The Lok Sabha approved land reforms, which boost farmers’ rights but are opposed by other businesses who say the new law will thwart efforts to revive the floundering economy.
The government says the bill, which will replace a muddled law dating back to the 19th century, will help speed up industrial investment by making the rules clearer.
With the rupee’s value tumbling along with other vulnerable emerging market currencies, India is struggling to finance its current account deficit and its leaders are desperate to promote economic growth.
But many are sceptical about the land bill, which is seen as a vote winner for the governing United Progressive Alliance (UPA) coalition because it will give farmers up to four times the market rate for land bought for industry and infrastructure.
“We believe that the land bill strikes a fair balance,” India’s finance minister P Chidambaram told reporters.
“Land has to be made available, but while land is being either purchased or acquired to make land available for industry, we must also keep in mind that those who are deprived of land are in most cases deprived of the only asset they have.”
Another bill, passed on Monday, offers subsidised food to two-thirds of India’s 1.2 billion population, fuelling criticism that lawmakers are more concerned with elections due by May 2014 than in building a strong economy.
“It’s populist. They want to appease the farmers,” said Paras Adenwala, MD and Principal Portfolio Manager, Capital Portfolio Advisors.
“The UPA is making ground for election by these bills.”
Indian shares fell by more than 3 per cent the day after the food security bill was passed.
Source – Reuters