Indian Prime Minister Narendra Modi on Sunday announced he was ditching an executive order aimed at making it easier for business to buy land, in a major setback for his reformist government.
Modi said he would let the ordinance lapse on Monday, following large-scale farmer protests led by a resurgent opposition to the reform, which he pledged soon after forming government last year.
In his monthly radio address to the rural heartland, the premier lashed out at what he described as the spreading of false rumours that made farmers oppose the reform.
"We had brought in an ordinance on land acquisition which is lapsing on August 31, and I have decided to let it lapse," he said.
Modi won a landslide election victory last May on a pledge to reform and revive Asia's third largest economy, but some of his biggest initiatives have hit roadblocks.
His right-wing government has struggled to pass the land and other key bills in parliament where his Bharitya Janata Party (BJP) lacks a majority in the upper house.
The government has had to issue temporary executive orders three times since announcing the land bill in December after failing to push it through the chamber to make it permanent.
Party leaders have hinted in recent weeks that the ordinance would be dropped, but it is the first time Modi has publically conceded defeat on the issue.
Modi said he will amend the bill to favour farmers so that they do not face financial losses.
"We will accept any suggestion in the interest of farmers," he said.
The reform is aimed at speeding up land acquisition for billions of dollars worth of stalled infrastructure and other development projects to boost the economy.
But the main opposition Congress party says the bill hurts India's 300 million farmers and agricultural labourers.
Protests by farmers have drawn tens of thousands of people and served as a rallying point for anger among the rural poor towards the Modi-led government.
The proposed bill exempts projects related to defence, rural housing and power, along with industrial corridors, from the requirement that 80 percent of affected landowners must agree to a sale.