Protests Delay Indian Projects

Official support for a recent protest along the Utter Pradesh highway project near Delhi has left some foreign industry leaders doubting the wisdom of investing in infrastructure and industrial projects in India, the Wall Street Journal reported.

"Land has suddenly become very emotional, so for the government, this is a time of appeasement, not for moving on growth," Deepak Parekh, an adviser to the government on economic policy and chairman of HDFC Group, India's flagship financial conglomerate, told the newspaper.

Other infrastructure and industrial projects in India have also been delayed or halted. Steel projects worth more than $80 billion have been delayed because of problems with land acquisition and environmental clearances, the Indian steel ministry reports. For instance, a US$12 billion steel facility in the eastern state of Orissa, planned five years ago by South Korean company Posco, has still not broken ground due to local opposition over land prices.

After Vedanta Resources expanded a US$5.4 billion alumina plant, the Indian environmental ministry last month blocked the U.K. mining company from mining bauxite in the Niyamgiri Hills in the state of Orissa due to its failure to obtain approval from an 8,000-member indigenous tribe.

The controversial Yamuna Expressway, site of the Utter Pradesh protests, is a 103-mile highway under construction between Delhi and the Taj Mahal. The government brokered a series of land acquisition deals for the project, offering widely varying prices for acreage along the route. This has led to violent protests and the current impasse, the newspaper said.

Instead of the 12 miles of daily roadway construction promised, an average of only five miles were laid during 2009 and the same rate is expected for this year, according to highway officials.

Under legislation drafted in 2007, the government can buy land for infrastructure projects such as roads but must leave land acquisition for industrial projects like steel mills to the private sector. Indian officials have said they will introduce legislation to reinstate the government's role in the development of industrial projects and to address the land-related concerns of tribal peoples.

However, the future of Indian development is uncertain under the current administration. "Definitely, India's development policy will be at a crossroads," N.R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy in New Delhi, told the Wall Street Journal.