Thursday, January 11, 2007


Land is the ultimate property, indeed it is very often the only real property, fittingly called real estate. Some considerable amount of thought has me convinced that the fundamental difference betwen the capitalist and the socialist forms of governance, the head-on conflict about private vs. public ownership w.r.t the means of production has its clearest and most basic manifestation in the issue of the ownership of land. The reason I have been compelled to go back to terms I first read in the 9th standard economics textbook is the recent spate of land acquisition by the various state governments to develop SEZs as part of the 'reforms' process and the Singur controversy in particular.

The West Bengal government has used 'eminent domain' to get part of the 1000-odd acres that they have acquired for the Tata Motors plant at Singur, while mouthing the official line of 'We are trying to get consent'. They're also in the process of similiarly acquiring some 19,200 acres of land in Nandigram for an SEZ. Without delving into the political gimmickry surrounding both these acquisitions, the core issue on hand is something that is extremely fundamental to the basic model of governance, economic and otherwise, that a nation or a government adopts.

Simply put, eminent domain is the right of the government to forcibly acquire land from its current owners or residents (I say residents because ownership can be a very tricky thing) at a price that it deems fit, if they refuse to sell it to the government. It has traditionally been used for projects that involve infrastructural development, the Sardar Sarovar project on the Narmada being a classic exmaple. The most common moral rationale given for such acquisition is 'greater common good', a term that is viewed, often rightly, with huge skepticism by liberal intelectuals.

Working under the assumption that no one in their right mind supports a collectivist approach to land ownership, it is fascinating to examine the two basic approachs that remain, one that of liberal free-market capitalism and the other a more sitting-on-the-fence centrist approach that tries to find the middle ground. A libertarian viewpoint would put individual property rights above anything else, and argue that governance that is based on any sense of a unit that is more of a 'community' than an individual is bound to be subjective, hypocritical and open to flagrant abuse by the authorities and those close to them. While such a stand seems absolutely logical theoretically, it also reeks of moral grandstanding. A call of 'only private property' is fundamentally not very different from 'no private property' in its ideological absolutism. Transport, drinking water, etc. are integral to basic national infrastructure and it is the job of a government, even in a libertarian set-up, to provide for them. Railroads have to be built, roads have to built, dams have to be created. Some land will be required, some areas will be submerged, and some people will have to move. Ofcourse, it would be brilliant if the transaction happened through a proper consensual sale, but that is a truism, lets tackle the areas that are contentious. If you will criticise the government for acquiring land inspite of its residents' unwillingnes, and criticise the government for not doing enough for the infrastructure if it doesn't do so, and criticise it for wasting the taxpayers' money if it tries to find the middle ground by opting for an economically less viable project that goes through previously uninhabited land, you really do not leave the government with any choice, and are not helping the situation at all. Eminent domain has a purpose, and it must exist.

The concept of 'greater common good' also does exist, but is nearly impossible to formalise. I have been told that its currently accepted definition is 'benefit whoever you want to, but do not degrade the existing standard of life of those you are affecting'. Cultural and emotional issues notwithstanding, 'do not degrade' would simply mean adequate compensation. Even assuming that there do exist correct formal methods of determining 'adequate compensation', the beautiful definition quoted above is, like most such beautiful definitions, a convenient truism. What if basic amenities to 50 people can be provided only by degrading the standard of life of some other 5? Should the government go ahead? What if the numbers are more evenly balanced, say 50 against 40? Should the government go ahead now?

