Little car, big problem
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11/01/2009
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Business India (Mumbai)
India needs to relook at its land acquisition acts
When the Nano and Ratan Tata were sent scuttling out of Singur by a rent-seeking Mamata Banerjee, they didn't make landfall in Gujarat at first go. They looked at various site alternatives to set up shop for the Nano, the Rsl lakh small car. Like Banerjee, other activists for farmers' rights moved into sabotage mode elsewhere.
In Maharashtra, Union Agriculture Minister Sharad Pawar, who hails from that state, said the Nano was unwelcome; power supply priorities should favour farmers, not industry. Farmers in Gujarat are more pragmatic; they have made it clear that they want the Nano plant. But they also want money. (In West Bengal, on the other hand, Banerjee didn't realise the limits to extortion.)
Singur and Sanand highlight the growing problems with land acquisition. The Tatas are not alone facing the problem. In Raigad, where Mukesh Ambani is setting up a special economic zone (sez), the affected farmers have rejected the offered compensation. This is apparently the outcome of a referendum held by the state (Maharashtra) government, though court cases are holding up official declaration of results.
Much of the problem is because we haven't moved with the times. "We follow a 1890s act for land acquisition," says Rajesh Chakrabarti, assistant professor of finance at the Hyderabad-based Indian School of Business. That act was based on the need for setting up railroads and national highways and belongs to a different era. The projects today, are for corporate profit.
But there needs be a realisation that the future of agriculture is in mechanisation. This is the only way to higher productivity. As has happened elsewhere in the world, the farm workforce will decrease. In the UK, for example, the agriculture labour force has gone down from 700,000 in 1984 to 526,000 in 2007. In the past 50 years, per hectare yields of wheat, barley, potatoes and sugar have tripled. Expensive Indian produce will not be able to compete with cheaper equivalents grown in such countries. The future is in corporate farms, and industrial projects and sezs on the surplus land.
There are no easy solutions to the compensation issue. The sez Act of 2005 is vague on this aspect, perhaps because it is a state government subject. One solution, obviously controversial, is to make the whole country into an sez.
But that doesn't solve the problem of the farm workers. There are two issues. The first is finding alternative employment. Both industry and the government must chip in here with training and job offers to compensate for loss of farm income.
The more immediate issue is land acquisition. Satish Magar, the motive force behind Magarpatta City on the outskirts of Pune, has one solution. Inclusive capitalism, he says. Magarpatta city is built on the ancestral land of 120 odd families, who are all shareholders in the project.
At Salboni in West Bengal, the jsw group is setting up a Rs35,000 crore, 10-mil-lion-tonne steel plant. The company claims it has the best model of compensation in the country. Apart from the down payment, dispossessed farmers are to get shares in the new company, jobs and insurance. That may be the way to go.