BW Communities

The Great Indian Land Slide

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Trapped By Politics: Solutions to the land dispute in Singur — where Ratan Tata has invested Rs 1,500 crore for the Nano project — exist but are being ignored by political leaders (Bloomberg) A businessman has a great idea. A government bungles acquiring the land it promised him at subsidised prices, and the opposition uses provocative politics to doom the project. Tata Motors’ Nano plant at Singur in West Bengal currently exemplifies such problems. But similar situations are unfolding across the country every day. The Pohang Steel Company’s bid to build a Rs 51,000-crore steel plant at Jagatsinghpur in Orissa has been stalled after bitter local protests against the acquisition of 3,566 acres of forestland for the project. In July, Dow Chemicals’ R&D centre in Chakan, near Pune, was torched by villagers angered by the fact that the company had been given 10 acres of land for the facility. The consequent emotional and economic mayhem is unsettling India’s industrialisation, and forcing the nation to rethink its development agenda. While the struggle to formulate fair and sensible land acquisition policies is natural in a maturing democracy, for 61 years governments, India Inc., and public opinion have ignored the issue. Mostly, this has been because those affected by land acquisition were usually tribals or residents of distant, dusty villages. Now the Singur episode, which is holding the introduction of the much-admired Nano to ransom, could turn into a lightning rod for change. “We have to learn from Singur,” says Confederation of Indian Industry’s (CII) Director-General Chandrajit Banerjee. “Industry has to come up with the right compensation. Land policies have to be clear and laid down beforehand to avoid a mess later.” Principles of Profit The corporate world has generally come out strongly in support of Tata Motors. Even Reliance Industries Chairman Mukesh Ambani, previously considered a rival of Ratan Tata’s, has issued a strongly-worded statement in support of the Nano project. But India Inc. needs to introspect on a vital question: why are the champions of free market principles consistently demanding free or subsidised land for projects? “Taking away land from farmers and tribals is easy, since it is a summary process conducted by the district collector,” says Simpreet Singh, spokesperson for the Medha Patkar-led National Alliance of People’s Movements. “Land acquisition is cheap. That’s why the Maharashtra Industrial Development Corporation has acquired 85,000 acres in the state. But of this, 13,000 acres is lying as wasteland.” Since subsidies distort free markets, industrialists’ demand for free or subsidised land defies logic and economics. Yet, almost every major project coming up in India sits on discounted land. Industry leaders defend this by pointing out that the market price for land in India is so far above global levels that projects would be rendered unviable if not given subsidies. Twisted land management policies and corruption has meant that both urban and agricultural land prices in India are 2-5 times those in most developing countries, such as Malaysia. Still, the legal basis of acquiring agricultural land for industrial use is tenuous. The 1984 amendment to the Land Acquisition Act of 1894 specifies in Chapter 7 that farmland cannot be acquired for corporate projects. It also states that companies benefiting from land acquisition must negotiate the land’s price directly with land owners. This didn’t happen in Singur, says the Paschim Banga Khet Mazdoor Parishad (PBKMP), an association of farmers, which is challenging the issue in the Supreme Court. “The land acquisition was directly for the Tatas,” says Colin Gonsalves, legal counsel for the PBKMP. However, the West Bengal government says the acquisition was of a general nature, and the allotment to Tata Motors was concluded later. {mospagebreak} The truth of this is difficult to ascertain as land deals between governments and companies are often kept secret. No national figures exist for the total amount of land governments have given the private sector. BW’s own internal estimate, based on a rough analysis of published reports, suggests that between Rs 2,00,000 crore and Rs 4,00,000 crore ($50 billion-100 billion) worth of land has been handed out by government to various projects. In the Singur case too, the West Bengal government has kept the terms of its deal with Tata Motors secret, though it has been forced to divulge some key details. The government has paid Rs 140 crore in compensation to Singur’s farmers for 997 acres of land, and Tata Motors will pay just Rs 20 crore for this property over five years. Stamp duty on the transaction will be waived, and water will be supplied free to the project. Indeed, the thirst for projects, both because of the jobs and kickbacks they generate, is what drives state governments to outdo each other in handing out land gifts. The impact is significant. Since 2003 West Bengal’s agricultural land has reduced by 120,000 acres, and landlessness had increased sharply by 2.5 million to touch 7.4 million. Aggressive land acquisition for industrialisation has exacerbated the problem. But on the other hand, India needs to create 10-12 million jobs a year, and this is not possible without rapid industrialisation. Seeing Red: While Trinamool Congress leader Mamata Banerjee (left) has been vehemently opposing the Nano project, tribals in Orissa have taken up the cudgels against the Posco steel plant (Pic By Sanjib Mukherjee) The Land Acquisition Act Contrary to most democracies, the right to property is not a fundamental right in India. This means governments can invoke the concept of eminent domain (the power to overrule individuals’ property rights) with greater ease. At the core of the debate is India’s colonial-era legislation — the Land Acquisition Act of 1894. It can take away a person’s property through a summary process. Under the Act, any public body can acquire private land through the district collector. He or she can unilaterally decide the