Much has been written about cronyism in India. The most visible aspects of the problem involve cases of ministers and powerful politicians giving away natural resources at dirt cheap rates to big firms. While public fury may prevent blatant misuse of power in this respect, the large number of protests across the country against forced land acquisition by governments often goes unnoticed.
The danger of not having a proper land acquisition law, one that defines public purpose carefully and regulates land acquisition carefully, is clear: On the one hand, large projects will remain stalled; on the other, the abuse of eminent domain powers, especially by state governments, will continue unabated. Perpetuating such bad public policy only threatens growth and promotes cronyism.
The legislative process to this end has stayed stuck for a while. The Land Acquisition (Amendment) Bill is as good as dead. Opposition to the Bill within the United Progressive Alliance (UPA) has ensured that it will remain that way for some time.
It is time the UPA government tried to build consensus on the subject again. A large part of its problem is that of communicating to its coalition partners and citizens at large that public purpose cannot mean government acquisition for a government project and government jobs for locals. Union and state governments hardly have money to execute projects. Very often, these require private participation.
What is required is a clear demarcation between a project that makes economic sense for the country or the state (for example, power generation, a greenfield industrial venture) and those that make business sense but have little economic impact (housing and residential constructions being two prime examples for such diversion of land). In this context, the mindset that works at the local level—“they (project owners) make profits while we lose”—has to be changed. The government has not done anything to alter perceptions on that score.
These are difficult things to do. For example, in an environment where governments are often mired in corruption, it becomes very difficult to make such distinctions between projects based on economic criteria. The issue of communication is even more difficult. Sooner or later, whatever the difficulty, governments will have to take these measures, if growth is to continue.
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