India’s Modi changes tack with controversial land acquisition law

The prime minister's government is attempting to bypass a parliamentary deadlock over the bill, instead suggesting that individual states pass their own versions of the legislation instead, reports Samanth Subramanian.

Prime minister Narendra Modi has defended his bill, saying that the uncertainty over whether it would pass or not was hurting the economy. Joseph Nair/AP Photo

NEW DELHI // After six months of failing to convince parliament to pass a controversial land acquisition law, prime minister Narendra Modi is now trying a different tack – persuading states to pass their own versions of the law instead.

The law, intended to quicken economic growth by making it easier for industries and infrastructure companies to buy land for new projects, has been at the heart of Mr Modi’s economic agenda since he took power last year.

But opponents of the bill – which modifies a 2013 law passed by an earlier Congress-led government – have said that Mr Modi’s version rides roughshod over the rights of poor farmers and small landholders.

A political deadlock has ensued. The bill was passed in March by the Lok Sabha – the lower house of parliament, where Mr Modi’s Bharatiya Janata Party (BJP) has a majority – after first being introduced a month before. But the Rajya Sabha – the upper house, where the BJP is in a minority – has refused to pass even amended versions of the bill. The Rajya Sabha is now in recess after its last session ended in May.

At a meeting of 16 state chief ministers in Delhi on Wednesday, Arun Jaitley, Mr Modi’s finance minister, pointed out that states need not “indefinitely wait” for parliament to pass the bill, and that they could formulate versions for themselves.

It came after “an overwhelming section” of chief ministers at the meeting urged parliament to build a coalition and pass the land bill quickly, or else give states the flexibility to pass their own laws, Mr Jaitley told reporters. But as Mr Jaitley highlighted to the ministers, they already have this flexibility.

According to the constitution, states are free to form their own laws regarding land policy, as long as these laws do not conflict with those made by parliament. If such conflicts do occur, the president of India must ratify them first.

Notably, the chief ministers of nine states governed by the Congress party were missing from Wednesday’s meeting.

Mr Modi defended his bill on Wednesday, saying that the uncertainty over whether it would pass or not was hurting the economy.

“The political deadlock over land acquisition is seriously affecting rural development, including the creation of schools, hospitals, roads and irrigation projects,” he told the chief ministers.

The Congress’ 2013 law on land acquisition mandated that companies show the consent of at least 80 per cent of small rural land owners when applying for government permission to buy land and start a new project.

Small farmers in India often do not possess clear titles to their land, and so can be easily forced out by big companies unless consent is mandated.

Mr Modi’s vision of the law exempted five key sectors from the 80 per cent consent rule: defence, infrastructure, rural infrastructure, affordable housing, and industrial corridors. Companies working in these areas could buy fertile agricultural land more easily, and by avoiding social impact studies, they could lower the number of people who needed to be compensated.

The Congress' law was "impractical and anti-development," Sudhanshu Trivedi, a BJP spokesperson, told The National. With Mr Modi's law, "if you want to create a road, an irrigation facility, or electrification, then all these projects in rural areas will be exempted from the consent clause".

But some chief ministers at Wednesday’s meeting, such as Punjab’s Parkash Singh Badal, whose Shiromani Akali Dal party is an ally of the BJP, disagreed.

“Land should be acquired only with the consent of farmers, solely for public purposes,” Mr Badal said. Mr Modi’s bill “has caused great concern in the minds of farmers and farm labourers”.

Despite the controversy, however, Mr Modi’s version of the law has effectively been in place since December 31, when he put it into effect through an executive order – an ordinance. The ordinance has expired twice since then, and both times the government has reissued it.

The current issue of the ordinance is valid until September 1, six weeks after the next session of parliament begins on July 21. But the government indicated, during its meeting on Wednesday, that it might let the ordinance expire on this occasion, to allow states to formulate their own laws and to bring the parliamentary deadlock to an end so that other laws can be passed.

In theory, even after the ordinance expires, states can still pass legislation to exempt key industrial sectors, with the confidence that the president will, at the behest of Mr Modi’s government, approve these laws even though they conflict with the 2013 law.

However, states ruled by opposition parties are unlikely to pass such legislation.

Niranjan Hiranandani, the managing director of the realty firm Hiranandani Group, said the death of the bill at the federal level will be a setback to Mr Modi’s ambitious plans for industrial growth.

“Politics has won and economics has lost out,” Mr Hiranandani told the news channel ET Now on Wednesday. “When it comes to land, the current dispensation is not acting very different from the previous regime. This will have an impact on the industry and large-scale projects.”