By withholding the introduction of the Land Acquisition Amendment & Rehabilitation Bill in Parliament, the UPA government has blinked first in its?tussle with Mamata Banerjee on the tricky issue of land acquisition. Unfortunately, this?may just set Banejee up as the change blocker in UPA-II. It also leaves the UPA open to pressure by other allies, most prominently the DMK, which has particularly strong views against disinvestment. This may not be the best precedent for a government so fresh into its term in office?this is when political capital to carry out difficult reform is highest.?And there is no doubt that land acquisition is a difficult policy terrain. But an emerging economy like India has?little option but to convert agricultural land into industrial use if it?s to grow rapidly.
The new Bill that has now been withheld did address the two most contentious aspects of land acquisition. First, it addressed the question of who is to do the acquiring. Instead of the government doing all the acquiring, the new Bill suggested that the private sector directly acquire 70% while the government acquire the remaining 30% land for a particular project. This seems to be a reasonable balance between a remunerative price for farmers?which direct private purchase is more likely to deliver than government acquisition?and proper acquisition of contiguous land for the acquirer?some small landholders may hold out despite a good price in which case the government has to intervene. But Banerjee and her party are adamant about an unreasonable, and almost certainly unimplementable, 100% private acquisition. The second issue is of course rehabilitation. It can be no one?s case that those displaced should be left entirely to their own devices. This Bill would have addressed the rehabilitation aspect, too. But now it?s delayed to another day. The UPA government must, therefore, come clean, and relatively fast, on how exactly it intends to proceed from now on. Is this just a temporary holdback to buy some time to persuade Mamata Banerjee to see reason, or is this the beginning of complete surrender to her demands, at least until the elections in West Bengal in 2011. There is nothing worse than?policy uncertainty for investors and at the moment, the whole land acquisition issue is mired in uncertainty. The UPA must weigh in to provide some clarity.
