In many ways this is momentous decision, an admission of defeat worse than the beating the Bharatiya Janata Party took in February's Delhi assembly elections.
Today the Modi government, the first to feature an absolute majority in the Lok Sabha in more than the three decades, may seem completely on the back foot: The last Parliament session was a washout over demands for one of its top ministers to resign, the Goods and Services Tax Bill is stuck in limbo, its victory in Bihar is by no means assured and a fresh agitation by the Patel community in Gujarat could be sign of further trouble to come.
But the trouble for Modi all began with the Land Bill.
Relatively minor issues managed to give the Bharatiya Janata Party its first experience of legislative logjam in the Winter Session last December. The Monsoon session before that had gone off swimmingly, and the Centre assumed its massive victory and the political capital earned by Modi was sufficient enough to cover for a legislative agenda that could be seen as business-friendly at the cost of the farmers.
From the beginning, Modi has sought to turn around the image of India's investment climate: asserting that there is no more corruption, encouraging others to come Make in India, insisting that red tape would be replaced by a "red carpet", visiting the world's biggest economies and courting their investors.
Modi's Ordinance Raj at the end of the Winter session was the same. The government wanted to send a message – to the Opposition, to the people of India and to the world's investors – that Modi would not let anyone stand in the way of his development efforts. Hence, the laws that could not be passed in Parliament were instead passed through executive orders.
This included a hastily drafted ordinance amending the Land Acquisition Act passed in 2013 by the United Progressive Alliance, which had been singled out by industry observers, chief ministers and even those within the Congress, as being an obstacle on the path towards development. The ordinance got rid of restrictions, like consent and social impact assessments, for certain kinds of acquisition. And it was immediately sold as a sign that India was open for business.
Unfortunately, it was only sold to industry, with the presumption being that Modi's popularity and goodwill would bring the farmers on board. That, however, didn't even extend to the BJP's own farmer constituency: Three organisations affiliated to the Rashtriya Swayamsevak Sangh, the BJP's parent body, registered opposition to the ordinance, a sign of the resistance that was to come from the Opposition at large.
The trouble with the ordinance was immediately apparent, even if the vehemence of the opposition to it might not have been foreseen. The UPA in 2013 had passed a large, unwieldy legislation that few states were actually using. But it had come after several years of consultation, not only because the Congress was itself a divided house but also because, after the violence opposition by farmers to industrial projects in the West Bengal areas of Singur and Nandigram, it was apparent that this was a highly inflammatory issue that wouldn't be easy to resolve.
Take in India
The National Democratic Alliance, however, took the wham-bam approach, hurrying in a Bill, turning it into law through an Ordinance and then, post fact, insisting that it was willing to listen to concerns from farmers. The local constituents would be handled later, the idea went, but the business-friendly image needed to be established right away. That's not a bad assessment to make, but it ended up being a colossal mistake.
Today, eight months hence, the NDA has reverted to the UPA's Land Acqisition law. This means businesses and states are as unhappy as they were at the start of the process. In the interim though, Modi expended his political capital insisting he would bring in the new law while being unable to do so, lost the Delhi elections, gave the Congress an easy issue with an obvious narrative to build on Modi's (pro-corporate leanings), angered farmers, wasted legislative time in a manner that would end up affecting other laws like the Goods and Services Tax Bill and delayed difficult decision to the extent that makes all difficult policy even trickier now, with Bihar and other elections looming.
Modi thought he had the farmers and the "people of India" on board, and he could rush headlong into bringing Acche Din with just by courting business. This was an error, one that in his "Mann Ki Baat" on Sunday, the prime minister effectively admitted.
"For me, in the country, everyone's voice is important," Modi said, "but the voice of the farmer is the most important." Maybe if Modi had actually believed that eight months ago, things might have turned out differently.
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