By Nigam Prusty
NEW DELHI, March 7 (Reuters) - Indian political parties
failed on Thursday to agree on how to compensate farmers for
land acquired for infrastructure and industrial projects,
dashing market hopes of a breakthrough.
The government wants parliament to pass a bill aimed at
speeding up dozens of major projects throttled by India's
notoriously slow land acquisition process, at a time when the
economy is in sharp slowdown.
The land acquisition bill proposes to overturn land
ownership laws that date back to the 19th century and is seen as
a potential vote winner for the ruling Congress party, which
faces a general election in just over a year's time. The cabinet
approved the bill in December, but it still faces opposition in
parliament and has already undergone about 160 amendments.
Shares in real estate firms had risen up to 11 percent in
the run-up to Thursday's all-party meeting, a rise that several
traders attributed to market hopes of a consensus.
Businesses fret that the bill will raise project costs. The
law could oblige them to pay up to four times the market price
for land in rural areas and twice the market price in urban
areas, and give displaced people homes and jobs.
It also requires four-fifths of all the landholders to agree
to the sale to a company before any land can be acquired.
"The meeting is inconclusive," said Parliamentary Affairs
Minister Kamal Nath after the meeting. "This is an important
piece of legislation. We are trying to evolve as much consensus
as possible, if not unanimity."
The government wants parliament to approve the bill during
the current session, which ends on May 10. However, the
Trinamool Congress (TMC), a powerful regional party, opposes the
bill on grounds that the government should not get involved in
land acquisition at all.
Communist parties want the bill sent to a parliamentary
standing committee for further consultation, given the large
number of amendments.
In theory, Prime Minister Manmohan Singh's government does
not need cross-party consensus to push the bill through. But it
has typically tried to find as much agreement as possible for
politically sensitive legislation.
Investors say that while the bill is likely to raise project
costs, it will also bring policy clarity to the process of land
Market watchers say the bill, once passed, will likely boost
the share price of companies like DLF Ltd, India's
largest real estate developer, Sobha, Unitech and
Prestige, which own large tracts of land.
(Reporting by Nigam Prusty, Aditi Shah and Abhishek Vishnoi;
writing by Matthias Williams; Editing by Ron Popeski)