Journey into conflict: Why Tata is caught in land dispute
By Joe Leahy
Published: September 14 2008 19:16 | Last updated: September 14 2008 19:16
You know immediately when you have reached Khejuri. The roads in the communist part of Nandigram, a remote rural area in India’s West Bengal state, are lined with crude bamboo flagpoles bearing the communist hammer and sickle. At the entrance to the area, paramilitary police check all visitors.
The region about 150km from Calcutta erupted last year into a mini-civil war after the state’s communist government tried to acquire land in Nandigram for a special economic zone being set up by Indonesia’s Salim group. The villagers in Khejuri wanted the zone, arguing it would bring jobs. But their neighbours elsewhere in Nandigram did not want to surrender their farms and started protesting against the project.
The communist cadres in Khejuri took up arms against the protesters, leading to as many as 14 deaths by some reports and creating divisions that persist to this day. “We can’t look them in the eye – we can’t go over there and they can’t come here,” Satarajan Das, a villager in Khejuri, says of his former neighbours in other parts of Nandigram.
The area has come to symbolise one of the central difficulties facing India in its attempt to become an industrial power – how to build big projects without disenfranchising the nation’s farmers, who still comprise 70 per cent of the population, many of them peasants who follow centuries-old farming practices.
The latest high-profile victim of this conflict between industry and agriculture is Tata, one of India’s largest conglomerates. The group is being confronted with farmers’ protests against its plan to build a factory to make the world’s cheapest car, the Nano, also in West Bengal and on prime agricultural land.
Vedanta Resources, a UK-listed metals company, is locked in a conflict with tribal people in Orissa, also in India’s east, over a plan to mine hills regarded as sacred. Plans by Posco, the South Korean steelmaker, to build a $12bn (€8.5bn, £6.7bn) plant in Orissa have stalled after opposition from farmers.
No one disputes that India needs more manufacturing industries to create jobs. Agriculture employs nearly 60 per cent of the workforce but generates only one-fifth of gross domestic product. With India’s population, currently 1.1bn, set to grow by half again in less than 30 years, more employment is urgently needed in labour intensive industry outside of agriculture. “No substantial country has ever crossed the barrier of poverty without very substantial industrialisation,” Amartya Sen, the Nobel prize winning economist, noted recently in a column for a local paper.
The problems arise, however, when it comes to acquiring land for industry. Indian industrialists accuse political parties of blowing up conflicts with farmers for their own narrow interests. But analysts say there are fundamental issues of justice that need to be solved in the way that land is acquired. “The industrialists in this country and the developers have got used to the government expropriating land on their behalf at ridiculous prices and giving it to these guys practically free,” says Mohan Guruswamy from the New Dehli-based Centre for Policy Alternatives, a think-tank.
The problem has become particularly acute in West Bengal, where the chief minister, the former hardline communist Buddhadeb Bhattaracharjee, has become a born-again champion of industry, in the model of China.
His government was particularly eager to attract the Tata’s Nano factory because of the project’s high profile in India and overseas. Ratan Tata, group chairman, has captured the imagination of the world with his promise that the Nano will have a starting price tag of Rs100,000 ($2,190, £1,220, €1,545), turning the project into a showcase of India’s expertise in low-cost engineering.
In 2006, West Bengal offered Tata an incentive package few industrialists could resist, including a 1,000 acre plot of land virtually for free, a Rs2bn loan, cheap electricity and an exemption from 12.5 per cent value added tax for 10 years. The deal done, officials showed the Tata group several sites for the plant before settling on Singur, a open patch of lush rice fields near Calcutta on the main highway to Delhi.
But trouble dogged the Nano project from the beginning. In May 2006, a Tata team visiting the area was temporarily detained by protesters and had to be rescued by police. In September that year, police attacked protesters against the plant, one of whom later died of the injuries sustained. In December, when work began to fence off the plant site, police fired shots to clear the area.
The latest strife at the Nano plant came last month when the opposition Trinamool Congress, led by prominent activist Mamata Banerjee, started mass protests calling for 40 per cent of the site to be returned to farmers still opposed to giving up their land for the project. Mr Tata, distressed that the group might miss the October commercial launch date for the Nano, ratcheted up the pressure on the state government to solve the impasse by bluntly warning that he would relocate the plant if the protests continued. The threats drove Ms Banerjee and Mr Bhattacharjee, both of whom have no interest in seeing the Tata group leave the state, back to the negotiating table.
A visit to the villages around Singur shows that this is an area where poor farmers eking out a subsistence living rub shoulders with middle-class agriculturalists.
