The Financial Express, Dec 11 2014, New Delhi: It is difficult to appreciate how road transport minister Nitin Gadkari hopes to create a shelf of 500 ready-to-bid projects worth R3 lakh crore when, he as well as other ministers in the government openly talk about how even government projects are not taking off due to serious problems in land acquisition—Gadkari’s own ministry points to how 72 national highways are stuck due to land acquisition issues. While, some months ago, it appeared as if the government might be able to pull off some changes in the Land Acquisition, Rehabilitation and Resettlement (LARR) Act, that doesn’t look likely any more. Some months ago, Gadkari had been tasked with talking to various state governments on their views on the LARR Act, and most states had come out with views similar to those of the central government—that while compensation levels were not really the problem, the compulsory social impact assessment was a big hurdle. While it was always obvious the Congress would oppose any changes in the Act since that was the brainchild of Sonia Gandhi’s National Advisory Council (NAC)—even though Congress-ruled states also came out against vital LARR clauses—the fact that states like Uttar Pradesh, Tamil Nadu and West Bengal had serious concerns made it look like a done deal. Ever since, with the government going on the offensive in states like West Bengal, it is no longer certain any major changes in the Act can be expected soon.
In which case, it is not certain how investment levels are expected to rise—the latest GDP data shows a 1.5% contraction in investment levels. In such a situation, even if RBI starts cutting interest rates—in any case, several top banks like SBI have indicated that rate cuts can be expected in early 2015—it is difficult to see how the investment cycle can be revived. One possible solution, though that’s a bit of a long shot, is to allow states to come up with their own changes in the land acquisition law. This has been demonstrated in the case of labour laws where, despite the Centre not increasing the levels at which labour retrenchment doesn’t require government approvals, the Rajasthan government has gone ahead and changed its own laws—labour is in the concurrent list—and has got the President’s assent for this. Rajasthan’s land acquisition Bill, currently in the state assembly, addresses most of the contentious issues by hiking compensation levels but restricting the social impact assessment. If this Bill is to be passed by the assembly, and then get the President’s assent, it could open the way for other states to follow just as they are doing in the case of labour reforms.