The Hindu Business Line : Create a land market

Reading the excerpts of the Prime Minister, Dr Manmohan Singh's speech at the Steel Summit organised by the Ministry of Steel and the Confederation of Indian Industry (CII), one can be forgiven for assuming that he was reading a text prepared more than 15 years ago. That was when policymakers were wont to remind industry that, "It is your responsibility to ensure that good quality steel is available at reasonable prices." Dr Singh also assured the audience, in words reminiscent of the past, that the Government would do whatever is necessary "to ensure that industry is able to meet the growing demand for steel." He rounded off this plea with a call to the Tatas and the Mittals to eye the domestic market as much as they were looking for global markets and opportunities.

The last exhortation anchors the audience to the present. It also defines the nature of the problem the Prime Minister was attempting to address and yet not doing it quite convincingly. Steel and cement are two essential commodities for an economy coping with an overall supply-demand mismatch, especially in infrastructure and housing. Existing capacities in both have managed to meet the rising demand arising out of the sustained growth of the economy over the past three years. The lack of additional capacity to cope with incremental demand is now leading to a price rise that has the Government, justifiably, worried. It is hardly surprising that both the Finance Minister and the Prime Minister have been using public platforms and one-on-one meetings with manufacturers to persuade them to reduce, or at least hold, the price line. But this cannot be the solution over the medium- to long-term. Clearly, the need for expanding capacity exponentially, especially in the light of the Eleventh Plan focus on infrastructure, is palpable. But exhortations will not work as much as a sustained attempt to create conditions attractive enough for investments from the Mittals, the Tatas and the POSCOs of the world.

A good place to start would be land acquisition, which, notwithstanding the 1984 amendments, is still governed by an 1894 Act! A major overhauling that keeps the interests of both the tiller and industry by creating the framework for a land market is clearly more important than the government simply proposing to stop acquisitions for private companies. Nandigram and the current troubles over land for POSCO in Orissa reflect a rural discontent that will be vented regardless of who acquires land for industry. More generally, efficiency and transparency codes to speed up decision-making need to be transmitted to every tier of government beyond New Delhi and the State capitals. That would certainly attract the world's steel-makers more than pious rhetoric.