Landing In A Mess

The Narendra Modi government is going to face its first big showdown with the Opposition over its recently promulgated land acquisition ordinance. Bowing to the demands of industry to ease the process of acquiring land for projects, the NDA government pushed the measure through the executive route after it realised that parliamentary passage was no going to be possible with the Opposition enjoying majority in the Rajya Sabha. On the flip side, the decimated Congress and its allies, spoiling for a fight, intend to use the land ordinance to ‘expose’ the government’s ‘anti-farmer’ intent. 

 

The crux of the ordinance, which will require parliamentary passage during the February Budget session, does away with the requirement of 80 per cent of the affected owners agreeing to the acquisition of their land for projects related to defence, rural electrification, affordable housing and industrial corridors. Again, to hasten project implementation and reduce red tape, the ordinance jettisons the mandatory social and environmental impact assessment based on public hearings. These provisions were introduced by the Congress’s Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. 

 

There is a sense of deja vu in this ordinance exercise. The measure seeks to roll back the Jairam Ramesh-piloted Act that replaced the rather draconian 1894 colonial legislation, which allowed for forced land acquisition if it was deemed to be in the ‘public interest’. The British enactment, under attack for decades, was finally replaced in January 2014 by a new ‘democratic’ code that seemingly empowered landowners. Private developers seeking to acquire land needed 80 per cent concurrence, while ventures in the public-private domain required 70 per cent. 
 

Industry, expectedly, denounced the Act as populist appeasement. Even without the Act, new projects faced delays and endless procedural bottlenecks. With the new provisions, the projects would be further crippled by farmer vetos, industry associations such as Ficci and CII pointed out. Estimates by industry representatives of stalled projects put their worth anywhere between $15.7 billion and $300 billion. 
 

Finance minister Arun Jaitley, who has been the government’s spokesman on the issue, has tried to assuage criticism by clarifying that the land ordinance will not disturb the ‘progressive’ provisions pertaining to relief and rehabilitation in the Act — for example, payment of four times the market value for acquiring rural land, and twice the value for urban land. 

 

The attack on the government has only just begun. On procedure, the government is facing flak for its ‘ordinance raj’. After Parliament’s winter session ended on 23 December with the Rajya Sabha blocking important legislations in the coal and insurance sectors, the Modi government fell back on promulgating ordinances. Two ordinances were passed in quick succession — one that allows the government to auction coal mines and lets coal companies mine and sell the fuel; another lets foreign companies in insurance partnerships raise their stake from 49 per cent to 74 per cent. As many as 10 ordinances have been promulgated since the Modi government took charge.

 

On the land acquisition ordinance, the first hint of trouble came when President Pranab Mukherjee delayed its signing, asking the government to explain the urgency to amend the 2013 Act through an executive order. The ordinance went through anyway, but not before the President tacitly pointed out that neither would the heavens have fallen nor would the country have lost billions of dollars in investment had the government waited for Parliament to pass the legislation. Ordinances, by definition, are a short-term measure, and no foreign investor or project planner will bet on a temporary regulatory measure. An HSBC Securities note on the issue admitted as much when it said: “While ordinances can be reissued once they lapse, they may not be perceived as a stable solution by investors wanting secure property rights.” 

 

The Modi government’s attempt to send out a positive signal may have back-fired. The Prime Minister faced what could possibly qualify as internal dissent when three Cabinet ministers opposed the series of ordinances on the plea that the NDA government would face an ‘image problem’. 

 

The e-rickshaw ordinance may have sparked the problem. Battery operated rickshaws in the capital had been banned in July last year by the Delhi High Court over safety concerns. When the e-rickshaw regularisation Bill failed to pass muster in the Rajya Sabha, out came an ordinance legalising the vehicles. It was plain that the Modi government had its eye on the impending Delhi elections. 

 

Of late, murmurs of dissent have given way to a flood of vocal protests and announcements against the land ordinance. Social activist Medha Patkar, on behalf of the National Alliance of Peoples Movements, dubbed the ordinance as “contempt of the right of the democratic institution of Panchayati Raj to reject forced acquisition in the name of development”. She said the measure was designed to serve top industrial houses like the Adani and Reliance groups and alleged that 200 environmentally unsafe projects had been cleared by the Union ministry of environment and forests. 

 

The Congress has finalised plans to start a national chakka jam to protest against the ‘anti-farmer’ measure. The party is also drumming up support in non-BJP states on the issue of violation of the federal structure of the Constitution, since the views of states were not taken into account before promulgating the ordinance. 

 

It is not clear whether the NDA government will be able to pass the land Bill in the Budget session of Parliament either. While the BJP has a clear majority in the Lok Sabha, with 52 per cent of the seats, it controls only 18 per cent of the 245-member Rajya Sabha. With members enjoying a six-year tenure, it is projected that the Modi government is unlikely to have a majority in the Upper House till 2018. There is talk of forcing the issue through a joint session of Parliament, but the math and timing of the move is still fuzzy. The finance minister has repeatedly emphasised as part of the government’s ‘Make in India’ campaign that if the setting up and operation of industries is not made easier, “we will be threatened with a situation where we will become a nation of traders rather than a nation of manufacturers”. 

 

What the Modi government seems to have forgotten is that when you give a taste of empowerment which is what the land acquisition Act guaranteed landowners through a veto — it becomes difficult and politically dangerous to take that power away. The new land ordinance may well mark the end of Modi’s honeymoon and the beginning of mass disenchantment. 

 

(This story was published in BW | Businessworld Issue Dated 09-02-2015)