Modi accepts defeat on contentious land decree, will change law

ndia's Prime Minister Narendra Modi listens to a speaker ahead of launching three new national social security schemes at a function in Kolkata May 9, 2015.

Chief of India's Congress party Sonia Gandhi (C) marches along with the members of other opposition parties, to Rashtrapati Bhavan, in New Delhi March 17, 2015

Sun Aug 30, 2015

Prime Minister Narendra Modi will let an executive order making it easier for businesses to buy land lapse on Monday after failing to win support from opposition parties in a major blow to his economic reform agenda.

Modi said on Sunday the government was ready to amend the proposed law and criticised the spreading of false rumours that made farmers afraid of the changes.

"I have always said that, in the dispute related to the land acquisition law, the government is open minded," Modi said in his monthly radio address. "I am willing to accept any suggestion for the benefit of farmers."

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, where his party is in the minority in the upper house.

Leaders of Modi's 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.

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.

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

Conflict between farmers and companies trying to secure land for industrial projects has hampered India's plans to expand its network of highways, build mines and other infrastructure, holding up about $300 billion of investment.

(Reporting By Andrew MacAskill; Editing by Paul Tait)