PM Modi battles opposition to key land reform

By Frank Jack Daniel

NEW DELHI (Reuters) - Opposition parties boycotted Prime Minister Narendra Modi's latest attempt to build consensus around a business-friendly land bill on Wednesday, boding badly for his ambitious agenda of economic reform in a parliament session that starts next week.

Almost half of the 31 chief ministers spurned Modi's invitation to meet him in New Delhi to discuss the proposal to make it easier to buy farmland for development. The meeting ended earlier than expected.

Modi has made the reform a central plank of his economic agenda, and told the meeting that a lack of land for roads, housing and industry was crimping economic growth. But the opposition says the bill is anti-farmer and has blocked it in the Rajya Sabha for months.

In his first year in office, Modi has made life easier for Indian businesses by cutting red tape, but opposition protests have slowed his efforts at structural economic reforms he says are needed to make India a leading global economy.

Addressing the media after Wednesday's meeting, Finance Minister Arun Jaitley said the message from the states present was to quickly find a solution to the impasse.

"Either the centre must build a coalition and pass the land bill quickly, or give the flexibility to the states to pass their own laws," he said.

Modi has spent significant political capital trying to push the land law through parliament, and Jaitley's comments raised the possibility that if he is unsuccessful again in the coming Monsoon session he might devolve the issue to states.

"If they give up on this, it will be a huge setback for industrialisation, and for planned urbanisation," said Mohan Guruswamy, president of Centre for Policy Alternatives, a think tank.

In the session due to begin on July 21, the government also plans to pass the biggest tax overhaul since independence, and may introduce labour bills aimed at job creation.

But the Congress party has other ideas, and wants the prime minister to address parliament about what it says is corruption and influence trafficking by senior members of his party and government, before any debates on legislation.

"We are not going to allow this government to ignore the critical issue of corruption, it all depends on what the prime minister says (in parliament)" said Congress spokesman Sanjay Jha.

(Additional reporting by Douglas Busvine and Aditya Kalra; Editing by Jeremy Laurence)