Indian cabinet eases rules on land acquisition

NEW DELHI: India's cabinet on Monday approved an executive order to make it easier to acquire land for the power generation, housing and defence industries, a move aimed at kickstarting stalled infrastructure projects.

The cabinet passed amendments to contentious land acquisition rules which analysts say have been holding up projects.

Finance Minister Arun Jaitley said land needed for five categories of projects -- including national security, low-cost housing and rural infrastructure -- would be exempted from general rules laid down for acquisitions.

He said the amendments aimed to achieve "a fair balance" between landowners' rights and streamlining the process of purchasing land for the five categories.

"If land is needed for these five activities, rules will be relaxed while higher compensation to farmers whose land is acquired will continue to apply," Jaitley told reporters, insisting that the interests of farmers were paramount for the government.

Under the present law, those seeking to acquire land must have the consent of 80 percent of the affected landowners and must compensate landholders up to four times the market price.

Business groups have complained the rules are skewed too heavily in favour of landowners.

The executive order must now be approved by the next parliamentary session which starts in February.

Restrictions on buying land, under a law championed by the previous Congress government, have been cited as barriers delaying infrastructure projects worth almost $300 billion nationwide.

The new government, led by Prime Minister Narendra Modi, has been seeking to step up the pace of reforms to revive the stuttering economy.

It has used executive orders to pass reforms due to a lack of a majority in the upper house of parliament or Rajya Sabha.

Last week, it passed two orders to raise foreign investment in the funds-starved insurance sector and allow commercial mining of coal, bypassing lawmakers.