Pratim Ranjan Bose
(I prepared this paper for Jefferson Fellowship in April 2010. That was soon after India was rocked by a series of conflicts over land acquisition for industry. Four years have gone by. India's policy direction over land has already undergone a major change. I have written many articles in the issue. But, many a issues raised in this paper may still be relevant. Taking advantage of this blog to publish it.)
“How many
times can a man turn his head,
Pretending
that he just doesn’t see?
The answer,
my friend, is blowin’ in the wind…” Bob Dylan
In September
2008, Lehman Brothers was declared bankrupt. The dramatic collapse of one of
the icons of the mighty American finance capital and the onset of the global
economic crisis are immortalized in public memory by the photographs of Lehman
employees literally being sent home packing.
Lehman employees leaving office. source http://notianza21.files.wordpress.com |
At the same
time, a large number of rural Indians were rejoicing their victory in a
long-drawn intense tussle against the acquisition of fertile farmland, by the
government for contemporary India ’s
two most talked about industrial investment proposals.
The land was acquired
using legal provisions[i] that empower the state to
“compulsorily” acquire privately held land for “public purposes”. In the
competitive free market economy, the law helps the state governments to attract
major investments, assuring on easy availability of land at competitive prices
for timely project implementation.
Referendum at Raigad. Source: The Hindu |
On September 21,
the farmers of Raigad, in the country’s most industrialized state of
Maharashtra in the West, finally sealed the fate of a $ 87 billion[ii]
SEZ project – billed as world’s largest privately built SEZ – through India’s
first ever ‘referendum’. The land acquisition process was stalled mid-way.
Mukesh Ambani, the scion of energy conglomerate Reliance Industries (LOST) sunk
$ 130 mil in the scrapped project.
The battlefield of Singur. Source: Business Line |
A month later, in
October, weeks away from the scheduled commercial production, Tata Motors and
its ancillary suppliers decided to abandon a newly built integrated factory
complex, for manufacturing world’s cheapest car Nano at Singur in West Bengal in
the East. They were tired of facing the protesters, demanding return of the
acquired land, for nearly two years. The project was relocated to Gujarat ( where larger part of the land offered were
already under possession of a state institution) in the West, sacrificing
approximately $ 300 million and, pushing back the production schedule of Nano.
The spanner in the wheel
Singur and Raigad were part of a series of
conflicts, some of which turned extremely violent leading to loss of many lives
- involving investment proposals worth hundreds of
billions of dollars, requiring acquisition of millions of acres of land and the
resulting impact on the livelihood -
that had taken the country by storm in the middle of the last decade, when
India had firmly positioned itself on a high growth trajectory[iii].
It was A time
when the corporate sector was earning higher profits. From around 3500 in 2001,
the country’s benchmark market index (BSE-SENSEX) was racing to touch 20,000[iv]
mark. In terms of the number of billionaires[v],
India (40) was becoming more
prosperous than much larger and even developed economies of China (17), Italy
(14), France (14) or Japan
(24). The number of Indian millionaires[vi]
was also racing past the 100,000 mark.
With higher
returns from business and investments and spiraling corporate salaries, merely
6 per cent (62 mil) of the upper middle-class[vii]
population were happy enjoying a working lunch at KFC or smoking premium Indian
cigarettes at a price which is equivalent to five times the per-capita
consumption expenditure of three-fourth[viii]
of the total population of 1.14 billion, nearly 500[ix]
million of which live below the starvation (poverty) line. Together with the
rich people, the upper middle-class cornered close to one-third[x]
of the national income.
Overall, India ’s
phenomenal 250 million (23 per cent) of the educated middle-class was happier
than ever, accounting for nearly 42 per cent of the country’s personal
consumption expenditure. With a market size of three times of Germany (82 million), this section was the prime
attraction of doing business in India .
Cartoon source: conchacastaneda.blogspot.com |
Reforms
unleashed their growth potential in many ways than one. Their upward mobility[xi]
is reflected in the booming market for expensive private education, thriving
urban housing sector, spiraling sales of passenger cars and two-wheelers,
mushrooming of shopping malls, restaurants and hotels in cities and towns; increase
in sales of air-conditioners, refrigerators and a range of consumables which in
turn were creating shooting demands in the core sectors including energy, steel
etc
The stage was
set for higher growth. The wind of ‘prosperity’ caught the imagination of the
politicians. All the states – ruled by political parties of as diverse
ideologies as the Leftists in West Bengal or the right wing BJP in Chattishgarh
– were competing with each other for their slice of ‘growth’. A newly enacted
SEZ Act (2005) was expected to accelerate this momentum by attempting to
emulate China ’s
stupendous success in industrial growth. Talks of further reforms in areas like
mining[xii],
a road map for capital account convertibility[xiii]
as early as in 2011 further improved the investment climate.
