New Delhi: Political parties failed on Thursday to agree on how to compensate farmers for land acquired for infrastructure and industrial projects, dashing market hopes of a breakthrough.
The government wants parliament to pass a bill aimed at speeding up dozens of major projects throttled by India's notoriously slow land acquisition process, at a time when the economy is in sharp slowdown.
The land acquisition bill proposes to overturn land ownership laws that date back to the 19th century and is seen as a potential vote winner for the ruling Congress party, which faces a general election in just over a year's time. The cabinet approved the bill in December, but it still faces opposition in parliament and has already undergone about 160 amendments.
Shares in real estate firms had risen up to 11 per cent in the run-up to Thursday's all-party meeting, a rise that several traders attributed to market hopes of a consensus.
Businesses fret that the bill will raise project costs. The law could oblige them to pay up to four times the market price for land in rural areas and twice the market price in urban areas, and give displaced people homes and jobs.
It also requires four-fifths of all the landholders to agree to the sale to a company before any land can be acquired.
"The meeting is inconclusive," said Parliamentary Affairs Minister Kamal Nath after the meeting. "This is an important piece of legislation. We are trying to evolve as much consensus as possible, if not unanimity."
The government wants parliament to approve the bill during the current session, which ends on May 10, 2013. However, the Trinamool Congress (TMC), a powerful regional party, opposes the bill on grounds that the government should not get involved in land acquisition at all.
Communist parties want the bill sent to a parliamentary standing committee for further consultation, given the large number of amendments.
In theory, Prime Minister Manmohan Singh's government does not need cross-party consensus to push the bill through. But it has typically tried to find as much agreement as possible for politically sensitive legislation.
Investors say that while the bill is likely to raise project costs, it will also bring policy clarity to the process of land acquisition.
Market watchers say the bill, once passed, will likely boost the share price of companies like DLFLtd, India's largest real estate developer, Sobha, Unitech and Prestige, which own large tracts of land.