Coming back to Singur, it is easy to see that the primary reason for the controversy is the fact that Tata Motors is a private enterprise and hence the use of eminent domain for land for the 'Rs 1 Lakh car' factory just cannot be viewed at par with its use for land for say, railway tracks. What makes the situation truly scandalous is the fact that the government has a monopoly on the sale of agricultural land for non-agricultural purposes, which basically means that the farmers in Singur cannot sell their land to Tata directly, even if Tata was offering them a briliant deal, but Tata Motors can always lobby with the government and hence get the land at any rate that the government decides. This monopoly over the market for agricultural land was part of the land reforms carried out by successive state and national governments, in continuation with the abolition of the Zamindari system. The rationale is simple to see, the government didn't want the Zamindar to scoot after booking his profits by seling the land that was tilled by others but owned by him. The opposing rationale is simpler to see, and is far more convincing. The presence of government as the monopolistic intermediary increases the number of transactions points, the number of vested interests, the number of rent-seekers and those who make a 'cut' and is a stark example of a legislation that breeds crony capitalism instead of the intended socialist democracy. It is a classic demonstration of the fact that the tools that are required by a collectivist government to take from the rich and give to the poor are the exact same tools required to take from the poor and give to the rich. The rationale behind land reforms, however cannot be faulted as a whole. A defence of private property rights is not an adequate argument for the rights of the 'Zamindars' and the Zamindari system had to be abolished. Like so many things however, land reforms in India have been carried out insufficiently, indiscriminately and with the use of heavy handed statist legislation instead of a judicious centrist balance.

The inherent problem with the centrist approach that I take is that it can be easily accused of hypocrisy and subjectivity unless a specific concrete model outlining the basic points of balance is presented. Here goes then, my set of conclusions.

1) Eminent domain must stay. It must however, be used only in government projects that can be counted as integral to the basic national infrastructure and nation-building. The dam on Narmada should have been built, else large parts of Saurashtra may have never recieved clean drinking water. However, the Tata Motors plant in Singur, irrespective of the revenue or the employment that it will generate, cannot be counted as integral to public infrastructure and the state or the national government should have nothing to do with land acquisition for the same.

2) The government monopoly on the sale of agricultural land for non-agricultural purposes must go. If Tata Motors has to lobby with someone to acquire land at Singur, it should be the villagers or the Gram Panchayat directly. The compensation deal, in terms of money/employment/education/whatever should be directly between the company and the farmers, and if the farmers still refuse, the company must search elsewhere instead of asking the government to play mai-baap.

3) Atleast some part of the relief and rehabilitation work in any project where the government does use eminent domain must precede the work done by the government for the project itself.

4) SEZs are a sham. If a rule has to be relaxed for the economy to prosper, there is no reason why it must be relaxed only in a particular area and only for those companies that are big enough to manage to get land in those areas. If the reform process has to be gradual or humane(whatever that means), the relaxation of the rules may be more gradual in pace, but whenever implemented, it must be implemented for the entire nation at a go. A couple of days ago, the PM said something to the effect of 'the government will acquire land aggressively to force the pace of industrialisation'. Mr Prime Minister, reforms are about removing the stumbling blocks in the setting up of private enterprise, not about 'forcing the pace of industrialisation' which is simply Stalin-talk thinly veiled as a proactive approach to reforms. The Soviet Union was also highly industrialized and also showed aggregate increase in economic prosperity. Government backed land acquisition for private players, while seemingly different from dirigiste practices, is actually very similiar. The spoils will simply be shared by the government and a handful of big private players, instead of only the government, as was the case in USSR.

Post conclusions, as a loosely related aside, it is also very interesting, if cynicism-inducing, to notice that even in those cases where the land acquisition does not happen through the government, the basic element of coercion is ever-present. Say a large company wants to develop a large xx.yy lakh square feet mall in a city that it has previously no operations in and ties up with a local player to acquire land for the same. From first-hand knowledge, I can tell you that most of these local players are nothing but local real estate mafia and the 'acquisition' is a straightforward case of bullying and threatening and violence that is at times lethal. Ofcourse, I can also tell you that the people who are already present on many of these lands are also simply closely-knit communities of strong-men with various day jobs (the Bharwads in Gujarat, for eg.) who have no real claim to the land that they are occupying. Ownership, like I said, can be a very tricky thing.Reminds me of something that Mark Twain said - 'No individual or nation occupies a piece of land that was not once stolen'.

1 comment:

murali said...

I cant understand the object of your post at all.

It is very clear that land ownership ultimately has to do with muscle power.As the saying goes,"Jiske pass dhandein,uske pass bhains"

What is left to analyse?