Perhaps in a first of its kind in India, around 25,000 plus farmers’ families from as many as 29 villages between Vijayawada and Guntur in Andhra Pradesh burst crackers and cheered Finance Minister Arun Jaitley’s Union Budget for 2017-18 that was presented in Parliament on Wednesday. Close to one lakh people joined the celebrations as the budget has given them a sort of bonanza.
There was a festive atmosphere in the villages and most of the farmers were glued to the TV sets watching the budget speech as they were expecting some big boon from the FM. The moment Jaitley mentioned the name of Amaravati farmers in his speech, there was applause and bursts of joy. Some of them rushed to the AP Secretariat at Velagapudi and distributed sweets to CM Chandrababu Naidu to thank him too.
All the villages come under the limits of the newest mega city, Amaravati, and the farmers have given their fertile lands for the construction of the capital of Andhra Pradesh. The Finance Minister has announced in the budget that the farmers who have given their lands for Amaravati would be exempted from Capital Gains Tax, which hovers around 20%.
Thanks to this measure, each of the farmers who has given his land under a newly conceived scheme of Land Pooling Scheme (LPS) instead of the land acquisition Act, 2013, would benefit to a tune of around Rs 25 lakh to Rs 50 lakh, if they don’t have to pay capital gains tax on the appreciation of the land value in the next three to four years.
Jaitley kept his word to the farmers of these 39 villages who had greeted him at the time of the laying the foundation stone for the core capital city construction in October last year. As the farmers had not been paid any compensation or price for their lands, Jaitley had assured them that there won’t be any tax on their capital gains. That brought cheer to the villagers.
Of course, there was hectic lobbying behind handing out the sop to the farmers of Amaravati. Naidu had reminded Jaitley that it was Prime Minister Narendra Modi who laid the foundation stone for Amaravati in October 2015 and made a promise to the farmers that their sacrifice would be acknowledged by the Centre and the state.
Had the farmers not given their lands under the LPS, it would have taken years together to get the land for the construction of the capital city, under the prevailing Land Acquisition Act. Under the LPS, the farmers had voluntarily given their lands and got two kinds of plots—commercial and residential—in back along with some annual cash payments.
On an average, for every acre of agricultural land with two crops per year, the farmer would get a residential plot of 1,000 sq yards and a commercial plot of 250 sq yards. The owners of more fertile lands with three crops per year, however, would get 1,200 sq yards of residential plots in addition to the commercial plot. Besides, variable payment of cash, too, would be given to them for a period 10 years.
According to Ch Sridhar, CEO of Capital Region Development Authority (CRDA), there are 25,614 farmers from 29 villages under Amaravati limits who had given as many as 32,221 acres of lands under the LPS. The registration value of these lands at the time of land pooling two years ago was at Rs 8-Rs 10 lakh per acre. But once the area is developed, its value will go up to Rs 3-Rs 4 crore per acre.
As per the LPS deal, the CRDA has handed over a total area of 12,000 acres to the farmers who will soon get well developed plots by the end of next year. Each farmer is given a certificate of ownership of the plots they get under the LPS which can be transferred, sold or mortgaged in banks or used as guarantee for loans.
“Even if we assume that the farmers would sell half of the plots they got in the next three four years, till when the exemption would be in force as per Jaitley’s budget, the total value of the land would be around Rs 23,000 crore and the estimated total benefit under capital gains tax exemption would be around Rs 4,600 crore,” a senior official of CRDA told The Sunday Guardian on condition of anonymity.
The FM has announced that the benefit would be applicable to the farmers who had owned the lands as on 2 June 2014, when combined AP was bifurcated, and those who had given their lands in 2015. The exemption would be applicable for two assessment years from the day of possession of developed plots from the CRDA which is expected to be in 2018.
Andhra Pradesh Municipal Administration Minister P. Narayana told this newspaper that the exemption of capital gains tax was a huge relief to the farmers who had lost their valuable lands where commercial crops are grown for the sake of the state capital. “For the first time, we from the state have achieved something concrete for the farmers,” he said on phone from Amaravati on Thursday.
Apparently, the Naidu-led TDP government is buoyed with the announcement made by Jaitley in the budget. Though it could secure 90% of the lands needed for the capital through the LPS, a small amount of 2,000 acres more is still to be acquired and it has used the Land Acquisition Act for the purpose. A few of them even approached the National Green Tribunal on this.