Fisrtbiz, Dec 12 2014, New Delhi: Is business confidence in Narendra Modi waning? Are the markets tanking due to global cues or because business is worried about the lack of real movement on reforms? As Arun Shourie, a reformist minister in the Vajpayee cabinet, told The Indian Express the other day, there are more words than action. He said: ‘Plateon ke aane ki awaaz toh aa rahi hai, khaana nahin aa raha (We can hear the sound of plates, but the food isn’t coming.)’

The Economic Times reported two days ago that a closed-door meeting of the Confederation of Indian Industry heard many business voices expressing concern about the slow movement on change. The initial euphoria is ebbing, the newspaper reported.

To be sure, the legislative agenda has been squeezed by discordant notes from the Sangh parivar, which gave the opposition a reason to paralyse parliament. But even if there were no off-key notes being struck by the parivar, it is not clear that big and controversial legislation can be shepherded through the upper house, where the NDA does not have the numbers, quickly.

Is it time to lower expectations from this government, or keep hopes alive till the budget?

The problem for Modi – at least at the perceptual level – is that he has not sent that one big signal which will indicate that the past is being left behind. Incremental change is good, but its effect will take a long time to seep through to business before it restarts investment.

So the question Modi must ask himself is this: is there one thing I can do in the next few months that will revive animal spirits in business?

The answer is yes. And, without doubt, this action should involve big changes in the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Ac t, 2013 – a.k.a. the Land Acquisition Act – legislated by the UPA government in its dying moments.

This Act is a poison pill handed down by Sonia Gandhi in the name of the poor to ensure that no recovery takes place even in the next government.

This Act had almost no consent from almost any of the state governments, which are the implementing agencies of the Act, and this includes the Congress governments. Even Mamata Banerjee’s West Bengal government does not believe in the Act. And yet, it was legislated.

This Act, which is now more than a year old, has not seen one single project invoking its provisions so far. Zero projects. Not surprising, since no major project that requires large tracts of land can conceivably do so under this Act in less than three to five years. Little wonder, no one has even tried. This Act perpetuates growth paralysis through wilful political design.

If you want to know why, you could do no better than read Bibek Debroy’s stinging article in The Economic Times today (12 December), which lays bare the nonsensical provisions of the Act. None of the framers of the Act seem to have ever put on a thinking cap.

Debroy, who lists problems in every key clause of the law, from compulsory social impact assessments to 70 percent consent, rehabilitation of affected families, determination of market value for acquisition, retrospective application of the law, and the involvement of gram sabhas – to name only a few – concludes thus: “In the name of protecting the poor and ensuring entitlements, Laar (the Land Acquisition Act) destroys land markets. We are stuck until the legislation is amended by parliament.”

The sheer anti-federal character of the law shows up in how Delhi decided what states should do, even though land is in state hands. Notes Debroy: “The pros and cons of the (Land Act) debate were waged in Delhi. State governments, irrespective of their political composition, are now paying the price for Delhi’s follies.”

I couldn’t have put it better. It bears repeating that the Union government should never legislate anything that states have to implement without the latter’s explicit consent. The UPA got particularly vicarious pleasure in doing so in the name of the poor so that the political benefits go to the Gandhi dynasty, and states are left carrying the can.

So, to come back to our first point, this is the law that must either be overturned or substantially amended so that growth can even start inching up.

With changes, infrastructure cannot take off. Construction activity, which is the biggest creator of jobs, will be hobbled. Factories will not be built. And farmers, who are the main intended beneficiaries, will not be able to sell their land and look for better prospects. This Act is the single-biggest impediment to reviving growth and jobs – especially in the rural areas.

If Modi had to stake his entire political capital on one piece of legislative change, it is not the insurance bill or GST or labour law, but the Land Act. For this he must be prepared to fight, bribe or coerce allies and opposition to get the poisonous law neutralised. This is the law worth calling a joint session of parliament for.

Web: http://firstbiz.firstpost.com/economy/reviving-animal-spirits-one-law-modi-can-change-land-act-112841.html