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Defining fair market value of land in a thin land market of India to pay just compensation - a case study

Author

Listed:
  • Tapas Roy
  • R. Jayaraj
  • Anil Kumar

Abstract

India has a new Land Acquisition Act LARR 2013. Its contents significantly differ from its earlier version of LAA 1894. But the Act continues to consider average market value of the adjacent lands as fair market value of the acquired plot and ignores the absence of active land market in India. Land plots in India are small and ownerships fragmented. The qualitative attributes of smaller land plots vary and hence their prices. Because of thin market, sales data are scanty and cannot be directly used for averaging. The new act has increased solatium to two to four times the average market value to obviate criticism of paying less to the landowners. This paper proposes to use rational method of computing for valuation of land to pay just compensation. This includes identification of attributes which affect agricultural land price and use the attribute differentials to modify the sale prices before averaging. Modified sale values then may be averaged to get the fair market value and used as a basis to pay just compensation.

Suggested Citation

  • Tapas Roy & R. Jayaraj & Anil Kumar, 2017. "Defining fair market value of land in a thin land market of India to pay just compensation - a case study," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 13(3), pages 258-274.
    • Handle: RePEc:ids:ijecbr:v:13:y:2017:i:3:p:258-274
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