Raining Investments:
There is no
consolidated information on this, but investment proposals, promising creation
of millions of livelihood opportunities, literally rained across the length and
breadth of the country between 2005 and 2007.
If the richer
and more ‘investment friendly’ states of Maharashtra, Karnataka, Gujarat,
Haryana received the bulk of the over 500 proposals for the tax –free zones
(SEZs); the three mineral rich states as well as poorest states of of Orissa,
Chhatisgarh and Jharkhand amassed commitments worth over $ 180 billion[xiv]
in mines, minerals, power and steel proposals. West Bengal
attracted billions of dollars investment in, automobile, private township,
petrochemical SEZs and others. Uttar Pradesh was basking in glory to have
gathered nearly a dozen of proposals for ultra-mega thermal power projects.
It was time for Uttar Pradesh[xv] (UP) or Orissa[xvi] – where 70-80 per cent of people earn less than
a dollar a day, largely from agriculture, and 80[xvii] per cent rural household
are not electrified – to acquire thousands of acres of farmland, each acre
offering double the scope of employment. The acquired land will be used to
generate merchant[xviii]
power that would keep the ACs running in Delhi
or produce steel to build world-class infrastructure in the commercial capital
of Mumbai.
source: slugpost.com |
It was now time for the illiterate
malnourished fishermen of Nandigram in West Bengal or the Forest dweller tribals
and dalits[xix] of Rayagada in Orissa or Bastar and Dantewada
in Chhatisgarh, Raneswar - whose existence had long been forgotten by the
country - to brave resettlement as well as sacrifice their traditional life and
livelihood options to pave way for petrochemicals SEZ[xx], aluminum mining[xxi] or steel plants[xxii] that would offer handful
of jobs to skilled personnel.
The rude
awakening
But, the party
ended before it began. India
was faced with a distinct manifestation of distrust by a large section of its
population to the country’s growth aspirations.
The steely
resolve of the agitators who were demanding return of the land acquired at Dadri[xxiii] since 2005 was repeated
at Raigad and Singur (2006). The country-wide dissent against land acquisition
for large SEZs took the most violent turn at Nandigram in West Bengal (2007),
forcing most of the states to either put such projects on hold or take
policy decisions (like Kerala) to avoid such forceful acquisitions. Some states like Gujarat ,
didn’t pursue the fresh SEZ proposals at all.
Land acquisition
– even for development work - has become difficult in many parts of the
country, impacting over hundreds of road[xxiv]
construction projects. In West Bengal , a
30-year old Leftist government faced a landslide erosion of its support base at
the grassroots level. Bulk of the projects in the state were eventually
scrapped or put on hold.
source: clker.com |
But the most
dangerous outcome of the entire episode was rapid increase in the spread of the
influence of Maoists[xxv]
among India ’s
500 million poor. Abject poverty and increasing inequality allowed the Maoists to
consolidate their presence among the tribal and dalit population in the
forested, mineral rich areas of the country throughout 1990’s and by 2004-5
they became a formidable force with a presence in over 20 per cent of the
landmass.
The economic
boom and the resulting dissent has simply helped them in gaining newer grounds
among a larger section of the poor as was evident in the rise of armed people’s
militia at Nandigram.
The police firing
and eventual death of 13 tribals - opposing the construction of a steel Plant
by Tata Steel on the same land that was once taken away from them at a pittance
- at Kalinganagar[xxvi] in
January 2006, converted each and every identified location for major projects
in Orissa, Jharkhand and Chattisgarh into a potential battlefield. They were
losing faith on the democracy and were seeking the support of Maoists to
safeguard their livelihood. Not a single major project in these states could be
implemented in last five years.
Maoists today
enjoy support of the poor in one-third of India ’s landmass, proving serious
inadequacies in Indian growth story.
Hope
against despair:
“I am confident that, after a successful
implementation of the stabilizing measures and the essential structural and
policy reforms, our economy would return to a path of high sustained growth
with reasonable price stability and greater social equality,” the then finance
minister Mr. Manmohan Singh said[xxvii],
announcing the reforms in 1991.
Ironically, two
decades later, as Prime Minister of the country, his government in 2010 has cautioned
against “unbridled euphoria”[xxviii]
over Indian’s growth story and points out that the poorest Indians did not get
a fair share of the income generated in the economy.