compensation to be paid, and can overrule any protest from the original land owners. Social activists decry this arbitrariness. But others believe India needs flexibility in land acquisition to accommodate the huge infrastructure projects the country needs. They often point to China, where the government owns all the land and can revoke citizens’ rights with a stroke of the pen, in defence of their views. What these distant observers of China fail to see is that such heavy-handedness is backfiring even in this authoritarian state. About 70,000 vociferous land protests were recorded in China last year alone. In response, the Chinese Communist Party inserted the right to property into the Chinese constitution two years ago, a pointed gesture to show it understood growth would not be sustainable without an increase in peoples’ rights. EXECUTIVE SUMMARY Flawed land acquisition policies are holding key projects hostage. The cost of this is leading to a new debate on the principles of land acquisition. The Wrong Approach The defining factor in land acquisition is the manner in which governments use the brute power at their disposal to force decisions in their favour, regardless of the consequences. This is what Communist Party of India (Marxist), or CPM, did in Nandigram, and later, to a lesser extent, in Singur. Privately, Tata executives say they were troubled by the CPM’s hardnosed tactics. But what irks the farmers opposing of the Nano factory is that their verdant paddy fields, to which many feel deep cultural, historic, and even religious connections, are being used for industrialisation. In response, CPM officials say their state has only agricultural land and that urbanisation demands that agricultural areas around cities convert to industrial use. The more complex problem is that when land is acquired from farmers, it is at a price in line with prevailing value, if not lower. Once the project kicks off, the price of land in the area shoots up and the original sellers or displaced people feel resentful and cheated over the lower price they were paid. In Singur, farmers were finally paid Rs 8.5 lakh for every acre of single-crop land, and Rs 12 lakh for double-cropped land — not a bad amount on the face of it, as the market price for of the land was pretty much the same. But today industrial plots in Singur are selling for up to Rs 40 lakh an acre. Solutions to this exist, such as giving the original landowners equity in the project built on their land and have been employed with great success. For example, less than a decade ago on the outskirts of Pune, 120 farmers of the Magar community pooled their land resources and launched a 400-acre realty project. The Magarpatta Township Company today is a booming housing and IT hub and each of the farmers continues to hold a stake in the project. But sadly such cases are rare. The Wrong Politics While any large project can throw up contentious problems, these can usually be resolved at the negotiating table. But in West Bengal, the CPM has been “arrogant” and hardnosed, the Trinamool Congress says, because the party is desperate to prove the success of its new, business-friendly industrial policy. The Nano factory was the showcase of the ‘new Left’, and perhaps the party became “over enthusiastic” in implementing the project. “Everything was done in a hurry,” West Bengal’s Industry Minister Nirupam Bose, admits. Now Banerjee smells blood, and is hinging her election hopes on the Singur agitation. Tata Motors’ Chairman Ratan Tata’s announcement last week that he would pull out of Singur if the turmoil there didn’t end hasn’t cooled the CPM’s or Trinamool’s rhetoric. The CPM insists the first Nano will roll out of Singur, and Banerjee insists the land taken forcibly from farmers be returned. This would sink the project, as the parcels of forcibly taken land are not contiguous but dotted all across the 1,000 acres. Meanwhile, half a dozen states have begun offering Tata Motors alternative sites. But this isn’t moderating views in either the CPM or Trinamool, underlining how the losers in the Singur agitation will be the people of West Bengal. If the state’s new industrial policy sinks in the wake of the Singur fiasco, it seems destined to remain one of India’s poorest regions. Not Just In India: Even in authoritarian China, there were 70,000 land protests recorded last year (Bloomberg) The Right Steps The same sort of political gamesmanship and violence are subverting people’s futures across the country. Land acquisition is clearly one of the most pressing issues as SEZs, power plants, highways, airports, factories, dams and housing projects find their way blocked by India’s archaic land laws and the agitations they spark. A key solution would be to overhaul the Land Acquisition Act, which is horribly out of sync with the country’s modern needs. The compensation for acquired land needs to be agreed through negotiation, and that is the spirit behind the 73rd Constitutional Amendment that requires local self-governing bodies to be involved in the process. Similarly, compensation must be speedy if it is to be considered fair. Also, land titles and the systems to manage these are in a shambles across the country and need to be modernised. In Singur, many farmers could not get compensation because they did not have titles to the land they were tilling. But possibly, the best solution is to make those losing their land stakeholders in the development projects. Equity for the landowners in the project they are losing their land to will give them a long-term economic alternative and blunt criticism that they are being “ousted”. West Bengal’s other showpiece project, the Rs 35,000-crore JSW Steel plant coming up at West Medinipur, has just announced a land-for-shares package that is worthy of national emulation. While there is no doubt India’s metamorphosis into an industrial power will require flexible land acquisition policies, if these fail to carry the affected people along the road to progress, the nation can be rest assured of more Nandigrams and Singurs. gurbir(dot)singh(at)abp(dot)in (Businessworld Issue 02-08 Sep 2008)