Go
How about the Govt. becomes a joint owner for the property being acquired by the land owners & could pays only 30% of the land value for the acquired land, and the land owner will get paid part of toll collected from the road is being used for the life time or 99yrs. All this payment coming to users bank account directly through NEFT.
Understand this would require an efficient / proper tracking of land ownership, linking the share of toll earned to different owners based & to be paid out on monthly basis, all these overheads can be managed with a software that can digitise all this information & automate the payment via NEFT to land owners.
Benefits to Farmers / Landowners
Farmers are not used (or good) to managing large amount of money when it comes at once, that happens if their land is acquired for a road / industrial development — they either spend lavishly on house, car or lend them to relatives / friends, very few of them would reinvest that money on land or other long term assets for their next generation.
Recurring payment on monthly basis to the same farmers by govt. based on the road used will be a boon for the farmers, it would secure their livelihood & ensure their children get quality education.
PRR Bangalore
Let’s take the example of Peripheral Ring Road construction for Bangalore, try to understand the initial payable & how the recurring payment would benefit the farmers family from long term.
Total Distance : 65Kms
Project Cost : Rs.21,000 Crore
Land Acquisition Cost : Rs.15,000 Crore
Land being acquired : 2500 acres
Now let’s make a few assumptions on the toll collection, once the road is ready. These assumptions are based on vehicle traffic & toll rates in the current NICE road (that is being connected by PRR)
Avg. Toll / Km (across vehicle types) : Rs.5.50
# of vehicles / Hour : 1200
Avg. distance / vehicle : 38Kms (assuming they take exits in between)
Toll Collected / Day : Rs.60 Lakh
Going by the above suggestion, Govt. only pays Rs.4500 Cr (30% of the expected payment) to acquire the land & this money could be paid by the agency constructing the land (that is generally the terms for BOT transfer model). Say we apply the algorithms for ideal returns for land owner & agree to pay 45% of the toll collected for a period of 99yrs, that would come to around Rs.4L of earnings per year / acre for the farmer, that is around Rs.4Cr for the 99yrs period.
Now that is a good stable income of Rs.35K / month for life long? assuming the toll charges are adjusted for inflation, the earnings should be same in real rupee value over the years.
Are we ready for Uberisation of Infrastructure?