In Gopalnagar, one of the villages near the Nano site, an old woman scoops up cow dung with her hands and slaps it on to the mud walls of her house. It will stick there while it dries for use as fuel. Nearby are the concrete houses of the richer farmers, who have invested in extensive systems of ponds and wells for irrigation and make a decent profit off their land.
The government’s mistake was not to first try to build a consensus among these people, particularly the more prosperous farmers, over the need for the plant, analysts say. “The government of West Bengal has adopted a ‘my way or the highway’ attitude,” noted Mritiunjoy Mohanty, assistant professor at the Indian Institute of Management Calcutta, in a study.
Many farmers were enraged when the government gave notice that it was planning compulsory purchase of their land. “The government has offered Rs1m per acre but I will not take it. I have not collected my cheque,” says Sarat Das, one of the better-off farmers in Gopalnagar.
A senior official with the state government admits the government did not anticipate the kind of problems it might face in Singur. Dialogue should have started much earlier, he says. “Singur has taught us many lessons,” says the official.
Others blame politicking by Ms Banerjee and the communist government. But analysts say at that underlying the issue is a flaw in India’s legal system that allows governments to compulsorily acquire land for private enterprise even when this serves a convoluted public interest at best.
The West Bengal government argues that acquiring land for private industry is legal because it serves the public purpose of creating jobs and generating taxes. It adds that farmland is typically divided into hundreds of small plots – there are 12,000 title holders at the Nano site alone – making it difficult for industrialists to assemble large chunks of land themselves.
Realising the importance of this issue, India’s central government has drafted an amendment to the 1894 land acquisition law, explicitly prohibiting the compulsory acquisition of land for private interests in most circumstances. But the amendment, currently before parliament, has come too late to solve disputes such as over the Nano project.
The Tata group, which continues to urge the warring parties to sort out their differences, has been portrayed as the hapless victim of politicking, winning it the sympathy of the country’s urban middle classes. But the reality in the villages surrounding the Nano site is more complex. Mr Das of Gopalnagar says Tata had offered the villagers jobs as security guards at the factory but the salaries would not have been enough to live on. “We can earn more with our land. With farming I made this place, got my girls married, three of them. This land is our mother,” he says.
But while the two sides may be poles apart in Singur, at least there is still hope of a peaceful solution, with Ms Banerjee and the government trying to hammer out a deal that will further compensate those who unwillingly gave up their land.
In Nandigram, no happy ending is in sight. In Sonachura, a village near Khejuri that protested against the special economic zone in Nandigram and bore the brunt of last year’s violence, the young men are vigilant. They claim that every night, Communist cadres from Khejuri creep into the area and throw bombs at villagers.
“How do we know how many people have lost their lives?” asks Bansi Mandal, a young farmer. “Ask [chief minister] Buddadeb Bhattacharya. Only he knows everything.”
Additional reporting by Arush Chopra and James Fontanella-Khan
‘WE ARE NOT SERVICING CAPITALIST INTERESTS’
West Bengal state is an unlikely hotspot for agrarian protest in India, given that it is also home to the world’s longest-serving democratically elected communist government. The Left Front ruling coalition, led by the Communist Party of India (Marxist), came to power in 1978 with an aggressive land reform agenda that gave tenancy rights to landless cultivators, creating in the process one of India’s most prosperous rural sectors.
But at the same time it drove away industry with practices such as “gheraoing”, whereby union activists encircle a factory manager in his office, detaining him until he accedes to their demands.
The communist government became so anti-business that it even severely restricted the use of computers, claiming they took away jobs, until about a decade ago when it became aware it was missing out on India’s software boom.
Buddhadeb Bhattacharjee, the present chief minister, changed that to a pro-business stance. He is seen as close to Ratan Tata, the Tata group chairman who delivered him a coup by agreeing to make the Nano in West Bengal in exchange for subsidies such as cheap land.
CPI (M) leaders thump the table when they are accused of being pro-capitalist in their new industrial policy.
“We are not servicing the interests of capitalists,” argues Biman Basu, chairman of the Left Front, the state ruling coalition led by CPI (M). “We want to create jobs for our young people.”
The CPI (M)’s hegemony in the state has been challenged by the Trinamool Congress, a breakaway of the federal Congress party led by Mamata Banerjee.
The TMC has won local elections in Singur, enabling it to mobilise mass support against the Nano project. In addition, there are some who believe the ruling coalition, led by the Congress party in Delhi, is supporting her effort.
The Congress party is miffed with the CPI (M) for opposing in the national parliament the ruling coalition’s efforts to secure a deal on nuclear energy with the US.
Copyright The Financial Times Limited 2008
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