The Financial Burden of Land Acquisition: Exploring Kerala’s Case in National Highway Development

Housing Society Law

Posted by Aditya Pratap Law Offices on 01 Mar 24

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The recent disclosure by the Ministry of Road Transport and Highways has shone a light on the unequal financial burden borne by states in national highway development projects. While the Central government typically finances the majority of such undertakings, a new policy requiring states to share 25% of land acquisition costs has had a disproportionate impact on Kerala. This article delves into the intricacies of this policy, its consequences for Kerala’s precarious financial situation, and the potential legal arguments that could be employed to seek equitable treatment.

The 25% Land Acquisition Cost Sharing Policy: A Point of Contention:

Prior to the introduction of the 25% Land Acquisition Cost Sharing Policy (LACS Policy), the Central government generally bore the entirety of land acquisition costs for national highway projects. However, citing fiscal constraints and a desire to encourage state participation, the policy was implemented in 2017. While seemingly neutral, the policy’s impact has been demonstrably uneven, with Kerala emerging as the highest contributor to land acquisition costs amongst states.

Kerala’s Predicament: High Costs, Limited Resources:

Documents tabled in Parliament reveal that Kerala, despite its relatively smaller size, has contributed a staggering ₹5,580 crore towards land acquisition costs in the past five years. This figure dwarfs the contributions of other states like Haryana (₹3,114 crore) and Uttar Pradesh (₹2,301 crore). Several factors contribute to this disproportionate burden:

  • High Land Cost: Land in Kerala is inherently expensive due to its geographical constraints and densely populated nature. This naturally translates to higher land acquisition costs for national highway projects compared to other states.

  • Policy Disparity: Unlike Kerala, states like Maharashtra and Gujarat haven’t contributed towards land acquisition costs. This raises concerns about the policy’s equitable application and the potential for preferential treatment based on political considerations.

  • Financial Strain: Kerala is already grappling with a difficult fiscal situation. Diverting significant resources towards land acquisition for central projects exacerbates this challenge, potentially affecting crucial state programs and social welfare initiatives.


Legal Avenues for Seeking Equitable Treatment:

While the LACS Policy itself may not be demonstrably illegal, Kerala could explore various legal avenues to seek fairer treatment:

  • Constitutional Challenge: Article 265 of the Indian Constitution mandates equitable distribution of financial resources between the Centre and states. Kerala could argue that the current policy disproportionately burdens its finances, violating this principle.

  • Discrimination Argument: The seemingly selective application of the policy to certain states like Maharashtra and Gujarat could be challenged as discriminatory, potentially infringing on Article 14 of the Constitution, which guarantees equality before the law.

  • Negotiation and Agreement: Kerala could engage in constructive dialogue with the Central government to explore alternative solutions like project-specific waivers, land cost sharing adjustments, or alternative financing mechanisms.

Conclusion: Striking a Balance Between National Development and State Finances:

The case of Kerala highlights the potential pitfalls of policies aimed at encouraging state participation in national highway development. While encouraging state involvement is desirable, it must be undertaken in a manner that doesn’t unfairly burden financially constrained states like Kerala. The Centre, recognizing its constitutional duty to ensure equitable distribution of resources, must re-evaluate the LACS Policy and consider implementing fair adjustments or exemptions to ensure that the burden of national development is borne equitably by all states.

Aditya Pratap is a lawyer and founder of Aditya Pratap Law Offices. He practices in the realm of real estate, corporate and criminal law. His website is and his media interviews can be accessed at Views expressed are personal.

This article has been assisted by Aruj Gupta, a 3rd year law student pursuing B.A., LL.B. Hons. from NMIMS Bangalore.

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