Sucheta Dalal :Land incentives may make road projects attractive
Sucheta Dalal

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Land incentives may make road projects attractive  

December 10, 2009


In an effort to make road projects economically viable for infrastructure companies, the ministry for road transport and highways is now thinking of allotting land tracts along the highways to companies for development.
“There is a possibility that the Indian government will think of allotting stretches of land for development, from which a developer can raise funds for a road project. The government is considering allotting land stretches to make road development projects more viable and attractive to developers,” said Virendra Mhaiskar, chairman and managing director, IRB Infrastructure Developers Ltd (IRB).
Such a policy could be based in line with Jaypee Greens’ new township alongside the Yamuna Expressway connecting Agra to Noida. The Agra-Noida expressway is being developed by the Jaypee Group’s infrastructure unit Jaypee Infratech. The township, Jaypee Green Sports City, is spread across 2,500 acres of land. The township will have connectivity to the Agra-Noida expressway once the expressway is completed. It is also likely to enjoy metro and airport connectivity, with a proposed international airport in the area and a metro link between Noida and Jewar. The township would be India’s first urban integrated city with motor race tracks, sport stadiums and commercial zones. Earlier, Jaypee Greens had launched a similar township alongside the Noida-Greater Noida expressway in May 2009.
Under the same model, developers can be allotted land stretches alongside the proposed road. The idea is to allow developers to develop the land tracts and utilise the revenue generated for building the proposed road. 
However, this kind of a land incentive could be considered only for capital-intensive projects. “There are certain projects which involve high cost that cannot profitably be covered through toll collection alone,” said Mr Mhaiskar.
Though the policy might sound attractive, it also involves two major glitches. While policy-makers envisage making land an incentive, acquisition of the same at present, could be a major roadblock. While it is still difficult for the government to acquire land for road projects, if the government decides to allot land tracts as well, then there could be more trouble.
In addition, road developers like IRB Infrastructure also believe that the process would prove to be time-consuming. “The model is not an easy one to execute and not highly appreciated.
Toll-based projects are most cherished. The main problems with this model would be (difficulties in) land acquisition and the fact that it (the process) will be time-consuming,” added Mr Mhaiskar.
Amritha Pillay

-- Sucheta Dalal