Analysis
Landing Industry in West Bengal: New Hopes?
The announcement of the so called Bengal model of land acquisition and the simultaneous handing out of 1200 acres of land to 13 industries by a government that is perilously close to the end of its term has evoked reactions from Opposition leaders along expected lines. Indeed, to the public at large as well, the Industry Minister’s statements in this connection have probably sounded as election gimmick on behalf of the Marxists at best and a pathetic attempt to remain in power at worst.
Nonetheless, given the fact that election strategies define the rule of the game in a democratic society, it is not clear that the Minister’s attempt to draw our attention to the fresh flow of industrial investment in West Bengal to the tune of Rs. 23,195 crore can be viewed as a grievous fault. Instead of engaging ourselves in facile searches for political motives therefore, it could well be worth our while to investigate if there is any fundamental difference between the government’s latest assurances to land losers and the alternatives it has been trying out since the Singur debacle.
Towards this end, a judgement passed by Justice R. Raveendran and Justice A. Patnaik in the Supreme Court on January 3, 2011 relating to land distribution in Haryana has a bearing on the matter. The much applauded Haryana model sweetens the bitter 1894 Land Acquisition pill in three distinct ways. First, it claims to offer lucrative market prices to land losers. Second, it ensures an annuity stream for 33 years for a land loser, where the annuity itself is somewhat inflation adjusted in that it increases over time. And finally, as per a Circular issued by the Haryana Urban Development Authority (HUDA) dated September 10, 1987, it offers a scheme for direct allotment of developed plots to land losers/oustees at normal allotment rates. More precisely, the referred circular provides for allotment of a plot measuring marginally above 3 cottahs to any landowner whose acquired land measures between 6.22 cottahs to one acre.
Five appellants in this suit had each lost land to the extent of 0.79 acres in Hudbust No. 1, Kasba Karnal, while the sixth lost more. The first five received a compensation of Rs. 3,02,473 for the land they parted with. However, they were each charged Rs. 2,80,478 for the 3.11 cottah developed plots they received according to contract, a sum that ate up almost the entire amount of compensation money they had received for the substantially larger plots they had given up. The aggrieved parties had applied for the HUDA developed plots soon after they were notified on December 12, 1990 about their availability. The price per square yard (0.012 cottah) announced in the notification was Rs. 863 only, so that the promised 3.11 cottah plot should have been valued at Rs. 2,15,750 rather than Rs. 2,80,478. For unexplained reasons though, HUDA allotted the plots almost three years after receiving applications and that too following Court proceedings. The price charged was Rs. 1,342 per square yard on the ground that the latter was the ruling market price at the time of actual allotment.
The bone of contention in the law suits that ensued therefore was the extra charge imposed on the allottees and the Supreme Court finally passed an order in favour of the appellants. The fact remains though that even at the reduced price, the difference between the compensation received and the allotment price paid was hardly sufficient to build a residence. This being the case, the only virtue that remained for the Haryana model to commend for itself was the annuity stream. It is not too clear of course how virtuous this virtue was itself. For land acquired for government projects, it awarded a sum of Rs. 15,000 per year, increasing at the rate of Rs. 500 per year. For private projects, the rates stood doubled at Rs. 30,000 and Rs. 1,000 respectively. Neither sum could guarantee a decent standard of living for an average farmer’s family.
The Bengal model announced by the Industries Minister seems to fare well when assessed against this Haryana tale. Of course, annuity wise the Haryana model dominates. It is missing altogether in the Bengal package. Regarding compensation for acquired land, the Minister indicated lucrative area based market prices, at par probably with Haryana. As far as “land compensation” goes, however, Bengal’s latest offer is clearly superior. If the Minister is to be taken at face value, three cottahs of developed land will be handed over in exchange for each acre of lost land. But as opposed to Haryana, the allotment will be free of charge, if the media has reported correctly. The Minister has also indicated that the plot of land can be used either for commercial purpose or sold away to take advantage of value appreciation. In addition, arrangements will be made to impart vocational training to a member of the land losing family, in view of job opportunities that will emerge with industrial development. Fortunately, the package does not guarantee a job per family too, since such promises cannot but remain unfulfilled. Industries that will come up will be large employers for sure, but not large enough to provide employment for each family. Indeed, it is surely with this impossibility problem in mind that the newest industrialization drive is projected to create 41,000 jobs directly and indirectly. Lastly, share croppers and landless labourers will gain from the scheme, a feature that is absent in the Haryana model.
Even though the Bengal brand of the 1894 pill appears to be somewhat sweeter than Haryana’s, the judgement handed out by the Division Bench of the Kerala High Court for the State of Kerala vs. M. Bhaskaran Pillai case of 1997 prevents acquired land to be returned to the loser costlessly. More concretely, for the 3 cottahs per acre model to be workable, around 3000 cottahs or 49 acres of developed land must be found in an area disjoint from the acquired area in Singur for distribution amongst the land losers. Any acquisition of land then will call for a multiplier chain of further acquisitions for the government to stick to its promise.
If this understanding is correct, complaints from people being coerced into accepting low quality land labeled as developed real estate will pile up over time. It is perhaps to prevent this eventuality that the Ministry insists that private industries be required to create appropriate infrastructure for neglected areas adjoining the acquired land. If the private parties do not renege, then developed or at least semi-developed land allotment in nearby areas may not turn into a wild goose chase. But the yet to emerge scenario is not too clear in this context.
In the meantime, the Opposition will continue to squeal. One leader has been quoted by the media to have demanded an investigation into the manner in which 1200 acres of land were allotted to industry in the first place. Another has pointed out that the government does not have a land bank at all from which it could have distributed the land. Such veiled allegations of corruption might turn into threats for industrialists benefiting from the scheme. Although the Industry Minister has made time bound allocations, the bounds themselves are likely to be fragile if the entrepreneurs are unsure about the post-election scenario.
A part of our land for industry problem arises from state governments’ insistence on producing alternative versions of the 1894 Act instead of scrapping it altogether. The Act is a powerful tool in the hands of state governments and most of them are loath to strip themselves of the authority they enjoy through its wielding. Eminent economists have repeatedly suggested the free market route for land acquisition. But will markets work either in a state that will soon enter the Guinness Book of Violence?
21-Jan-2011
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Dipankar Dasgupta
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