Watering down land law could hurt PM Modi: Experts

Tweaking rules to make it easier to acquire land for industry could dent Prime Minister Narendra Modi’s huge political capital unless he also ensures a commensurate rise in compensation for farmers, political experts and economists say.

Modi’s new government, which won a landslide mandate in the April-May national elections, is seeking to water down the 2013 land acquisition law, especially a clause that makes the consent of 80 percent landowners mandatory in any acquisition of land for industry or infrastructure.

It also plans to lift a ban on acquisition of multi-crop land and also scrap a social impact assessment clause.

"Dilution of key provisions of the land act will send the message that Modi is pro-business. That will be (the) undoing of Modi who has won elections riding on a surge of aspirations,” says Prof RK Barik of the Indian Institute of Public Administration.

“He has got votes cutting across caste, class and community lines. He is above groups and classes. Tilting to one group or class will turn expectations into disillusionment."

Land acquisition is a political hot potato in India, where two- thirds of the 1.2-billion population is dependent on agriculture and where land is a farmer's only social security.

Land protests have stalled plans for power utilities, mines, roads and steel mills. Farmers have put on hold some 230 tax-free export zones and huge investments by top steel makers such as ArcelorMittal, South Korea's Posco and Tata Steel, according to government figures.

One theory is that Prime Minister Modi could enhance the compensation to those who give away their land to blunt any criticism from farmers and civil rights groups, says Prof Pralay Kanungo of Jawaharlal Nehru University.

That would also ensure a much more equitable growth structure in India, other experts say.

"The private sector talks of the need for good financial returns. Why is not this rule extended to farmers who should also be entitled to a fair share from investors?" says Prof Kamal Mitra Chenoy, also of Jawaharlal Nehru University in New Delhi.

"A change in the provision of 80% approval by farmers for private acquisition of land should also follow economic principles like a fair profit for their land. If such an offer is made, farmers would definitely accept.”