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FM bats for Land Bill, calls it key to India’s progress

Post BJP taking the ordinance route to bring about changes in the Land Bill, the leading opposition have cried foul calling it an arm-twisting tactic to grab land of the poor in the name of industrialization.

Speaking during a book release function of industrialist Suhel Seth, Finance minister Arun Jaitley refused to call the Land Bill as the Nuclear Bill moment of the NDA. A few years back, then UPA PM Manmohan Singh got the Nuclear Bill passed despite opposition. “The comparison between the UPA’s nuclear deal and Land Bill is not correct, says the FM. There are 300 million people who are landless and the Land Bill is going to determine India’s progress. Preventing infra corridors in rural areas would prevent creation of jobs in those areas,” he said.

In his defense, the finance minister said chief ministers of every state were on the same page wanting amendment to the law. “We went into the exercise of bulding consensus.”

Below is the verbatim transcript of Arun Jaitley and Suhel Seth’s interview with CNBC-TV18’s Shereen Bhan.

Q: We shy away from holding corporate India accountable for strategic misadventures and we have got plenty of examples?

Seth: I completely agree. In fact the context in which I wrote those lines about failure was that America is far more forgiving on failure because they believe in moving on. Here the stigmatisation which is associated with failure endures, it lingers, a recent case in point is Vijay Mallya. So, all his businesses will now be indexed to how he manages one airline which then obviously crash landed, but the reality is that there were brands that the man built which have now kind of been obliterated, whether it is right or wrong is another matter, A.

B, Indian society is very unforgiving qua failure. How many parents have you heard who actually go out in the society and say, my son has just failed his exam or my son couldn’t get this job or my son has lost out on this or he is still unmarried or something like that. Unmarried is just in a matter of speaking. So, there are these issues about corporate India.

Q: I don’t want to get down to specific examples but do you believe that in India we have sort of shied away from holding corporate CEOs responsible and accountable. You do that with the government, you will have reams of paper and the press going after the government, but we don’t to do that when it comes to corporate India. There is this sort of glorification of failure even when it comes to corporate India and you seem to be sort of talking about that in the book as well?

Seth: You have made a very important point. I generally believe that the accountability of CEOs in India to shareholders is far less than it is in other developed economies and the finance minister is absolutely right, but Mr Jaitley says when you need the government then you cling on to the government. Often CEOs or industry turns towards government for hand me downs or saving them but these are the reality, so that needs to change. The fact that you have got a Black Money Bill which has now come in or is going to take effect, the fact that you have got a government that is cracking the whip on what I would call illegal, unethical behaviour are good signs, we have got to become more accountable.

You cannot have CEOs not going to jail whereas ministers or parliamentarians or whoever spending long years in jail and I am a great believer if you have made a mistake and if that mistake is willful and intentional you need to be punished. You either need to be punished by being dismissed from the role that you occupy or you need to be punished in a more punitive manner, either economically or by being sent to jail.  

Q: You wanted to come in on that?

Jaitley: Government’s are always accountable, politicians as a class are accountable. In fact we are accountable everyday to the media, we are accountable to parliament, we are accountable to the voters; we can be kicked out of power. Corporate India is also accountable because if they fail then they exit the market. There is no place for failure. These are among the more accountable institutions. The least accountable institutions are first the media, and a very close second are the judges.

Q: I was quite certain that I would get that pecking order but let me continue with that conversation because I don’t want to make this a ‘Tu Tu Main Main’ between the media and the government but let me get back to Suhel’s book and in the book he says the one quality most great CEOs possess is the ability to insulate and isolate. They insulate themselves from a skeptical world that often comes in the way of their grand plan and they isolate themselves from the chatter of a world that perhaps doesn’t know as much they do. I would imagine it applies to politicians and leaders in the government as well. Let me ask you this in the context of what is currently happening as far as the Land Bill is concerned. Your own allies oppose your version of the land ordinance, the opposition is united in opposing the land ordinance in its current avatar, in the rarest of rare cases we have actually seen parliament being prorogue and you have made this a decision of your government to prorogue this Budget session of parliament so that you can re-promulgate the land ordinance. Is this in that sense if I could call it your nuclear moment? Manmohan Singh was willing to giveaway political capital, give away his position of power at that point in time for the Nuclear Bill, the UPA was willing to do that for Multi-brand Retail Policy. Is the land ordinance your nuclear moment if I could call it that?

Jaitley: That is a comparison which may not be exactly be correct.

Q: Just in terms of numbers, you don’t have the problem that they do.

Jaitley: The nuclear deal was just a one-off policy. The Land Bill is going to determine a very large part of the progress India makes in particularly certain areas and I am not going to start with industry.

For instance in the 2013 Bill, I have repeatedly said this that it is a Bill which is hostile to the interest of rural India. There are 300 million people in rural India who are landless. Dr. Ambedkar used to say that their best guarantee is going to be as far as the dalits are concerned, that you have industrialisation in that region. So, you prevent industrial corridors coming up in rural areas, there is going to be no jobs for these 300 million people.

Secondly, rural infrastructure — our farmer today if you have seen the plight of the farmer in the month of March particularly when you had unseasonal rains, you had drought last year, you need irrigation facilities. The 2013 law says no land for irrigation, no land for rural roads, no land rural electrification and therefore if you are going to change the face of that part of India — the industrialists sitting here if they need land for industry you will probably buy agricultural land and try and get it converted. For those who run the large real estate companies will buy agricultural land, start building major townships. They can take care of themselves but it is this area where you need rural infrastructure, where you need irrigation, where you need industrialisation in those rural areas for which you need land and therefore it is an important moment for India.

