Government's decision to allow the Land Acquisition Ordinance to lapse and return to the previous Act is a "setback to economic reforms", industry body Assocham said on Sunday.
Assocham said this would also make acquisition of land for crucial industrialisation a "herculean task".
"We hope the initiative should now rest with the state governments. We expect some of the progressive states would come forward with their own laws, since land is a state subject," Assocham Secretary General D S Rawat said.
"If, accompanied with labour reforms, land reforms should help these states attract greater industrial investment", he added.
Giving up the ordinance route, government had issued an order to include 13 central Acts like National Highway and Railways Acts to extend benefits to those whose land is acquired under land law.
The order issued by the government under the removal of difficulties clause (Section 113) in the Land Act now extends the provisions relating to the determination of compensation, rehabilitation and resettlement to all cases of land acquisition under 13 central acts which were left out in the 2013 law.
By using the clause, government has done away with the need to issue the controversial land ordinance for a record fourth time. The ordinance will lapse on August 31, six weeks after the commencement of the Monsoon Session on July 21.