The Hindu Business Line : Lifting Bharat out of economic quagmire

There is much consternation across the country over the setting up of industry by acquiring land, mostly voluntarily, but sometimes forcibly from unwilling farmers by governments impatient to join the "industrialisation bandwagon". The chosen route is the Special Economic Zone (SEZ). Indeed, the raison d'etre of the SEZ Act 2005 and the SEZ Rules 2006 was to create one consolidated enabling document for the benefit of prospective investors.

Prescription for Trouble

What makes land acquisition a prescription for trouble, as demonstrated in West Bengal? First is the element of compulsion that comes with the exercise of the "eminent domain" principle of the state having an overriding supremacy over individual's rights and, second, the flawed system of paying compensation to the owners of the dispossessed farmland.

The crucial question, however, is: Can India continue to ignore the sweeping economic changes that come with the march of times?

India has been an agrarian economy for millennia; 65 per cent of the population is agriculture-dependent — the "Bharat" where in pockets the economic situation is worse than in many Sub-Saharan African nations.

This segmentfeeds the rest of the 35 per cent — the "Galloping India" that basks in the glory of 9 per cent-plus- GDP growth. It is then logical that unless the 65 per cent is lifted out of the economic quagmire, India can never hope to join the comity of affluent nations. The question is how?

Here one must look at some basic statistics. In 2000-01 there were 141.1 million hectares of net sown area with 127.3 million cultivators and 106.8 million farm labourers. Simple arithmetic reveals the unviable nature of India's farm-holding.

Kerala is a classic example of such fragmented land-holdings. It stands to reason that if the farmers who own tiny patches of land are persuaded to part with them, these fragments can be pieced together to establish a viable SEZ. It has to be persuasion; force will never work, as ownership of land is deeply embedded in one's psyche, no matter how tiny the patch. Here statesmanship must prevail over petty and narrow "vote bank politics".

Decent compensation

The best lure would be either a decent compensation package and/or bringing the farmer in as a partner in the enterprise. If the farmer is given a one-time monetary compensation, it will disappear in no time. But a consortium can be established, on the bank model, where the deposited money will earn a decent interest that can be a source for sustenance.

The farmer must not be able to touch the principal. Every effort must be made to recruit into the enterprise at least one or more member from every farmer's family in the area.

There is a mistaken notion that farmers cannot absorb knowledge. Consider, this: Indian cardamom faces tough competition from the Guatemalan produce.

Despite the Central and State governments spending thousands of crores of rupees on research, the best cardamom variety is an ingenious and painstaking selection by a Kerala farmer who has no formal agricultural science education. There are many more such instances.

The Land Acquisiton Act of 1894, under which land is acquired for public purposes, allows the state to develop the land and assign it to private parties; the Supreme Court has also upheld such transfers.

On paper, the Land Acquisition Act provides for fair compensation; in addition to the market value, it provides for resettlement costs to the farmer, and a solatium of 30 per cent of the market value to compensate for the compulsory nature of acquisition. In practice, the process is riddled with corruption and is dilatory.

Whither a sensible approach?

Perhaps, the key missing link in the land acquisition issue is the sensible approach by the state or the private investor.

The bureaucracy simply decides to take the land from the farmers and give it to the investor. But has anybody taken the trouble to explain to the farmers the stakes involved?

Has any agency explained to the villagers the prospects of the projects, in terms of what it can provide to them and their families such as better living amenities, better schools, better roads, better medical facilities?

Let alone the private parties, not even the state, whose primary objective is people's welfare, has gone to the farmers and/or their representatives with a clear blueprint of development that they can expect to happen on the land they surrender?.

No home-work has been done. Simply put, there never was an honest dialogue. It was like an order coming from the top that those at the bottom had to obey or face the consequences. This is what happened in West Bengal. Quite shocking has been the silence of New Delhi.

The inter-ministerial body — the Board of Approval (BoA) — has approved several SEZ projects. The investors, both Indian and foreign, are clearly unsettled by the turn of events.

Unfortunately, we have been springing one surprise after another. Industry needs both land and water and the policy planners are yet to learn how best to make use of them for the economic advancement of the nation. Time to learn a thing or two from the big neighbour China.

(The author, a distinguished international agricultural scientist, can be reached at nair_kpp@yahoo.com)

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