NEW DELHI: State governments have joined the chorus against the new land acquisition law, saying its provisions will adversely impact infrastructure projects and the overall investment climate in the country.

In a four-hour pre-budget consultation with Union finance minister Arun Jaitley on Monday, representatives of state governments raised the issue while seeking additional allocation for the infrastructure sector, rationalisation of taxes, restructuring of state electricity boards’ debt and steps to tame inflation.
The state governments expressed concerns over certain provisions of the new land acquisition law and environment law and their impact on completion of critical infrastructure.

The new government’s key initiatives such as the plan to clean the Ganga and develop waterways also interested the state finance ministers, who raised several queries in this regard at the meeting.

Jaitley said the Centre and states would have to manage the affairs of the economy together as a “team”. He also asked states to be fiscally prudent.

The finance minister emphasised the need for state governments to address supply-side bottlenecks to manage inflation and made a case for putting in place strict measures and special courts to stop hoarding and black marketeering.

“The need for a single agriculture market and real-time information dissemination on prices to farmers and consumers are areas which need to be addressed…. I urge you to address the areas of agriculture extension, public investment in agriculture including irrigation and agriculture marketing, which fall under your purview,” Jaitley said.

The ministers said long inflationary trends had adversely impacted the food and nutritional security of the common man and pointed out that reforming public distribution system was high on the government’s agenda. “We are committed to breaking this vicious cycle of high inflation and high interest rates,” Jaitley said, adding that the slowdown in economic growth coupled with high inflationary pressure posed a challenge to the country’s economy that grew at sub-5% pace over the past two years.

The minister asserted the need for “rounding off corners” towards implementation of the goods and services tax. State FMs, on their part, sought expeditious release of compensation for central sales tax rate reduction.