Land issues derail $150 bn worth projects in 2001-11

Projects worth a staggering $ 150 billion (about Rs 6,65,550 crore) have been stalled in India during 2001-11 mainly due to land acquisition problems and strong opposition from local communities at the sites, says a study.

The stalled ventures include greenfield projects in mining, manufacturing and infrastructure sectors, according to a study by strategic risk management firm Orkash.

Land acquisition issues, strong opposition from local communities, naxalism (concerns) as well as overall policy issues, are among the main reasons for stalling (of the projects), Orkash's CEO Ashish Sonal said. The estimates come against the backdrop of India aiming for $ 1 trillion investments in the infrastructure sector during 2012-17.

Sonal noted that the affected projects include those of Vedanta in Orissa, ArcelorMittal in Jharkhand and the Bangalore-Mysore Road Corridor. Vedanta's proposed $ 1.7 billion bauxite mining project in Orissa has been hanging fire for a long time on account of environmental clearance as well as local community issues. ArcelorMittal's projects in Orissa and Jharkhand, each worth Rs 50,000 crore, have also been delayed.

Apart from "genuine and 'manipulated' community opposition to land acquisition," the study pointed out that there are also issues such as environmental impact on land and water resources and inconsistencies in regulatory compliance.

Meanwhile an Orkash survey of 25 large Private Equity (PE) entities that focus on infrastructure showed that there are concerns about risks outside the domain of "traditional financial risk management".

Gurgaon-based Orkash offers custom research, intelligence and business assurance services, among others.