Why failure of land reforms will be Modi's biggest fall

Reform is a tricky thing, the very word is open to many interpretations. Its many connotations include anti-poor, pro-industry, pro-development - the list goes on. Pushing through reform requires a great amount of zeal, conviction and vision. That's why the Narasimha Rao-Manmohan Singh duo is revered -because they did push through reform which the opposition opposed vehemently.

In all likelihood, it does seem like the government has decided to drop the land ordinance - after failing to drive consensus on the contentious clauses of consent and Social Impact Assesment. Was it the best attempt at redrafting a flawed legislation? Perhaps not. But for everyone watching the Indian reform story, this was the curtain raiser, a sign of things to come. And if the government decides to drop it, it will make observers suspicious of big reform.

Within the government, the concern was that if the government decides to include social impact assessment and the consent clause -which requires 70 per cent consent for private projects and 80 per cent for public projects - it will make land acquisition virtually impossible and will hurt 'Make in India' considerably.

"We have to remember that we are a raucous democracy and political considerations will intervene in economic development," says Adi Godrej, Chairman of the Godrej Group. The large land banks will become difficult to acquire, leaving land acquisition in a limbo would not hurt the biscuit manufacturer, but PM Modi's ambitions of a solar power revolution, among other things could take a hit. For instance, every mega watt of solar power requires 5 acres of land. "To put up a 100 GW solar plant will be nearly impossible," says a policy expert.

Land acquisition is essential if India has to urbanise, currently less than 10 per cent of land in India has been utilised for urbanisation.

Land can be purchased, leased or acquired. Purchasing or leasing does not require consent or law, no country in the world has a land acquisition law that requires consent to acquire land for public purpose. "Nobody questions the right to acquire land," says a global policy expert.

In the legendary Kelo Vs City of New London, the Supreme Court of the United States held that general benefits of a community enjoyed from economic growth qualified redevelopment as "public use". The plaintiff Susetto Kelo sued the City of New London in Connecticut, United States arguing that the city had misused its eminent domain power and that economic development - the stated purpose of the taking and subsequent transfer of land to the New London Development Corporation did not qualify as public use.

And if the SECC survey findings are to be believed, lifting people out of poverty requires migration from agriculture to non-agriculture activities. "We need to encourage people to move out of rural areas which requires policies that encourage non-agriculture industries and proper planned urbanisation," DK Srivastava, policy Advisor, EY, told India Today at the time of the release of the survey.

If India decides to go back to the land acquisition law of 2013, it will make it virtually impossible for industry to acquire land, a timeline of 50 months would make most projects unviable, this gets compounded by the clause that if the land has not been utilized for five years it will have to be returned - if it takes 4.5 years -on paper, could take longer -- to just get through all the formalities of acquiring land, how will anything begin? According to the Economic Survey released this year, 161 projects were stuck due to land acquisition issues.

It would do well for the government to hammer out a solution - because running away will just not do it.