Centre does well to drop land Ordinance
It has been evident ever since the Monsoon session of Parliament began that the Opposition, especially the Congress Party, would disrupt the proceedings in the house. Under the circumstances, the government needed to have focussed on two or three items on its reforms agenda rather than be adamant on pushing through the land Bill. Eventually, on Sunday, the prime minister announced the government would let the Ordinance lapse. However, this is not be the end of the road for land reforms because the states can take the initiative to recast the regulations to make it easier for industry to acquire land.
Indeed, this paper had argued several months back the government should, instead of dealing with changes at the central level, allow the states to pass their own land laws since they were empowered to do so; Article 254(2) of the Constitution allows states to have a law which runs counter to the central law, provided, of course, the President of India gives his assent. That would effectively allow a Madhya Pradesh or a Maharashtra to reframe the rules to the extent they believe will facilitate land acquisition in their respective territories. They could, for instance, choose to tone down the consent clause, or do away with social impact assessment requirements depending on what is palatable to their respective assemblies. Those states in which the BJP is in a majority should have little trouble pushing through any changes they might want. Indeed, states such as Rajasthan, Madhya Pradesh and Gujarat are doing precisely that when it comes to rewriting labour laws, amending them and sending it to the President for his approval, a mere formality once the Centre recommends it.
So, while it may want to prove that it can push through legislation, it may be prudent for the Centre to focus on rallying support for other reforms such as the GST(Constitutional Amendment) Bill. In the meantime, the state governments can get going on reworking the land rules; there really is no tearing hurry given there is plenty of surplus capacity across most sectors of the economy and, with demand showing no meaningful resurgence, no business house is really looking to add any. As some political commentators have observed, the BJP would do well not to acquire an anti-farmer image ahead of the crucial Bihar elections since it needs to build strength in the Rajya Sabha. By ill-advisedly trying to get the land Bill through, the BJP has only ended up creating a more united Opposition than there was to begin with. But it can make for lost ground if it makes some sensible decisions; not going ahead with MAT for FPIs with retrospective effect would be one and raising gas prices to encourage investments in the exploration sector would be another. The government’s stock right now is low and the markets are losing confidence as is clear from the host of downgrades for benchmark indices. But it has a lot going for it—among other things, low commodity prices are a big plus—and it can make a quick comeback.