PM Modi walks with his cabinet colleagues on the opening day of winter Session of Parliament (Associated Press)
The government has decided to postpone a reform seen as essential for developing much-needed infrastructure. A proposal to change land acquisition laws will not be introduced in the month-long parliament session that began on Monday, said sources. Instead, the government would like to shore up the opposition's support to liberalise the insurance industry, a long-delayed reform expected to help improve investor confidence.
Restrictions to buying land, strengthened under the last Congress government, are among the biggest barriers to new projects worth billions of dollars in roads, railways, ports and power installations.
The government is in a minority in the Rajya Sabha or Upper House. Without opposition support, it cannot pass important legislation there. For this session, it has decided to prioritize a bill that lifts the cap on foreign investment in insurance and pension ventures from 26 percent to 49 percent.
A total of 189 projects, including $10 billion in highways, are stalled because of difficulties with land acquisition, environment clearances and red tape, says the Transport Ministry headed by Nitin Gadkari.
The land purchase law enacted by the last government - and supported by the BJP while it was the opposition - sets compensation to landholders at four times the market price and requires the approval of 80 percent of landowners for any deal.
A land acquisition law passed by the last government and supported by the BJP while in opposition dramatically increased compensation to farmers for land. Stringent rules requiring consensus among sellers have made it difficult for industry to buy land.
The government wants to make it a much faster process. Finance Minister Arun Jaitley has said he supports the higher compensation but wants to loosen other barriers to land purchases.
The government wants parliament to remove a requirement to get landholders' consent in the case of public-private partnership projects, or at least bring the threshold down to 50 percent of affected landowners.