Now I don’t think it is in that sense as far as the government is concerned both in terms of a majority in the lower house, a majority in both houses taken together, we have a comfortable figure and therefore we are just going about straightaway the constitutional way when there is a conflict over a particular law how is that law to be passed? And we firmly believe that it is a law which is going to help India and therefore those changes are required as far as the Land Acquisition Bill is concerned.

Q: I don’t want to get into the merits of each of the clauses that the ordinance has put forward. I think it was Anand Mahindra and Sunil Mittal both in their stories in your book Suhel have spoken about taking people along. You were talking about the process and in terms of the process because your government also believes now in fostering and nurturing a federal structure, would it not have been correct then to get state chief ministers onboard now that there is significant opposition to your version of the ordinance to have a conversation on what would be acceptable to them and then let state governments decide. I know on some clauses like the social impact assessment you have said that states can decide. However, shouldn’t the process have been more consultative?

Jaitley: On two counts you are probably not well informed. A, before we embarked upon this exercise we called every state government and every state government unanimously said we want a change to the 2013 law. Chief Ministers of Congress and UPA governments – Maharashtra, for example, wrote letters to the Centre to amend this law. Chief Minister of Haryana – then UPA, refused to accept the central law – the four time compensation and offered much less. So, we went through the exercise of building consensus, unanimously the Chief Ministers said so.

Notwithstanding that we have put a provision that it is for the state government to decide whether to notify these parts or not. So, we leave it to the state government. So, if Bihar chief minister says I don’t need land for irrigation in my state so be it but he can’t stop Maharashtra. So, real federalism is completely the opposite of what you think it is and which is that one state can’t prevent another from enacting a law. India is not merely cooperative federalism, India is also competitive federalism. A state which doesn’t want to move further can’t prevent a more progressive state from moving further. 

Q: Anand Mahindra in one of his book as success mantras for success says “If you want to lead a large, complex and multi-business organization, you have to know when and how to let go, and empower others. Empowerment is the algebraic outcome of curiosity and humility.” How good are Indian CEOs, Indian promoters at giving up control?

Seth: Slowly they are. They are giving up management control for sure. In our stories of CEOs or owners or promoters actually hiring professionals to run their companies, Anand talks about it, look at Anand’s structure. It is completely a federal structure. He is for all practical purposes the executive chairman but he has CEOs running those business. And Rakesh is here, Mr KP Singh is here. They all have their CEOs running their businesses.

So I don’t think we are still in that time warp where the promoter wants to call the shots. Yes, there is more accountability in this relationship now which wasn’t there earlier and this whole thing about family retainers being elevated to positions of CEO just because the owner trusts them that period is also over. So we are seeing that significant change.

Having said that, many professional mangers in this country have also stuck on to their jobs without shareholder accountability. They continue to remain much like every season’s Christmas tree.

Q: Let us talk about this in the context of government. How hard is it to empower, how hard is it to let go. The criticism of the previous government was that there was no centralisation, everyone was doing their own thing. The criticism of your government is that there is too much centralisation and there is one power centre that is driving everything?

Jaitley: The previous government had a lot of centralisation but outside the government.

Q: So you accept that there is power centre that is dictating what every ministry and what every minister ought to do?

Jaitley: In any parliamentary democracy a Prime Minister is the natural leader of the government. A Cabinet functions around the Prime Minister. Ministers hold office at the pleasure of the Prime Minister, he has to have confidence in them. And therefore to have a strong political leader as a Prime Minister is a strength of democracy, it is not a weakness. In fact the weakness of democracy is that you have a Prime Minister who is like a CEO, but the board of directors sit outside the government. Now that kind of system we have experimented for ten years and it didn’t work.

Q: But what are the perils of too much centralisation?

Jaitley: No, too much centralisation was 1975 where you almost had a Cabinet system because of presidential system or a monarchic system. That is not the system that you have today.

Q: Sunil Mittal as one his mantra says, you need to get the right people at the right stage of organisational evolution. If I could ask you this in the context of government and how government functions, the council of ministers cannot be a meritocracy because of political compulsions, I don’t think anybody lives under the illusion of that but is there no space for deep specialist to actually work with the government? The hope was that the Niti Aayog would fulfill that responsibility or that role. I am not commenting on who is in the Niti Aayog or not but my question is, is there no space for specialists to work with the government specially in this phase of execution where we need to look at what happens to education 10-20 years down the line, what happens to skills 20 years down the line, you need an out of the box approach, you need a new way of thinking and that doesn’t seem to be the case even as far as your government is concerned.

Jaitley: You need specialists, you can have specialists from within the civil service, you can have specialists in bodies like the Niti Aayog, you can have it in other advisory bodies, people who advise government but then as far as the Cabinet is concerned you have to have elected people. Therefore in the name of specialists the unelected really cannot run a system, unelected can only advise the government, they can guide the government. Every government has its own kind of people – friends, admirers, advisors, insiders, outsiders who are all around the government.

Q: Can there not be an institutional mechanism as opposed to friends and advisors?

Jaitley: That is not the system that you have in India where you can have an unelected person as a part of the government. A government must necessarily have an elected person.

Q: If I can quote to you the outgoing CEO of Vodafone who recently did an interview with me and he said very often the Indian government makes policies that are not in the best interest of the sector or even in the best interest of the country and that seems to be a problem that we are faced with sector after sector. It is in that context that I asked you my question.

Jaitley: I think that is an extreme statement because irrespective of the government in power, governments can go wrong but consciously no government would act in what in its own wisdom is something not in the interest of the country. Government can go wrong, companies go wrong. Therefore, I don’t think this whole trial system of a particular decision, exploring new fields can really be considered as governments deciding wrongly on a deliberate basis itself. After all, within the government there is a settled system where a lot of consultations take place, there is a lot of accountability that the governments have, there is a lot of discussion in the parliament, outside the parliament, in the media that takes place which finally culminates into a decision.

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