Economy Aug 29, 2012
Consider this incongruity: the UPA government, which has been squeamish about auctioning natural resources like spectrum and coal on the ground that this would make telephony or power more expensive for the people, is taking the exact opposite stand on another natural resource: land for industrialisation, infrastructure and urbanisation, three important pillars of development.
Coal Minister Sriprakash Jaiswal was found moping and moaning the other day over the fact that putting up coal blocks for competitive bidding may raise power costs, but yesterday Rural Development Minister Jairam Ramesh was busy trying to push through cabinet the Land Acquisition Bill as though this is what is going to take development to the next level.
Everyone knows that the Bill-being championed by Sonia Gandhi's National Advisory Council and Rahul Gandhi-will push urban and rural land prices through the roof and retard development. But nobody has, till now, had the courage to put it that way.
Luckily for India, many cabinet ministers-including several from the Congress itself-opposed the Bill on Tuesday and consigned it to further vetting by another Group of Ministers (GoM) before it comes back to cabinet. This means not in this session, says Business Standard.
Among other things, the draft Bill calls for paying two times the market rate for land near urban areas, and four times the market price for rural areas. This is over and above the costs to be incurred in rehabilitation and resettlement of the people selling or dependent on the land being acquired.
If implemented in the current form, India can kiss goodbye to faster growth for decades. Throughout UPA-1, spectrum and coal blocks were given out without any reference to market prices (which is what the auction route is all about), but in the case of land, the UPA is planning to adopt a "market-plus" route, where the idea is to impose costs on industry and infrastructure builders that will be multiple times the market.
However, there is one strand that links the opposing decisions on spectrum and coal blocks, and the one on land: corruption and vested political interest.
By not opting for market-based pricing in spectrum and coal (till the Supreme Court and CAG shoved it down the government's throat), the UPA could favour private parties. Conversely, by interfering with market pricing of land meant for industrialisation and infrastructure, the government is trying to buy the votes of the landed peasantry. However, even this is likely to result in big-ticket corruption.
If land is going to be made horrendously expensive and difficult to acquire (like the need for 80 percent consent of landowners) for industry, residential housing and infrastructure, private parties involved in these activities will use bribery to achieve these ends. They will use criminals to manufacture rural consent, and employ corrupt practices to get their prices accepted and validated if the Land Bill becomes law.
These factors should have been obvious to anyone with a modicum of commonsense, but the matter is now to be referred to another GoM, this time headed by Defence Minister AK Antony.
However, there is a strong possibility that the GoM will also buckle under political pressure, and the only way sanity will prevail is if Sonia Gandhi herself sees the light - of which there is little sign so far.
At the cabinet meeting, the array of ministers opposed to the Bill included heavyweights like Commerce and Industry Minister Anand Sharma (who sent a stiff note, but wasn't present), former rural development minister CP Joshi, Urban Development Minister Kamal Nath, Civil Aviation Minister Ajit Singh and Corporate Affairs Minister Veerappa Moily.
For once, the objections display some spine - no doubt because this group realises the real damage that could be done through this mindless piece of political legislation whose basic intent is to protect and engender a rural vote bank at the cost of real progress.
According to The Economic Times, strong words were used. Kamal Nath opposed the Bill saying it would "destroy urbanisation and industrialisation." Wonder what Soniaji would say to that?
Anand Sharma, whose National Manufacturing Policy will be dead-on-arrival if the Land Bill goes through, sent in a note which was partially read out by the PM himself, reports The Indian Express. Among other things, Sharma wants land for special economic zones and manufacturing investment zones to be deemed as public purposes for which the Bill's rigorous provision would not apply.
Sharma is also reported to have emphasised that the draft legislation was industry-unfriendly and would "scare away investment if carried out in its current form". Since the themesong of the UPA after the exit of Pranab Mukherjee is to improve business sentiment, the Land Bill is clearly a no-no since it would achieve the exact opposite of that.
CP Joshi, now transport minister, wants the Bill to exclude projects like national highways - which is already grinding to a crawl due to land acquisition issues. And Ajit Singh said the Bill would hamper airport development.
The sub-text of these objections can be summed up in one word: Nimby - Not In My Backyard. If the Land Bill is to be passed, it must exclude my backyard, my ministry is what is being said.
That begs the question: if all the key ministers holding portfolios crucial to national development (highways, urbanisation, airports, power, corporate affairs, etc) are opposed to the Bill, how can the Bill be justified at all in its present form?
Manmohan Singh, perhaps secretly pleased that all these objections are coming from other ministers, was happy to accept Veerappa Moily's proposal to shift the decision to another GoM.
But that's where the damage could be done. Jairam Ramesh brought the Bill to cabinet in the secure knowledge that Sonia Gandhi is all for it. The GoM is headed by another Sonia loyalist, AK Antony, also not known for displaying political spine.
The ball will really be in Sonia's court. As things stand, the Land Bill is less about preventing the exploitation of rural peasants and more about erecting a serious speedbreaker to development and urbanisation.
Ideally, the Land Bill should be killed and the focus should be on creating a foolproof system of ensuring fair prices and just rehabilitation for those who give up their land for national projects. Instead, it has become a plan to shift resources to the rural landed and landless for political benefit.
It is now Sonia's political instincts versus national interest. Several ministers have already indicated where national interest lies.
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