Modi backs down on India's controversial land reform

India's prime minister Narendra Modi on Sunday backed down from a plan on India's controversial land reform, saying he will allow an executive order for businesses to buy land to lapse on Monday folloShow more

NEW DELHI // Indian prime minister Narendra Modi will allow an executive order aimed at making it easier for businesses to buy land lapse on Monday.

The decision comes as his government fails to win support from opposition parties, and will be a major blow to his economic reform agenda.

There have also been large-scale farmer protests led by a resurgent opposition to the reform.

Mr Modi said on Sunday criticised the spreading of false rumours that made farmers afraid of the changes, and said his government was ready to amend the bill to favour farmers so that they do not face financial losses.

“I have always said that, in the dispute related to the land acquisition law, the government is open minded,” Mr Modi said in his monthly radio address. “We will accept any suggestion in the interest of farmers.”

Mr Modi swept to power last year on expectations he would accelerate an economic transformation that began in the 1990s but is struggling to build support for reforms in parliament.

His right-wing government has struggled to pass the land and other key bills in parliament where his Bharitya Janata Party (BJP) lacks a majority in the upper house.

Leaders of his party said they had not given up on making it easier to acquire land needed to kick-start hundreds of billions of dollars in stalled projects.

However, after failing to win support in parliament, they may ask states to pass their own laws.

Mr Modi has had to issue temporary executive orders in the past seven months that allow the government to forcibly purchase farmland for industrial development. He has failed to secure the votes in parliament needed to make the changes permanent.

Party leaders have hinted in recent weeks that the ordinance would be dropped, but it is the first time Mr Modi has publically conceded defeat on the issue.

The reform is aimed at speeding up land acquisition for billions of dollars worth of stalled infrastructure and other development projects to boost the economy.

But the main opposition Congress party says the bill hurts India’s 300 million farmers and agricultural labourers.

Protests by farmers have drawn tens of thousands of people and served as a rallying point for anger among the rural poor towards the Modi-led government.

The conflict has hampered India’s plans to expand its network of highways, build mines and other infrastructure, holding up about $300 billion of investment.

Land reform is critical for Mr Modi's drive to build new roads, homes and factories. If stalled, it would blight his vision of 100 new "smart cities" across India linked by industrial corridors and high-speed rail routes criss-crossing the country.

* Reuters and Agence France-Presse