It has now become apparent to the Narendra Modi government that the manner in which it sought to amend the law relating to acquisition of land is not politically feasible. There are indications that the government will belatedly compromise instead of standing on prestige. The government is on the defensive on another issue. Despite claims about how more money will now go to the states from the Central government, actual transfers may come down and there would be a curtailment of welfare programmes on education and agriculture. Thus, even though the government claims it believes in fiscal federalism, that it is not pro-corporate sector and is not acting against the interests of farmers and the poor, the reality is different.
As arch rivals (such as the Trinamul Congress and the Communists, the Samajwadi Party and the Bahujan Samaj Party) found a common cause in the land acquisition issue, the Bharatiya Janata Party realised that it will not be able to browbeat its political opponents since it does not have a majority in the Rajya Sabha and may not have a majority for the rest of its five-year term which ends in May 2019.
Finance minister Arun Jaitley has made much of the fact that his government will now be transferring more funds to states by following the recommendations of the 14th Finance Commission. However, analysts have pointed out that even as the states’ share of taxes collected by the Central government is expected to rise, total grants and loans to states and Union Territories would commensurately decrease. Some argue that there has been an “absolute volte face” on the part of the government to help states finance their development plans and that there would be sharp cuts in budgetary support to various programmes, including Sarva Shiksha Abhiyan, Integrated Child Development Scheme, and Rashtriya Krishi Vikas Yojana.
In an email to analyst Pradeep S. Mehta, the chairman of the 14th Finance Commission Y.V. Reddy has agreed that the states “may not get more funds” and that the Commission “was of the opinion that the Union government does not have enough fiscal space at the current juncture and for the next five years, to be able to increase the aggregate transfers from the Union to the states.”
In his dissenting note to the Commission’s report, Abhijit Sen, member of the Finance Commission, expressed concern about the “abrupt” transition to the new system which would “disrupt” transfer of Plan funds in 2015-16. He added that by winding up spending on the Backward Region Grants Fund and “normal Central assistance”, the flow of funds to states like Tripura, Uttarakhand, Orissa and Bihar would come down — interestingly, all these states have non-BJP governments at present.
It was relatively simple for the Modi government to amend the Mines and Minerals (Development & Regulation) Act and to increase the FDI limit in insurance companies from 26 to 49 per cent. But the move to amend the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, has proved to be an uphill task.
The BJP was critical of the Congress-led UPA governments for undertaking “reforms by stealth”. But it did precisely this by promulgating the ordinance to amend the law relating to land acquisition on December 30.
The government speciously claimed that the ordinance was needed to amend 13 other acts — relating to building highways, metro railways, atomic energy plants, defence establishments, electricity projects and so on — by the end of the calendar year to bring these within the purview of the land acquisition act. What the ordinance actually did was much more — it diluted the substance of the 2013 Act on issues relating to prior consent of those whose lands are being acquired and the need for a mandatory, independent social impact assessment before the acquisition.
Faced with howls of protest not only from the Opposition but also from within the Sangh Parivar,
Mr Jaitley claimed that those opposed to amending the land acquisition law were against industrial development. He brandished letters from chief ministers who had reservations about specific provisions of the 2013 Act and “secret” letters that indicated how ministers in the earlier government — such as the then industry and commerce minister Anand Sharma — were unhappy with the law.
After this tactic failed, it was claimed that the government would convene a joint session of both Houses of Parliament. In India’s bicameral parliamentary system, only after a Bill has been rejected by any of two Houses of Parliament and after six months have elapsed, can the President be asked to convene a joint session of both Houses to pass the bill.
Only thrice in the past have joint sessions of Parliament passed bills to amend laws. These were the Dowry Prohibition Act, 1961, the Banking Service Commission Repeal Bill, 1978, and the Prevention of Terrorism Act, 2002.
When the bill to amend the land acquisition act was approved by the Lok Sabha on March 10, nine amendments were moved. These were aimed at countering the criticism that the bill was anti-farmer. Now the government has the option of either referring the bill to a parliamentary committee which would submit its recommendations in a time-bound manner or to dilute the amendments proposed. Either way, realpolitik seems to have prevailed over the arrogance displayed by Mr Modi and Mr Jaitley.