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Will Singur-type problems hit investment growth?

Business Standard | September 17, 2008

Since most projects can be shifted to other states, the problem will be minimal, especially if industry can find ways to make farmers partners in their profits.

Rajeev Chandrasekhar, Member of Parliament and President, FICCI

For every Singur, there is an example of fairly successful land acquisition somewhere else in the country

The Indian economy over the last decade is a more diversified economy that ever before. Therefore, any claims of slowdown (as true as that possible slowdown may be) being linked to land acquisition issues is laughable.

Admittedly, with economy on its growth drive, the appetite for land for use by business is clearly on the rise - as investments rise and more industries are set up. Industry and business are meeting this appetite for land by acquiring land from existing farmers and other owners of land with some form of state intervention through a land acquisition process.

Since these projects have a consequential effect in creating jobs and stimulating the local economy, there is a competition amongst states to attract these projects - which is in turn causing the states to trot out promises of cheap land amongst other sops to investors.

The population density in our country is high. Dependence on land for earning a living is also very high. Nearly 55 per cent of the population is dependent on the agriculture sector for its livelihood. In these circumstances, there is bound to be resistance and some opposition whenever steps are taken to bring in more land under industry by fiat and executive action rather than negotiation.

In recent days, there has been a debate around the Tata/Nano investment in West Bengal being impacted by delays in or problems with land acquisition for that project in Singur.

But at the same time, there are many investments around the country where land had been acquired for the project successfully, with no disputes or opposition from the local community/farmers/sellers.

Which leads one to conclude that the problem isn't with industry requiring more land but with the process adopted for land acquisition process in this case.

The common thread that runs through all the 'land acquisition disputes' is the perception of unfair deal to the farmer/seller or the coerced/forced acquisition of land from an unwilling farmer/seller by using the power of the state. This is doomed to fail, if not in the short term then definitely in the medium term.

The solution is simple, as pointed by Finance Minister Chidambaram during one interaction at FICCI - business shouldn't try and deprive an unwilling farmer of his land. It has far reaching consequences and repercussions - especially when businesses depend on the goodwill of the communities they serve.

The Singur dispute points to a need for a clear-cut national policy for acquisition strategy. The policy should clearly mention acquisition hierarchy - barren over fertile land, single-cropped land over multi-cropped land etc and a process of compensating the farmers that is based on the inviolable principle of equity and fairness - to have either a process of consent acquisition where the investor makes the deal with the farmer/seller for most of the requirements (say 70 per cent) and have the state come in and help with the balance on the same terms.

A better solution is to allow the farmers to remain stakeholders in the development in the area, by either having him lease the land or giving him ownership of tracts of land around the project.


Sajjan Jindal, vice-chairman and MD, JSW Steel [Get Quote] group

Unless ways are found to ensure farmers have a stake in the project's progress, the issue will get more complex

Acquiring land is a difficult and challenging task. Especially in large projects where you need to acquire a large chunk of contiguous land, but there are ways and means to tackle that. For industry, the best option is if the government acquires the land, but given the sensitivity of the issue this is becoming increasingly difficult.

The other option is that the industry negotiates directly with the farmers or land owners. Of course, you can't get all of the land but even if you get 60-70 per cent, the government can then step in and manage to take over the balance.

The basic point is that land owners who are giving the land for projects should be fairly compensated not only in cash but through involving them in the development of the project.

That is what we do wherever we set up new projects. Whether it is Maharashtra, Vishakhapatnam or Rajasthan, we are creating special purpose vehicles for different projects where farmers will be made stakeholders and once the project is developed, the SPVs will be merged with the main companies.

Unless we are sensitive and feel the need of the farmers, the issue will get more and more complex. The way Singur, Nandigram, Orissa and Jharkhand have happened, it would just get more complicated.

In Barmer, for our power project, we had a situation where the government would have to acquire 20,000 acres for mining lignite. The government issued the notice to the farmers to surrender the land but the farmers approached our CEO and said they were not ready to part with the land. So we had discussions with the farmers and when I went to the site, around 10,000 farmers collected there.

I convinced the chief minister not to acquire the land and said that after the lignite was taken out, the land would be returned to farmers even if it was after 50 years so that the next generation could farm on it.

The message is loud and clear. You can't take police and government help to push the farmers aside. Of course, 10 per cent can be miscreants who get politicised and have to be tackled with government help. But in any situation if 60-70 per cent people are with you, the rest can't stall the project.

We never faced any problem in West Bengal with regard to land acquisition. We were very careful not to touch fertile land. We did not touch land where three or four crops were being grown. It's a conscious decision to not touch multi-crop land.

However, if for the need of the project we have to acquire some fertile land, then we would more than compensate for it by, maybe, some government land which could be converted to fertile land.

I think state governments would also have to play a proactive role because every industry house is not the same. But at the same time, state governments should be sensitive to the needs of the farmers and should also not touch fertile land or that close to the city, which might have potentially higher value in the future. State governments should try and create a land bank in such areas where not too many crops are grown.

(The author is president, Assocham)



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