Almost half of India’s 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 upper house of parliament 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” sitting he might devolve the issue to states.

“If they give up on this, it will be a huge setback for industrialization, and for planned urbanization,” 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 main opposition 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.

— Frank Jack Daniel is a Reuters correspondent based in New Delhi. Additional reporting for Reuters by Douglas Busvine and Aditya Kalra.

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The minority government sidestepped India’s unruly parliament and resorted to an executive order to implement the programme, hoping to take the credit for a vote-winning plan.

“The union cabinet has approved the food security ordinance unanimously,” Food Minister K.V. Thomas told reporters after the cabinet meeting. The measure would be sent to the president on Wednesday for his signature, he said.

Under the plan, the government will sell subsidized wheat and rice to 67 per cent of its 1.2 billion people.

India is home to a quarter of the world’s hungry poor, according to U.N. figures, despite being one of the world’s biggest food producers and experiencing years of rapid economic growth.

The decree expands an existing programme that provides cheap food to 218 million people and has high-profile backers including Nobel economics laureate Amartya Sen, but critics call it a waste of public money at a time when growth has been steadily slowing.

The expanded subsidy is a pet project of Congress party chief Sonia Gandhi, who led the party to victory in the last two elections on the back of populist programmes such as a rural jobs plan and a US$12.5 billion farmer loan waiver passed just before the 2009 general election.

The decision not to wait until parliament reopens in the next few weeks shows the government is in a rush to implement the latest scheme and may fuel the rumour mill in New Delhi about the possibility of the government calling a snap election.

Claiming the credit

By using an executive order, the Congress-led government hopes to claim sole credit for the scheme, analysts said. Prime Minister Manmohan Singh’s government has been dogged by a series of high-profile corruption scandals during its second term.

“Congress clearly thinks that it can draw political advantage and that is why they are doing it,” said political analyst Subhash Agrawal of the India Focus think tank.

Providing rice and wheat at a fraction of cost will strain government finances.

It estimates that its food subsidy bill will rise by 45 percent to $22 billion in the first full year of the scheme, and that it will have to buy about 30 percent of India’s grain output to cover the programme.

India is one of the world’s largest producers and consumers of grains. Bumper harvests in recent years mean silos are overflowing, with some stocks exposed to rot and rodents.

The expanded programme would need about 61 million tonnes of grain, an extra three million tonnes a year — still leaving plenty of rice and wheat for the open market and continuing exports.

The government sells food through a rationing system or through “fair price” shops where corruption is rife, with some ration shop owners selling grain earmarked for the poor into the open market at higher prices.

Experts say more than 40 per cent of food meant for the poor is siphoned off.

The World Food Programme says more than a third of Indian children under five are malnourished, and critics say the focus on rice and wheat rather than more nutritious foods does not properly address the problem.

Most political parties, including the opposition Bharatiya Janata Party (BJP) as well as allies of the government, support the bill in principle, but would prefer to hold parliamentary discussions to enable some changes to be made.

The government now needs to get the bill approved by parliament within six weeks of its resumption. The Monsoon session of parliament does not usually begin before late July. Dates for the session have not yet been announced.

— Anurag Kotoky and Frank Jack Daniel are Reuters correspondents in New Delhi. Additional reporting for Reuters by Nigam Prusty, Ratnajyoti Dutta and Manoj Kumar.

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