The Hindu Business Line : Acquiring land for industrial projects<br>Distributive development is the key

Asking villages themselves to bid for supply of land to projects, broadcasting the bids, allowing revision of offers and then accepting the best combination of tracts on offer is an ideal way that will not only benefit everyone, but also minimise the problems arising from intra-village social cleavages, says P. V. INDIRESAN.

Little Jack Horner sat in the corner/ Eating a Christmas pie. / He put in his thumb, pulled out a plum. /And said, “What a good boy am I!”

Big business persons are not much different from Little Jack Horner. They sit in their boardrooms, pull out their balance-sheets and say, “What good persons are we!”

Certainly, our business leaders and managers are making lots of money, but that is in quantity, not in quality. Can all the money they make let them have a house with a garden or do they have to rear their children in a cramped apartment? Can their money let them reach their office in ten minutes or will it take them an hour and a half? Do they feel secure or do they have to hide behind bolted doors? Does all their money buy them fresh air, let alone happiness?

At a recent meeting where representatives of big business were present, I raised the issue of growing Naxalism. I said just as the Mughal Emperor brushed aside the threat from Nadir Shah by saying ‘Dilli dur ast’, our business leaders are saying even Marathwada is dur ast. In spite of having their noses bloodied in Singur and Nandigram, our business leaders are looking only at the rising Sensex and not at the declining social, political and physical environment.

The Trump Cards

Those who play the game of bridge appreciate how your Ace of Diamonds can be trumped by the lowly Two of Clubs. Indian polity is getting to be more and more like a bridge game with those wielding clubs holding the trump cards. Against the clubs of violent activists, the diamonds the business persons hold often prove worthless. Singurs and Nandigrams are warning signs. Indian business needs to change its ways before it can expect to halt such eruptions.

It is easy to argue that those who oppose industrial expansion are misguided, irrational and motivated. It is tempting to think that they can be bought off, or that their opposition can be worn down by patience. It would be more rational to enquire from where the opponents get their energy, to investigate what errors businesses have committed to offer scope for such violent opposition.

To cut the argument short, opponents of industrialisation are getting their energy from the excluded — from farmers whose land have not been acquired, and from casual landless labourers who fear the loss of even the meagre chances of occasional employment they used to have. In other words, the present system of land acquisition is flawed because it increases rich-poor disparity within the village.

It is no secret that once a proposal to start a major development is mooted, influential people corner potential land. It is they, and not the traditional farmers, who benefit from the bonanza. For landowners on the edge, it is doubly bitter experience: They get nothing and their neighbours get untold riches. For casual labourers, it is a season of uncertainty. Earlier, by village tradition, they had some rights of employment; after land acquisition, it is all uncertainty; they may get a fat job or none at all.

Growing Disparity

Therefore, the problem is not with the amount of compensation but with the sudden jump in rich-poor disparity, and with the arbitrary assignment of new riches. To those leftut, the scheme will appear capricious. They see no rationale why they should be left out, and others included. The more generous and the larger the compensation, the greater will be the disappointment, greater will be the bitterness, the greater will be the fuel for those who want to meddle.

In such situations, the temptation will be to raise the compensation. That will only add fuel to the fire. In fact, if the price paid in Singur or Nandigram had been no more than usual, nobody would have bothered. After all, sale and purchase of land is common; no violence erupts in opposition to such transactions. Violence is fuelled only when compensation is exceptional.

On the other hand, acquiring land at traditional rates is not fair either: Industrialists will then get an undue and undeserved advantage. Thus, we are left on the horns of a dilemma. We need a rational way of determining the amount of compensation, which will be considered fair to both seller and buyer as also to the neighbour and to the bystander.

It is matter for some surprise why the market mechanism, which is an effective tool for identifying prices, has not been invoked in this case. Market means competition; it means transparency; it means choice. Thus, in the matter of land acquisition, as far as villagers are concerned, there is no choice, no transparency and no opportunity to compete.

Then, consider the following process:

A broad region where the industry may be set up is identified.

All villages in the region are invited to bid for the supply of land.

All bids are broadcast and bidders are permitted to revise their bids.

After a couple of rounds, the most effective combination of tracts on offer is accepted.

In effect, a Delphi method (a structured process for collecting and distilling knowledge from a group by means of a series of questionnaires interspersed with controlled opinion feedback) is used to generate a mutually acceptable price. Nobody can then complain because everyone was allowed to bid, because no one who did not want to sell land is forced to do so, and because the price was arrived at openly without any secrecy.

This process has the disadvantage that the land required will not all be in one piece, but distributed over a number of villages. That kind of fragmentation is not necessarily a disadvantage. These days, distributed manufacture is commonplace. For instance, the manufacture of the Dreamliner, the latest and most sophisticated passenger aircraft from Boeing, is spread over a number of countries ranging from China to the US. Hence, in most cases of industrial development, tracts of 10-20 hectares would suffice.

Distributive development has several advantages: A number of villages will benefit. Competition among villages will minimise problems arising from intra-village social cleavages. Large tracts mean that fertile land will inevitably be lost; where relatively smaller tracts are used, the location can be such that farming is disrupted the least. Actually, such selection will be automatic because infertile (at any rate less fertile) land costs the least. Incidentally, acquisition of less fertile land implies that relatively poorer landholders will benefit.

Transparent Process

One disadvantage remains: It is rare in India for anyone to hold as much as ten hectares — about the minimum size for viable development. Each such tract will, therefore, require cooperative offer from a number of landholders, and that may not always emerge automatically. On the other hand, because the bidding is transparent, because it is spread over a number of villages, and the Delphi process gives farmers an opportunity to revise their offers, or even make new offers, almost certainly there will be an adequate response.

One can pick many holes in this scheme. I do not assert that this scheme is perfect or that it is costless. I do state with conviction, and with first hand knowledge of having talked to farmers in seven States, that this process evokes positive response, that avoids bitterness. Above all, it does not use the not-so-well-reputed state apparatus as the middleman. But it needs something more to include the excluded — the neighbours, particularly, landless labourers.

(To be concluded.)

This is 205th in the Vision 2020 series. The previous article was published on July 9.

(The author is a former Director of IIT Madras. Response may be sent to: indiresan@gmail.com)

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