Unchanged land law is major anti-growth barrier

The Narendra Modi government has taken a giant leap backwards by failing to push ahead with the much-needed amendments to the land law.

Its decision to retain the original law means that it will take anything up to five years for an investor to buy a plot of land, as the Niti Aayog vice chairman, Arvind Panagariya, has pointed out.

The original law was, of course, the handiwork of the socialistic inclination of Congress president Sonia Gandhi, whose iron grip over the party and, as a result, over the Manmohan Singh government, enabled her to enact the supposedly pro-farmer and essentially anti-industries legislation.

Her hope was that populist initiatives like the land law and the food security act, which promised subsidized grains to 67 percent of the population, would ensure her party's victory in last year's general election.

In the event, the Congress put up its worst performance, which showed that the electorate was not fooled by the profligate welfare measure or the patently anti-development law.

Instead, the voters wanted someone to come to power who promised economic growth so that they would not be dependent on official charity or on policies which were expected to lead to more fragmentations of holdings by keeping farmers tied to their lands by complicating the process of sale and purchase.

There is little doubt that the Bharatiya Janata Party's (BJP) success in getting an absolute majority in the lok Sabha was entirely due to the popular expectation that Modi will vigorously pursue economic reforms. From this standpoint, the BJP's current retreat is a matter of huge disappointment as it is a setback to India's hope of becoming an economic powerhouse in the near future.

The Congress, and particularly its president and vice president, who spearheaded the campaign in favour of this regressive step, will be delighted since it will stymie Modi's "Make in India" project by deterring foreign investment.

For Sonia and Rahul Gandhi, it is the first favourable turn of events for the Congress since its lok Sabha tally dropped by as many as 165 seats since 2009 as they have succeeded in forcing Modi on to the back foot.

But it will be unfair to blame the Congress alone. The prime minister himself cannot be absolved of the guilt of mishandling a sensitive issue.

For a start, he rushed in when he should have been more circumspect. Perhaps, the BJP's first ever majority in the lok Sabha accentuated his customary arrogance.

As a result, instead of preparing to rally those who may have been expected to stand by him, like the BJP's allies and those among the opposition parties which take a nuanced view of the economic scene like the Biju Janata Dal (BJD), Modi appears to have decided to go ahead on his own.

The BJD would have been a helpful ally, for it has seen how Rahul Gandhi's promise to be a foot soldier in Delhi of the Niyamgiri tribals has condemned the innocent hill dwellers to be hunter-gatherers for the foreseeable future in the absence of industrial development.

Modi might have been able to win over the AIADMK as well because, first, it is generally pro-reforms and, secondly, with the DMK going along with the Congress, it has to be on the opposite side.

But more than winning friends and influencing people, what Modi failed to realize was that too enthusiastic a drive in favour of industries could confirm his reputation of being pro-business, which is not widely appreciated in India.

It is this chink in his armour which Rahul Gandhi has exploited by accusing the government of being "suit-boot ki sarkar".

It is not only that Modi was unable to convince allies like the Shiv Sena and the Akali Dal of the justifiability of his cause and how it will benefit the country, including the farmers, in the long run, he could not even win over status-quoist saffron outfits like the Swadeshi Jagaran Manch, the Bharatiya Kisan Sangh and the Bharatiya Mazdoor Sangh.

lapses of this nature show how a chief minister who is used to having his own way in a state can be lost in the labyrinth of national politics where there are parties like the Congress which can trip up an opponent even if he is on to a good thing.

The only option for the central government is to let the states frame their own land acquisition laws although these cannot contravene restrictions like obtaining the consent of 70/80 percent of the landowners.

However, since most states have realized the value of private sector investment, including West Bengal whose Chief Minister Mamata Banerjee recently visited london in search of investors, it is possible they will find a way to circumvent the obstacles in order to attract industrialists.

If so, Modi can still have the last laugh. But for the present, he has suffered a major setback in his nascent career at the national level, the second one after the BJP's crushing defeat at the Aam Aadmi Party's hands in February.