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Is Bengal ready for re-industrialisation?

June 10, 2008 16:44 IST

"Sudhu bigha dui, chilo mor bhui, aar sab-i  geche rine, Babu balilen, "Bujhecho Upen, e jami loibo kine."
(After losing everything in debt, I had only two bighas of land left. But the Babu said, "Upen, you must sell that to me.")

[from Dui Bigha Jami (Two Bighas of Land) by Rabindranath Tagore, 1895]

More than a hundred years ago, Rabindranath Tagore wrote about a poor farmer, Upen, who was forced to 'sell' his land to a rich man and suffer the inevitable consequences of losing his livelihood and, along with it, his sense of belonging.

In today's Bengal, the Left Front government has been buying lots of land for various purposes, ranging from local development to setting up industries. Singur and Nandigram are two highly publicized cases for obvious reasons of violence and collective resistance, though under the law landowners cannot refuse to sell, if the government wants to buy.

Many farmers have suffered the same fate as Upen's, and naturally voted against the Communist Party of India (Marxist) to make them suffer unexpected defeats in South 24 Parganas and East Midnapore. Given this reversal in panchayat (local self-government) elections, the debate on industrialisation is likely to be renewed, stirring up public emotion once again.

There is no denying that any strategy of industrialisation will involve some displacement of farmers, especially in a predominantly agricultural economy. Since the Left parties began their onslaught on industries forty years ago, Bengal's economic slide never stopped.

Only in the last decade or so there has been a conscious effort to reverse this process, and thankfully it is producing results; but still it has a long way to go before Bengal can reclaim its old industrial glory.

The real issue, therefore, is not reversal of the policy of industrialisation, but managing the transformation well, with due attention paid to people like Upen, who are marginal farmers, unrecorded sharecroppers or daily workers.

Land acquisition is only one task of this undertaking, improving the efficiency of bureaucracy and preparing the local labour market for private investment are two other crucial responsibilities that the state should not forget.

There is also an overlooked aspect of Bengal's improved agriculture, which now presents a great deal of dynamism and commerce in contrast to the archetypical image of poverty and exploitation: fodder on which every Left intellectual is brought up.

Industrialisation has threatened to eliminate such enterprises and along with them a hard working self-employed workforce.

Fair price

Two issues are important in land acquisition. First, who should acquire it: the government or the actual investor? Different views have been voiced, and so far the Bengal experience provides unclear evidence, with of course Singur and Nandigram tipping the scale in favour of the second option.

Some economists have given good reasons for divesting this task with the government, in which case the Land Acquisition Act empowers the government to take anybody's land. The strongest argument is to avoid 'hold up' by a few reluctant owners (reluctance could be genuine or strategic). This also seems to be the best policy for creating industrial park for small investors.

The second issue is fair price. The Left government has claimed that it has shown generosity by offering a markup on the 'going market rate' of the land in question. And even though, according to media reports, this claim is true, the fairness aspect still needs to be examined.

The going market price of a plot of agricultural land reflects its present value, assuming that the land will continue to be used for agriculture. In this sense, the market price reflects a 'fair price.' But when the plot is acquired for industrial, commercial or residential development purposes, the going market price is hardly fair. In this case, the land is transferred out of agriculture to a different market where its final price can rise 15 to 20 times.

When this is the case, basing the compensation formula almost entirely on 'current use' is clearly unfair. I believe, much of the current discontent could have been avoided, if in the land pricing scheme a respectable weight were placed on the future price of the land.

At present there are many low-scale development efforts going on in the districts, which have not received any media attention at all; but from my personal visits I sensed that such projects also expose the unfairness of land price schemes.

Typically, a government agency acquires land by offering say Rs 2 lakh (Rs 200,000) per acre, which could be the going market rate for 'agricultural land.' Later, after some developmental work, lands are sold in small 'parcels' to end users -- like private residential buyers -- at a premium rate fetching, say, Rs 20 lakh (Rs 2 million) per acre.

Sometimes, a private developer might act only as an intermediary. Clearly, developmental expenditure alone cannot justify such a phenomenal margin; it is the demand of the urban real estate market that makes the price rise so high.

The government price scheme has so far ignored the end-use price. Consequently, a landowner who is forced to sell feels robbed of the opportunity of getting a share of the margin. This is a clear case of regressive redistribution.

Efficient bureaucracy

Nobody can deny the crucial importance of an efficient bureaucracy, which will implement policies and programmes fairly and quickly. Although over the last few years the West Bengal administration has improved its performance through computerisation, internal monitoring and various campaigns, there is still much to be desired.

Compared to other industrialised states, such as Tamil Nadu, Karnataka and Maharashtra, West Bengal government's offices are still a poor picture of sloppy take-it-easy work culture (referred to in Bengali as hochche hobe). In the districts the picture is much worse. There ordinary people are at the mercy of the staff; and petty corruption is rampant.

Part of the problem lies with the practice of the leading party, CPI(M) itself. Party workers play a vital role in helping the poor people wade through cumbersome procedures that are inescapable even for routine things like a birth certificate.

Often, party leaders mediate serious family or property disputes, which can take ages to settle in court. Creditably this approach has empowered the disadvantaged and its economic benefits cannot be ignored. But this has also given rise to opportunities of selling favour and extorting money. The bureaucracy, in the process, has been made subservient to local party bosses, who call the shots but are not accountable in any way.

But industrialisation demands a well-functioning administration which will efficiently collect taxes and protect lives and properties of the poor and the rich alike. This work cannot and should not be undertaken or influenced by the party bosses.

Local labour market

Another sign of investment-worthiness can be read from the education sector. Here my hunch is that West Bengal is caught in two scenarios. Kolkata and its suburbs are benefiting from the buoyancy of the urban job market, thanks to largescale outsourcing. But the districts present a different picture. Majority of the college graduates there aspire for jobs at government schools or offices. For many, new economy jobs are too alien.

There are no statistics available; but most college graduates in the districts cannot write in English, let alone speak. Even their proficiency in Bengali is suspect. Computer literacy is dismal. In sum, they are unemployable.

If they are not ready to make use of the new opportunities, self-fulfilling pessimism will set in and opposition to industrialisation will grow.

It is time to reform our schools and colleges, to impart marketable skills and to reorient the youngsters to harsh reality of private sector jobs.

The author is a Senior Lecturer in Economics, University of East Anglia, Norwich, United Kingdom. The views expressed here are personal.

Bibhas Saha