The proposed new policy will introduce a mechanism for automatic land conversion upon payment of reduced taxes, thereby eliminating the need for multiple office visits.
Published Jun 14, 2025 | 8:55 PM ⚊ Updated Jun 14, 2025 | 8:55 PM
Revenue Minister Anagani Satya Prasad at the cabinet sub-committee on revenue reforms. (X)
Synopsis: The Andhra Pradesh government plans to repeal the NALA Act, 2006, to simplify agricultural land conversion for non-agricultural use. Criticized for fostering corruption and delays, the Act is expected to be replaced with a streamlined, tax-based system enabling automatic conversions. The reform aims to boost real estate, attract investment, and improve ease of doing business across the state.
In a major reform initiative, the Andhra Pradesh government under Chief Minister N Chandrababu Naidu is set to repeal the Andhra Pradesh Agricultural Land (Conversion for Non-Agricultural Purposes) Act, 2006 — commonly referred to as the NALA Act — aiming to ease bureaucratic hurdles and foster economic growth.
The proposal to scrap the Act is expected to come before the state cabinet on 24 June, bringing much-needed relief to the real estate sector, a major pillar of the state’s economy.
The cabinet sub-committee on revenue reforms, which met last Wednesday, 11 June, has instructed officials to draft a new policy that will simplify land conversion procedures and reduce associated taxes. At its next meeting, the sub-committee will review the officials’ recommendations before presenting them to the cabinet.
Enacted in 2006, the NALA Act was designed to regulate the use of agricultural land for residential, commercial, or industrial purposes by imposing a conversion tax and mandating a multi-step approval process. However, over time, it has been widely criticised for fostering corruption, causing procedural delays, and inflating project costs. The necessity of obtaining approvals from both revenue and local authorities created ample opportunities for bribery.
The panel, chaired by Revenue Minister Anagani Satya Prasad, convened at the state secretariat in Velagapudi and expressed the view that the existing Act has encouraged corruption instead of resolving land conversion issues.
Finance Minister Payyavula Keshav, a member of the sub-committee, also stated that the NALA Act has long been a source of public inconvenience. He pointed out that the Act forced applicants to run from pillar to post, navigating multiple layers of officialdom for approvals.
Keshav recalled that Chief Minister Naidu had earlier announced the Act’s repeal during the third Collectors’ Conference. “The Chief Minister’s directive is clear — abolish the NALA Act and create a system where land conversion is seamless,” he said.
The proposed new policy will introduce a mechanism for automatic land conversion upon payment of reduced taxes, thereby eliminating the need for multiple office visits. According to sources, the government is considering levying a development fee of 2 percent for industrial projects and 3 percent for other purposes, replacing the existing 5 percent NALA conversion fee.
Officials have been tasked with drafting a simplified procedure for land conversion, particularly for entrepreneurs and industries setting up in municipal areas.
The move follows persistent demands from industry bodies such as the Confederation of Real Estate Developers Associations of India (CREDAI) Andhra Pradesh and the Andhra Pradesh Chambers of Commerce and Industry Federation (AP Chambers). Both organizations have criticised the high cost and bureaucratic complexity of the land conversion process under the NALA Act.
CREDAI-AP has long contended that excessive conversion charges have burdened developers and landowners, while the AP Chambers have called for the Act’s immediate repeal to spur investment.
Chief Minister Naidu has consistently emphasized his administration’s focus on improving the “speed of doing business,” once stating, “Laws obstructing development will be eliminated, even if they generate revenue. We’ll make up for it through other means.”
An ordinance to formally repeal the Act is expected to be issued shortly after cabinet approval.
The repeal is expected to streamline the land conversion process significantly. At present, landowners must submit applications to revenue divisional officers and endure long waits, often spanning weeks, for approvals.
The opaque and drawn-out nature of this process has fuelled corruption, with applicants frequently coerced into paying bribes for expeditious handling. The government now seeks to remove such discretionary powers by introducing automatic conversion upon tax payment.
The decision also aims to tackle the proliferation of unauthorized layouts, which have emerged largely due to the existing Act’s cumbersome procedures. By making land conversion easier, the government hopes to bring more land under formal regulation, reducing land disputes and aiding in better urban planning.
Municipal Administration Minister P Narayana also acknowledged the burden posed by high NALA tax rates. He revealed that several organisations had voiced concerns, prompting the sub-committee to ask officials to explore significant reductions in the levies.
He admitted that the NALA Act had become a source of hardship for the public and emphasized the need to ensure that existing urban development authorities can handle land-use planning effectively without creating new procedural roadblocks.
It is said that the NALA Act’s framework duplicates functions already managed by urban development authorities under statutes like the Andhra Pradesh Metropolitan Region and Urban Development Authorities Act, 2016.
(Edited by Sumavarsha)