People’s rage
may have cost India
the prospect to grow faster but, it had also created an opportunity for
evolving a more sustainable growth model focused on distributive justice
through reconciliation of conflicts, one of the most important pillars of a democracy.
More than half a
century ago, the country – then grossly impoverished with a per-capita income
of less than $100 at the then exchange rate decided to grow through universal
suffrage – a tough choice considering that “countries of Western Europe, the US
and Japan were able to sustain a democratic political system based on universal
suffrage at levels of income which were much higher”[xxix].
The democracy
did function uninterruptedly for sixty long years and, considering its size
(over 700 mil electorate) and diversity, set an example not merely in Asia but to the rest of the world. Failures
notwithstanding, it has been consistent in upholding the democratic rights of
its citizen.
Yet, the recent
crisis served to remind that India
was yet to evolve a participatory democratic process, where the policy
decisions would fulfill people’s aspirations.
The future will
tell how soon, India
will respond to the call.
***
[i] In India
land is a subject matter of the state (provincial) governments. The government
of India
defines the broad legal outline for land acquisition through The Land
Acquisition Act, 1894, to be implemented by the state governments. In addition,
every state government is eligible to frame its own set of rules with regard to
the application of the Central act, as long as such state specific acts or
amendments are not opposed to the Central act.
[ii] INR. 4,000, billion converted into USD at the current exchange rate
of INR 46 = USD 1.
[iii] India
posted an average of just below nine per cent growth rate for five years
between 2003-04 and 2007-08. The growth rate exceeded 9 per cent between
2005-06 and 2007-08.
[iv] Sensex peaked 20300 on Dec 11, 2007
[v] Forbes 2006-07.
[vi] Capegimini World Wealth Report.
[vii] Business
Line, January 22, 2005. http://www.thehindubusinessline.com/2005/01/22/stories/2005012201860700.htm
[viii] 77 per cent of Indian population had per-capital consumtion
expenditure of less than INR. 20 (less than half a dollar) a day in 2004-05,
according to National Commission on Enterprise
in Unorganized Sector. A working launch
package at KFC or a 20’s pack of premium cigarette costs around INR 100,
equivalent to more than $2.
[ix] According to the existing estimates 28.6 per cent of population is
below poverty line. It will move upto 38 per cent as India plans to change the
methodologies, as per recommendations of Tendulkar committee. According to
Human Development Report an even higher 41.6 per cent of population in India
live below the international income poverty line of $1.25 a day.
[x] Human Development Report, 2004: Richest 10 per cent has a share of
27.4 per cent of income or consumption as in 1999-2000.
[xii] Hooda Committee recommendations, 2006.
[xiii] S S Tarapore Committee recommendations, July 2006.
[xiv] INR 8378 billion. Resource Digest, Jan-Feb 2010 www.resourcedigest.info
[xv] Times of India ,
Oct 31, 2006. http://timesofindia.indiatimes.com/articleshow/243108.cms
[xvi] Indian Express, September 17, 2009 http://www.indianexpress.com/news/bpl-numbers-in-orissa-nearer-to-84-pc-stud/518091/
[xvii] Census 2001.
[xviii] Merchant power plants are allowed to sell power to the highest
bidder without any restrictions on tariff.
[xix] Scheduled castes. They were doing menial work in a traditional
Hindu society, and were subjected to social oppression.
[xx] Salim Group Indonesia, 10000 acre
[xxi] Balco
[xxii] Essar at Dantewara, Tata Steel at Bastar and Arcellor-Mittal at
Raneswar.
[xxiii] Reliance Power 7500 mw worth $ 5 bil requiring 2200 acres.
[xxiv] “131 projects delayed due to land acquisition problems”, India
Infoline News Service, February 24, 2010.
[xxv] Left radicals believing in the variant of Marxism as defined by Mao Zedong mostly gathered under the
Communist Party of India (Maoists) aiming at armed revolution. The party is
declared as an outlaw. In India
such radicals are loosely referred as Naxal or Naxalites, in reminiscent of the
rise of such forces way back in 1967 from Naxalbari village in West Bengal .
[xxvi] People’s Union for Civil Liberty
status paper http://198.170.85.29/PUCL-Police-Firing-at-Kalinganagar-2-Jan-2006.doc
[xxvii] Budget Speech 1991.
[xxviii] Economic Survey 2009-10, Micro
foundations of inclusive growth. Box
2.1 .
[xxix] Development With Dignity
by Amit Bhaduri. National Book Trust (2004).
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