The Narendra Modi government’s decision to allow its land acquisition ordinance to lapse shouldn’t be seen as a setback for economic reforms. Certain provisions in the ordinance had created misgivings among the farming community — especially the one that did away with the requirement of consent from at least 70 per cent of landowners in case of acquisition for a large swathe of private-sector projects. The timing was significant. The last year and more have been bad for agriculture. Poor monsoons and unseasonal rains/ hailstorms destroying the standing rabi crop in many parts of the country, coupled with a price crash in most commodities, have led to a significant erosion of farm incomes. Under these circumstances, trying to push through contentious amendments to the 2013 law enacted during the previous UPA regime’s tenure — that too by issuing ordinances thrice — only united the Opposition, which lost no opportunity to paint the current government as “anti-farmer”.
Such squandering of political capital was unnecessary, given that it has made the Modi government that much more reluctant now to undertake more important reforms even in agriculture — be it decontrolling urea, stopping open-ended procurement of foodgrain or replacing market-distorting subsidies with targeted direct cash transfers to resource-poor farmers and vulnerable consumers. The political slugfest over the land ordinance has also undermined the government’s ability to pass the Constitution amendment bill allowing the introduction of the potentially game-changing goods and services tax (GST). While the country does need an enabling legislative framework for acquisition of land for industrialisation, it is doubtful whether this deserved precedence over other more immediate and important reforms. Indeed, it must be hoped the fear of farmer backlash does not force the government to backtrack even on rationalisation of minimum support prices — one area where it can be credited with some progress.
The prime minister’s decision not to re-promulgate the land ordinance is, therefore, welcome — he has said that he did not want to give a handle to those wanting to spread fear or confusion among farmers. It will help the government to cut its political losses and focus on the other big and more urgent reforms like the GST, which cannot happen without the Opposition’s support. Once the fears and suspicions over land acquisition die, the government can also look at fixing fertiliser and food subsidies, while simultaneously ensuring farmers get the benefits from a single national market for their produce and investments in rural infrastructure. As regards acquisition, the fact is, agricultural land in India is overwhelmingly private property. It cannot be taken without some form of consent from the owners, for which they have to be made stakeholders in the projects being contemplated. How this is to be done is better left to the states.