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India's manufacturing potential hinges on land buy law

To become a manufacturing powerhouse India needs a well-defined land buying policy.

editorials Updated: Sep 01, 2015 01:05 IST
With the land acquisition bill facing stiff opposition, the Centre is mulling a change in its strategy and let states enact their own legislation on the controversial land law. (Arun Sharma/HT File)
With the land acquisition bill facing stiff opposition, the Centre is mulling a change in its strategy and let states enact their own legislation on the controversial land law. (Arun Sharma/HT File)

Prime Minister Narendra Modi on Sunday said that the land ordinance will not be reissued. The move, seen by many as a major climb down, appears to be part of the government’s strategy to break the political impasse on the land Bill, critical to build factories and accelerate infrastructure projects.

Business leaders have often complained that highly-restrictive conditions are proving to be a major barrier for industry to buy land. For a capital-scarce economy, allowing investors to deploy funds and buy resources in high-growth sectors is, perhaps, the first step in seeking to create jobs and multiply income.

There is no gainsaying the fact that infrastructure projects can spur economic activity. According to Crisil, the construction sector is the most labour-dependent among all non-agricultural sectors, requiring more than 12 people to produce Rs 10 lakh of real output. That is the reason why land buying rules is a major piece of structural adjustment that successive governments have attempted to fix.

In India, each such move faces its own dynamic of resistance, pacing out its passage through departments, ministries and social and political stakeholders. The land Bill is a case in point. Most of the fear about the land acquisition law appears to be driven by the perception that it could eventually allow ‘land-grabbing’, farmers will be forced to forgo their rights and get a raw deal.

While it is often argued that political debates in Parliament, and outside, is a manifestation of India’s great democratic tradition, it still begs the question on how much of political capital and time needs to be expended on a particular issue.

Time and cost overruns have been a major bane for India’s infrastructure and industrial projects. The government’sdata shows how delays in land buying and procedural clearances have resulted in major slippages in large projects.

As of January 1, more than four out of 10 central infrastructure projects worth more than Rs 100 crore were running behind schedule.

According to the ministry of statistics and programmeimplementation, as of January 1, of 738 projects, 315 were facing delays ranging from a few months to 21 years. The Narendra Modi-led government aims to build 30 km of highways every day, thrice more than the UPA government’s target.

Likewise, the government plans to turn the country into a manufacturing powerhouse through initiatives like ‘Make in India’. A well-defined land buying policy is a necessary condition for achieving these and other ambitions.

The sooner the political parties acknowledge this, the better it is for the nation.