Econ mom talks Mann ki Baat on Land Ordinance and GST

Lil One has always been good at chess. But this week, his game has suddenly become quite indestructible. I was getting frustrated as he was anticipating almost every move of mine and was giving me a tough match, often winning the board. “Losing to one’s kid is a wonderful feeling!”, my elderly neighbour informed me after she saw this most embarrassing spectacle of Lil One finally rupturing my rook defence and yell in delight, Orc style. I tried to look positively delighted to find this little speck of a boy beating me; my neighbour glowed in approval and left to inform the entire building of my successful motherhood milestone.

AAAAAAARRRGH! I am SO upset! Ok, I can see Saintly Sacrificing Mommies Inc. including women like Karan-Arjun’s mommy glowering at me in disapproval. But frankly, I am so frustrated! Ok, so here’s the world’s most well kept secret. Losing to one’s own kid in chess is quite an awesome feeling, once you overcome that strong urge to go and yell real loudly in frustration.

“You are reluctant to sacrifice, Mom, that’s your problem”, piped Lil One, getting into groove on his pet subject “3001 Favorite Mommy Errors.” “You have to be able to give up a minor piece in order to capture my rook. The power of exchange sacrifices is BIG. Let go a small thing today for BIG gains tomorrow. It always works. That’s what all chess masters say.”

Hmm. A sacrifice? He’s talking about a trade-off! Perhaps we are witnessing the same kind of a trade-off in the politico-economic-parliamentary space today. PM Modi declared in the “Mann-Ki-Baat” show a couple of days ago that the Land Ordinance would not be re-promulgated. Is this a small exchange sacrifice to get the rook, the GST Bill, going? It does look like it.

Frankly, I was never comfortable with that Land Ordinance. You can see some of my arguments regarding land acquisition in India in my earlier blogs here. The archaic Land Acquisition Act 1894 was replaced by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCT- LARR) in 2013. This Act was passed after a lot of discussion in the Parliament. LARR required consent of 80% of the land owners, if the acquisition was being done by a private party and 70% , if it was done by PPP. It also mandated Social Impact Assessment (SIA) before the land acquisition is done. The BJP, which was then on the Opposition bench, had been vociferous about certain clauses pertaining to Social Impact Assessment. Those clauses were duly inserted and then the Act was passed.

Now once the NDA came to power, it made an attempt to make the Act more “industry-friendly.” How does one do that? Well, there were two main changes that the NDA wanted to make in order to hasten the process of acquiring the land. First, it sought to dilute the SIA compliance for projects such as industrial corridors, rural infrastructure, affordable housing and “infrastructure and social infrastructure” projects. This last category includes sectors ranging from urban public transport to hospitals. Second, it provided an exemption to the consent clause for the Section 10A projects, as listed above.

This, it was felt, would reduce the time required in terms of acquiring land, thereby helping the industry to reduce project costs. To quote a CII estimate, the time required for consent and rehab and resettlement could increase the project costs of a 1000 MW power plant from Rs.150 crores to Rs.450 crores.

What I was uncomfortable with was the fact that the NDA chose to take the Ordinance route in order to get this on track. When we are talking about land, the most politicized of all assets, the asset mostly closely associated with land grab and conflicts and farmers’ welfare programs, and there simply CANNOT be a case for promulgating an ordinance. This is one issue on which one wants full transparency. These amendments to the Act should have been passed after full discussion in the Parliament.

The Ordinance was passed and was renewed three times. There was a hope that the issues would get duly discussed in the Parliament in the monsoon session and the amendments would be passed; but what we’ve seen is a monsoon washout. There were two key discussions to be tabled in the monsoon session; the GST Bill and the Land Ordinance, both of which couldn’t be tabled.

In the meanwhile, the industry lobby is getting restive about policy reforms promised by Modi Sarkar. The external environment has become unstable and volatile, monsoons in India have been 12% deficient causing the agriculture growth rate to fall to only 1.6% in FY16, the IIP is showing sluggishness in industry and interest rate continues to be high despite low inflation. Tabling and passing the GST Bill will be a shot in the arm for industries wanting to see some action on the indirect tax front.

Surprising many, the PM declared on his radio show that the Land Ordinance would be allowed to lapse on 31st August 2015. He mentioned that the Ordinance was about getting a better deal for farmers, whose land was acquired, but it had backfired and had created an environment of mistrust within the farmers. He was hence allowing it to lapse. Interestingly, the tone in which he spoke was not accusing or bitter but reconciliatory and warm. Full points on delivery!

Well, what happens to industrial growth then, one may well wonder. We are back to square one. Project time will now escalate and so will project costs. How do you take care of that, PM? What we’re witnessing is a trade-off. Let’s get the GST rolling smoothly. Now that the land issue is null and void, it’ll be easier to get the Opposition back to the Parliament. The Opposition cannot really take too much of a stance against GST; it was their idea in the first place and is undeniably required for taking growth ahead. Once the GST Bill is passed, we can get back to the more sticky issue of land acquisition (I hope this time through a discussion route.)

He’s let the land ordinance go so that he can take the more required and infinitely more flashy GST reform ahead. If the NDA can get the GST Bill passed, no industry lobby will be able to claim that they have not done enough for growth. Sacrifice the knight for the rook.

After dinner, I challenged Lil One to one more game of chess. As we were lining up our pieces, he suddenly said, “Can you feel it in your heart when you’re going to win, Mom? I can. Dil se.” I had a sudden urge to tell him it’s not Dil ki baat. It’s Mann ki Baat.

 

 

 

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3 thoughts on “Econ mom talks Mann ki Baat on Land Ordinance and GST

  1. Hi ma’am,

    Wonderful article. How you inter link EconMom with eocnomics is so amazing!!

    Trade offs as we call it is a part and parcel of economics and more so in politics. I have 2 questions on your article:

    1. You have mentioned about the discussion in parliament about bills is needed and ordinance may not be the best way. Yes. But what if the opposition is so adamant and stalling the parliament for some scam made in wonderland, which no court has proven? What option does a government have in these situations where the opposition plays disruptive politics which disturb the whole nation?

    2. You had mentioned that inflation is low. Well, yes a lot of statistics say it. However, people say that food inflation has not come down to that expected level. Vegetable prices like onions still soar high.

    3. A larger question. Is the road ahead for Modi Sarkar a rough one, given the stalling of bills, external volatility? Even Dr. Rajan recently said that investments are still low and inflation forecasts are not very low either. What steps should the Modi Sarkar take to counter all this?

    Looking forward to hear your view on the above issues ma’am…

    Like

  2. Economy does not rule the world, though it may, but here we have our political heroes who rule it. However, I have a question in the same regard, when BJP was in opposition and UPA was doing acquisition at that time BJP opposing it, and demand pro-people reforms and fooling the class of the people then they won it means some where this class of people appreciated BJP. How going against own actions, blindly, can help its career in politics? Here, I can understand the situation of this political institute.
    But if my given statement is correct then what can be the problem? and who can be the problem?
    It is not about the solution, it is about the career?

    Like

  3. sorry manasi for catching up so late. still, while reading the article ,as a layman I was really wondering,as a policy makers and experts ,you people have to be aware of so many things,checking on every details.but still I think with such inputs even a regular reader can develop insight.thank you very much

    Liked by 1 person

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