Jaitley: “I’m in the last stages of my discussion with the states on the eve of parliament session”

Agencies/New Delhi

India will push ahead with tough land acquisition and tax reforms aimed at boosting investment and kickstarting the economy, Finance Minister Arun Jaitley said yesterday.

He added that changes were needed to existing legislation to speed up the process of buying land for industrial use, a contentious issue in India which has long delayed projects.

“Some changes may be necessary (to the Land Acquisition Act),” Jaitley said at an economic forum in New Delhi.

“We will first try to reach a consensus and if that is not possible we will go ahead and take the decision,” he said.

Although the new Bharatiya Janata Party government has introduced smaller initiatives since taking power in May, critics say it has lacked the boldness needed to eliminate regulatory hurdles to doing business as it seeks to attract crucial investment.

The comments came as Prime Minister Narendra Modi expanded his government yesterday, appointing 21 new ministers, in a bid to step up the pace of promised economic reforms.

Jaitley, who suffers from ill health, is expected to lose the defence portfolio, allowing him to concentrate on the tougher reforms.

The Indian economy expanded last year by a near-decade low of 4.7% - half the scorching pace seen during the country’s boom a few years back.

Land acquisition is a politically charged issue, which has delayed many projects, sometimes for years, including construction of a $12bn plant by South Korean steel giant Posco in eastern India.

The law, passed last year by the previous Congress government, seeks to compensate farmers and tribals who sell their land for industrial projects, but business claims it has made the task more difficult.

Any changes will have to go through parliament where the ruling BJP lacks a majority in the Rajya Sabha, the upper house, and must rely on support from allies. Many states have criticised the new Land Acquisition Act, saying it has hurt the process of acquiring land for infrastructure projects.

The finance minister in his maiden budget proposed allocation of Rs70bn during this financial year for developing 100 smart cities in the country.

Earlier in the week, Jaitley said the government is considering changes to some “illogical provisions” of the new law.

“There are some illogical provisions like land cannot be used or acquired under this law for private educational institutions, private hospitals and hotels. There are some factors in it, which certainly require a relook,” Jaitley had said.

“By this, a new capital of Andhra Pradesh, or the 100 smart cities proposed cannot have private universities and schools, private hospitals or hotels,” he had said.

In another move likely to boost business sentiment, Jaitley said talks with stakeholders on a long-awaited national goods and services tax (GST) to ramp up inter-state commerce were in advanced stages.

A single tax regime, which would scrap the multiple levies paid by companies at state and federal level, would also require legislation passed through parliament.

“I’m in the last stages of my discussion with the states on the eve of parliament session, before introducing the amendments to the GST law in parliament,” Jaitley said.

Seeking support from opposition parties in passing the key legislation, Jaitley said they should realise that the “merits of some of these actions have positive attitude towards them.”