"We are withdrawing State Lands Special Provisions bill," leader of the house Lakshman Kiriella told parliament Tuesday.
"Our intention was to give freehold deeds to 2.5 million persons. But the opposition went to court and blocked it.
"With a free hold deed, they can get a loan, divide the land or sell it. When we tried to do it they opposed."
Freehold developed in Western Europe, particularly in England with the breakdown of feudal rule, when all lands were owned by the king.
Freehold rapidly pushed up agricultural productivity and was a key reason that helped Europe grow faster and its people to get richer than Asia, economic analysts say.
In Sri Lanka land rights of ordinary people started to develop during Dutch rule (accommodesans) and freehold started to spread after British colonial came, partly helped by the abolition of serfdom (Wedawasam or service tenure) by British liberals, analysts say.
Japan, which did not come under Western colonial occupation, created true freehold by law during the Meiji Restoration, after breaking the feudal Tokugawa Shogunate, starting taxation of agriculture.
Agriculture productivity soared with freehold and the Meiji rulers used the tax money as well as borrowings to kindle industries and mining. But the SOEs soon ran into losses and the government was in a fiscal and monetary crisis, partly due to printing money to put down the Seinan (Satsuma) Uprising in 1877.
Mitsubishi, Mitsui and other large Zaibatsu, grew as a result of the mass-privatization that started in the 1880s.
By the turn of 1900, Japan was an advanced industrial nation.
Even now Japanese citizens can sell their land to anyone, including foreigners.
This is in sharp contrast to countries like Hungary, which fought side by side with Adolf Hitler during World War II, where nationalism and Neo-Nazism still exist and therere is a clamour for land sale restrictions.
Analysts say in Sri Lanka the Waste Land Ordinance and expropriation after self determination from the British curtailed the development of freehold and Sri Lanka state was left with large tracts of land, outside of natural reserves
. Sri Lanka through various settlement schemes have given lands for farmers and others, but with restricted rights and not true freehold. Some grants do not allow the female child to inherit.
Opposition legislator Bandula Gunewardene told parliament, Kiriella was trying to mislead the people by saying that their group was opposed to freehold for the people. Their opposed freehold simply due to nationalism.
"We do not oppose freehold for the people," Gunewardene said.
"We went to court because the underlying reason to give freehold was to allow foreigners to buy land."
Wimal Weerawansa, another nationalist legislator said land 'set aside' by the rulers for agriculture will be then be sold to foreigners under freehold.
He proposed an oxymoron style 'freehold' with restrictions on sale to foreigners.
"If the owners cannot sell to foreigners we will agree," he said. "But the government did not do it."
Sri Lanka's elected ruling class is a result of a legislative assembly (a lawmaking representative body) as well as a Supreme Court that was set up by British colonials in the liberal tradition including utilitarians.
However especially after self-determination, illiberal sections of the elected ruling class had used its powers to deny existing economic freedoms such as free trade, impose new restrictions, or expropriate, critics say.
By the 1970s Sri Lanka had become a completely closed autarky.