The fate of future industrial development in West Bengal hangs in the balance with the suspension of work at the Tatas' Nano factory in Singur, some 40 km from the West Bengal capital Kolkata, owing to disputes over farmland acquired for the project. A domino-like effect has already been sparked off by the controversy surrounding this high-profile project, with one of India's best known software companies Infosys Technologies also articulating concerns over whether it should go ahead with its own venture in the state.
There may actually be numerous projects that have had problems following West Bengal Chief Minister Buddhadeb Bhattacharya's ardent wooing of domestic and international companies to his state in recent years. But the Nano, billed as the world's cheapest car with a price tag of Rs.100,000, or $2,250 excluding taxes, is an initiative being watched by the whole world. Any slip in its launch by the October deadline is going to send a negative message to many prospective investors.
The Tatas, India's largest and one of the most respected industrial houses with a combined turnover of $62.5 billion, have clearly taken a hard-nosed commercial decision to launch the Nano on the target date in a bid to ward off competition close from, among others, the Bajaj group. Significantly, its chairman Rahul Bajaj's statements on the issue have been ambiguous. He first came in support of Mamata Banerjee, whose Trinamool Congress, the principal opposition party in the state, has bee spearheading the protests at Singur. Then he issued a pro-Tata statement. These are normal corporate rivalries, which every industrial house has to tackle, and shifting the project to another state is among the options being considered by the Tatas.
The net result is that West Bengal may lose out on the privilege of being the launch pad for an Indian car that has truly grabbed global attention. The loss will be clearly that of the Left Front government and most acutely that of Chief Minister Bhattacharya since the Tatas had announced their small car project in his state on his first day in office and since then, he has been on a mission to revive industry in this heartland of the Communists.
But Mamata Banerjee and her party will be equally at a loss since their many statements that they are not against the Tatas per se are not going to change the group chairman Ratan Tata's mind - at least for the short run. With eyes closely set for an October launch of Nano, the industrial house may revive its Singur project only for the second or third phase of the car's expansion.
A laudable role as mediator and peacemaker was, indeed, played by West Bengal Governor Gopalkrishna Gandhi - the grandson of Mahatma Gandhi. But the talks initiated by him between the government and the protestors failed, largely because the Tatas, who are the key investors in the project, having already pumped in some Rs.15 billion (over $350 million) into the project, were kept out of the talks.
The problems over the Singur project are much deeper than the immediate attempt to reach a compromise formula on land acquisition. Some 1,000 acres of farmland was acquired for the project and the ancillary units by the state government. But a section of the farmers, who own some 400 acres out of that, said they were forcibly made to part with their asset and want the same returned.
On a larger canvas, the problem at Singur is linked to the need to providing adequate compensation to the Indian farmer who, as it is widely recognized, will now have to be weaned off his or her land to provide space for industrial development. This may result in much larger employment opportunities for the masses, but the contentious issue of compensation for acquiring farmland for industry will have to be resolved soon.
Otherwise, the grand plan being made to shift the focus of the economy from agriculture to manufacturing and services may suffer a serious setback. It may be argued that maverick politicians are fuelling the agitation in Singur or in some other parts of the country. But the fact is the compensation paid for the land in such areas has not addressed the apprehensions of farmers over their long-term livelihood issues.
One must, thus, also concede that the agitation launched by Banerjee and her party is not purely a political stunt to gain brownie points with farmers of West Bengal with an eye on the next elections. It clearly could not have been so successful if a section of the farmers of Singur were not really on the warpath. Their concerns clearly indicate a genuine cry for help. Many have also pointed out that a one-time payment for the acquired land will not feed them all their lives. Their reasoning is valid.
There are reports of numerous farmers having sold off their land, owing to the growing urbanization of the National Capital Region, which comprises New Delhi and its satellite towns. Soon after, many had literally blown up the money in a short period and then faced the difficult consequences. So the fears are genuine - as long as they possess their farmland, it gives them some form of permanent livelihood, but mere cash compensation to part with that asset for the sake of industrialization is only a short-term solution.
At the same time, with fragmented holding of such farmland, revenue from agriculture has been declining. In such a scenario, innovative ways to provide farmers both compensation and a long-term livelihood need to be incorporated into future land acquisition agreements. There are some encouraging signs where some industrial houses are trying out these new and innovative approaches to deal with the farmers whose land is being acquired for special economic zones. The aim should obviously be to ensure that the farmer's family does not lose out in the long run after selling their land.
The land for land policy proposed by the West Bengal government during the peace talks is also not viable, both because it creates pressures on land availability and also since providing comparable land is virtually impossible. The government needs to consider evolving a long-term policy for compensation to farmers that provides innovative solutions to the critical issue of loss of long-term livelihood that has been the core concern of farmers. This could be in terms of involving the stakeholders in projects in their own areas.
If guidelines in this respect are laid down in a transparent manner, it would be far easier to move ahead with industrialization that can provide much larger employment opportunities to the millions in this country. It will not only prevent more Singur-like scenarios but also make farmers key stakeholders in the drive towards industrialization and development.
(Sushma Ramachandran is an economic and corporate analyst. She can be reached at firstname.lastname@example.org)