India cabinet eases land acquisition rules

India farmer Image copyright AP
Image caption Critics say the new land acquisition rules will disadvantage farmers and the rural poor

The Indian cabinet has passed an emergency executive order to greatly ease rules for acquiring land for infrastructure projects.

Authorities say the move will kickstart hundreds of billions of dollars in stalled projects across the country.

Critics say the new rules will be unfair to farmers and the rural poor.

Industrialists had raised concerns over a law approved by the last Congress government in January which made it tough to acquire land from farmers.

At present, the companies have to obtain the consent of 80% of people living on the land before acquiring it and landowners have to be paid up to four times the market value for land in rural areas and two times the market value in urban areas.

Several states had asked Prime Minister Narendra Modi to amend the law saying it was making projects unviable.

In July last year, the world's largest steel company, ArcelorMittal, and South Korean firm Posco separately abandoned plans to build steel plants in India because of problems acquiring land.

On Monday, Finance Minister Arun Jaitley said although the compensation package would remain as before, the "consent clause" would be waived in five categories, including for defence, national security, low-cost housing and rural infrastructure projects.

"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," Mr Jaitley said.

The executive order, called ordinance, must now be approved by the parliament within six months.

Prime Minister Modi has promised to step up the pace of reforms to revive India's slowing economy and in the last few days has used executive orders to pass reforms since it lacks a majority in the upper house of parliament.

Last week, the cabinet passed two orders to raise foreign investment in the insurance sector and allow commercial mining of coal.

Opposition parties have criticised the ordinances saying they undermine the parliamentary system in a democracy.

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