Modi accepts defeat on contentious land decree, will change law

Prime Minister Narendra Modi

Prime Minister Narendra Modi will let an executive order making it easier for businesses to buy land lapse on Monday after failing to win support from opposition parties in a major blow to his economic reform agenda.

Modi said on Sunday the government was ready to amend the proposed law and criticised the spreading of false rumours that made farmers afraid of the changes.

“I have always said that, in the dispute related to the land acquisition law, the government is open-minded,” Modi said in his monthly radio address. “I am willing to accept any suggestion for the benefit of farmers.”

Modi swept to power last year on expectations he would accelerate an economic transformation that began in the 1990s but is struggling to build support for reforms in parliament, where his party is in the minority in the upper house.

Leaders of Modi’s party said they had not given up on making it easier to acquire land needed to kick-start hundreds of billions of dollars in stalled projects. However, after failing to win support in parliament, they may ask states to pass their own laws.

Modi has had to issue temporary executive orders in the past seven months that allow the government to forcibly purchase farmland for industrial development. He has failed to secure the votes in parliament needed to make the changes permanent.

Land reform is critical for Modi’s drive to build new roads, homes and factories and, if stalled, would blight his vision of 100 new ‘smart’ cities across India linked by industrial corridors and high-speed rail routes criss-crossing the country.

Conflict between farmers and companies trying to secure land for industrial projects has hampered India’s plans to expand its network of highways, build mines and other infrastructure, holding up about $ 300 billion of investment.

Indian government plans ‘extended’ parliament session to pass GST bill

Reuters: Prime Minister Narendra Modi government is planning an ‘extended’ parliament session to seek approval of a tax reform bill aimed at faster economic growth, a senior minister said on Saturday (29 August).

Parliamentary Affairs Minister Venkaiah Naidu said the government attached great importance to the Goods and Services Tax (GST) bill, whose passage has been stuck in the upper house of parliament, where the government is in a minority.

Naidu sought the cooperation of all opposition parties, especially the Congress, for the passage of the crucial bill.

“It will not be a special session but an extended session. The session is still on, it has just been adjourned. We will speak to all concerned parties to restart the session. The reasons for this are the GST bill, negotiable instruments – all these are important. We need to improve the economic state of the country,” Naidu said in the southern city of Hyderabad.

The GST bill is seen as low-hanging fruit among free-market reforms as it has rare bipartisan support. But it fell victim to an impasse over allegations of impropriety against Modi’s cabinet and party colleagues.

No laws were passed in the upper house in the three-week session which concluded early this month. Debate descended into insults that spilled to the streets, where opposition lawmakers marched and Prime Minister Narendra Modi’s cabinet staged a counter protest under a statue of Mahatma Gandhi.

Indian businesses have long coveted GST to subsume a thicket of federal and state levies that inflate costs. The tax has been watered down to win the backing of states, but companies feel it would still add 60 basis points to growth.

The Congress party, which lost power to Modi last year, championed the measure while in office. By scuttling the tax, for now, the party has denied Modi a victory.

The Congress party’s repeated disruptions made the parliamentary session the least productive since Modi took office in May 2014.