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Wednesday, 31 December 2014 00:00 - - {{hitsCtrl.values.hits}}
Restrictions on buying land, under a law championed by the last Congress government, are among barriers holding up projects worth almost $300 billion. Several states had asked Prime Minister Narendra Modi to overhaul the law enacted in January.
Finance Minister Arun Jaitley said projects in defence, rural electrification, rural housing and industrial corridors would not need to seek the consent of 80 percent of the affected landowners as mandated.
They will also be exempt from holding a social impact study involving public hearings - procedures that industry executives say can drag out the acquisition process for years. Compensation to landholders, however, will stay at four times the market price.
An ordinance is an emergency measure that has to be passed by the next parliamentary session. Modi has already resorted to using it three times in his six months in office due to a lack of majority in the upper house of parliament.
After the last parliament session ended in a legislative logjam on 23 December, Modi passed two orders to let foreign firms raise their stakes in insurance ventures and allow commercial mining of coal.
Parliament, which reconvenes in February, did not ratify the November ordinance on coal, forcing Modi to pass another ordinance to let the government auction coal mines and allow private companies to mine and sell the fuel.
“Governments must act with determination. The government must have the desire to implement its decisions,” said Jaitley, a key lieutenant to Modi, responding to opposition parties’ criticism that such ordinances undermine the parliamentary system in a democracy.
Modi is also considering changes to the Mines and Minerals Development and Regulation Act to auction minerals like iron ore and bauxite. But the government has yet to take a decision on an ordinance for it, Jaitley said.
Analysts reckon reform through ordinances has its risks.
“While ordinances can be reissued once they lapse, they may not be perceived as a stable solution by investors wanting secure property rights,” HSBC Securities analysts wrote in a note. “We, however, believe it is an important step to signal the government is serious on reforms.”
India finance minister denies pressuring central bank to cut ratesMUMBAI/NEW DELHI (Reuters): India’s finance minister denied on Tuesday that he was pressuring the Central Bank into cutting interest rates, after his comment that the high cost of capital was stifling investment sent markets into a tizzy. Arun Jaitley, in a speech in Delhi on Monday, said “costly capital” was one of the factors impacting manufacturers. Analysts said his remarks were the most public attempt yet by the government to press the Reserve Bank of India governor into easing rates. But Jaitley denied on Tuesday that his remarks were intended to pressure Raghuram Rajan, and had instead been meant to discuss the challenges facing the manufacturing sector. “The fact is that there was not a single sentence reference (not even a word) in my entire speech to either the Reserve Bank or its Governor,” Jaitley said in a Facebook posting. “One of the many points that I made was that the cost of capital has to be cut down. Any one speaking on the subject of ‘Make in India’ into a manufacturing hub would necessarily suggest this.” Traders said Jaitley’s comments on Monday had reinforced expectations that the Government is keen for the RBI to lower borrowing costs rates in order to help economic growth. The finance minister said on Monday that when “credit offtake is slow, the infrastructure creation becomes slower, manufacturers find it difficult to afford costly capital”. Benchmark 10-year bond yields fell 4 basis points to 7.89 percent on Tuesday, not far from a near 1-1/2 year low of 7.82% in mid-December. |
