The Hindu Business Line : Has development `land'ed India in a crisis?

The economic miracle in the country has engendered a dramatic reversal of factor supply — capital is available on tap, land is not. Unless the Government can reconcile conflicting interests over land acquisition consensually, the Manmohan Singh Government may find a place in the history books for the wrong reasons, says ASHOAK UPADHYAY.

Two key ministers in the United Progressive Alliance Government should be remembered by future generations for their singular contribution in airing an issue, long swept under the carpet in the public domain. By his admirable devotion to the Special Economic Zones (SEZs), Mr Kamal Nath, Union Minister for Commerce and Industry, has done more than just advocate islands of excellence (and needless to say, privilege). He has, perhaps unintentionally, brought home to the UPA Government its lack of a cohesive vision of the next wave of industrialisation that would turn on land acquisition.

When the first signs of rural discontent over proposed land acquisition appeared to threaten SEZs across the country, Mr Sharad Pawar, Union Minister for Agriculture, airily suggested the Government walk away from the messy transfers of land. That suggestion the Government took to heart after being caught by surprise at the depth of discontent among farmers at displacement.

Last fortnight's violence in Orissa and parts of Maharsahtra should have come as no surpise; if anything the incidents confirmed the sense of alienation that peasants across all categories of landholdings and the country have been feeling about the plans of their elected governments in New Delhi and the State capitals to build on the present self-confidence of the organised and urban economy. Likely as not, Opposition parties, marginal political groups such as the Trinamool Congress in West Bengal, and local peasant associations as also the Naxalites in other parts of the country will exploit the insecurity of the farmers, neglected by successive governments that focused on attracting investments in the urban-based economy.

Every annual Budget has repeated its homage to agriculture, promised it more funds, and then promptly forgotten it. Worse, the present Government, for all its pious declarations of service to the rural sector in its Common Minimum Programme, (CMP), seems to have taken the farmer for granted when dreaming of the next phase of industry through the SEZ, clusters and hubs. Key ministers have accepted as an article of faith the capacity of the `centres of excellence' to generate enough employment for the displaced. None asked the questions about the kind of jobs the SEZ would generate, the skills they would require and how the peasants would fit the bill.

Dissonance of policy

The violence in West Bengal's Nandigram, Orissa's Kalinganagar and parts of the most industrialised State, Maharashtra, are the grassroots responses to the abysmal lack of vision about the entire economy, an inability to own up to its lopsided development — that jagged edge of India's economic miracle. The greater danger lies in the dissonance of policies that threaten to exacerbate the uneven development.

Blinded by the broken lights of skewed growth, policymakers appear bent on bettering one another in putting their own policies at work without a thought to the consequences of such actions on the weaker sections. The SEZ is one example just as the breezy suggestion for the government to stay away from land acquisition is another; the private sector is urged to go global and is nudged to introduce job quotas. No one seems to know why the farmers kill themselves while discontent over land acquisition is dangerously close to being viewed as a law and order problem. The Planning Commission chief insists inclusive growth needs agriculture growing at four per cent but policies to get investments are thin on the ground.

The role of the state

If the UPA Government has its ear to the ground it should realise that the violent incidents Nandigram and elsewhere are not so much the outcome of State-level ineptitude as the lack of an adequate mechanism for land acquisition that can settle the alienation of property within a legal framework. Since Independence, governments have faced this problem for large projects, the most prominent one being the Sardar Sarovar Project that goaded various State governments, most often at the behest of the World Bank legislate compensation of displaced persons (DPs).

The problems of land use (and compensation) related at the time largely to public sector projects; the conflict, if any, involved the state and the farmer. Today, it involves the private sector and the peasant. Earlier, the acquisition was restricted to specific projects, whose social use was legitimised by the state itself acting as the arbiter of a larger social purpose.

Now, the acquisition is often non-specific, sometimes multi-product and on a general scale, organic in nature. Driven by private investment decisions it has no limits other than profit perceptions. No sooner had the SEZ Act become operational than the Commerce Ministry was flooded with over a hundred proposals with State governments falling over one another to woo investors. The idea that large tracts of dry or even arable land could be put to more "productive" use represents a rationality shared by the private investor and state; so far the latter has not convincingly reconciled that rationale with the historic rights the peasant has claimed on his land for a livelihood.

With the private sector seeking fresh investment locations, the state has to retain its mediating role to ensure that the process of land alienation is a fair one. Two draft proposals by the Rural Development Ministry are noteworthy in this regard. One, the Rehabilitation and Resettlement Policy includes "involuntary displacement" and recommends equity in buyer-companies for the DPs. The other, an amendment to the Land Acquisition Bill, expands the notion of "public purpose" to include infrastructure and public facilities.

Recommending novel forms of compensation for an expanded list of affected persons does not absolve the state of further responsibility. Between the buyer, the private corporation or developer and the individual farmers exists an asymmetry of information that tilts the bargaining power in any transaction in favour of the former. Just as the Securities and Exchange Board of India ensures flow of information and transparency to enable retail investors make optimal decisions, the state must empower the farmers to make rational choices.

Finally, the state has to protect society's larger interests while ensuring fair play for both the buyer (the private investor) and the seller (the farmer). More than in the case of public projects such as the Sardar Sarovar, the state would need to reconcile the social good with the interests of the transacting parties. One of the disadvantages of the SEZ is that its cost-benefit analysis is purely investor-driven. As a couple of eminent economists recently argued, coordinating locations between different investments is a socially necessary function of the state. Ideally, the state should be a better guardian of social costs and benefits than any one private land user

The New Wave

The UPA Government has presided over the highest sustained economic growth in memory. That record makes it a candidate for the history books; but a historic moment has just arrived, defined by that economic miracle which has engendered a dramatic reversal of factor supply. Capital is available on tap; land, is not, in any case not for the requirements of the next wave of economic growth. Unless it can reconcile conflicting interests over land acquisition consensually and transparently, New Delhi must expect more clashes such as those at Nandigram and Kalinganagar and Pune. In the event, that will ensure Dr Manmohan Singh's Government a place in the history books for the wrong reasons.

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