Implosion (24 page)

Sons of regional politicians and others, suddenly rich with wealth from land deals and corruption, have typically shown scant respect for the law. In September 2011, a 22-year-old toll booth operator was shot dead on the Gurgaon highway by the driver of a sport utility vehicle (SUV) – regarded by India’s new rich as a symbol of wealth – who refused to pay the toll of Rs 27. People from nearby villages were exempt from paying tolls if they could prove their identity, and an argument with the booth operator led to the shooting that was caught on closed circuit television.
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In an earlier example of the arrogance of the newly affluent, a politically connected youth, the son of a Congress MP from Haryana, who later became a minister in the state’s cabinet, shot a bar attendant in 1999 at a Delhi nightspot when she refused to serve him a drink. There were some 200 witnesses to what became known as the landmark ‘Jessica Lal case’,
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but many ‘turned hostile’, refusing to give evidence. The youth was acquitted in 2006, but he was re-arrested after a public outcry and sentenced to life imprisonment.

The social dislocation and other problems caused by rapid urban development will continue for decades ahead, albeit maybe more slowly than during the millennial decade of high economic growth. The McKinsey report forecast in 2010 that 590m people would be living in Indian cities by 2030 – up from 340m in 2008 and 290m in 2001. It said there would then be 68 cities of more than a million people including 13 with more than four million and six with 10m. Delhi and Mumbai would be among the world’s five largest cities. ‘We will witness over the next 20 years an urban transformation the scale and speed of which has not happened anywhere in the world except in China,’ said the report.
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Land Legislation

People who lose or voluntarily give up their land for industrial development have rarely been compensated adequately, and the laws and regulations have varied in different states (land is a ‘concurrent’ subject in India’s Constitution, which means that both the central and state governments have powers). Records of landholding are often not available, or cannot be easily verified, which complicates acquisition. This has led companies to prefer that governments acquire land for them using the 1894 legislation’s powers to acquire land compulsorily, often at low prices that do not reflect the real market price. In forest and tribal areas, it has meant that local people have not been properly consulted, as the stories in the next chapter show.

People giving up their land are often offered jobs in the new projects. This has commonly been one job per family, which can work well with unskilled jobs during construction work, but not so well when projects are completed and companies find local people unsuitable for skilled employment – for example, in a car factory. Some are given unspecialized jobs such as that of security guards, but many cannot even do those duties, so feel doubly shut out from their traditional occupations by both the real estate boom that they missed and the industrial boom that they cannot share. The poor also frequently lose out when compensation packages are being handed out. Land acquisition officers typically take a percentage cut to improve compensation amounts. In a relatively minor but illustrative example in Andhra Pradesh,
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the government took over land for a highway project from a woman who had only recently bought it. She successfully won a court case for more compensation than the government had initially allocated, but the local land acquisition officer insisted on receiving a 10 per cent payment for releasing the money.

In its approach paper for India’s 12th five-year plan, India’s Planning Commission, which monitors the economy and proposes policy changes, said that independent estimates suggested only a third of the 60m people who had been displaced by development projects over 60 years had been resettled ‘in a planned manner’.
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Most of them were ‘rural poor without any assets, marginal farmers, poor fisher-folk and quarry workers’. Around 40 per cent of those displaced were tribals and 20 per cent were Dalits. ‘Given that 90 per cent of our coal, more than 50 per cent of most minerals and most prospective dam sites are in Adivasi regions, there is likely to be continuing contention over issues of land acquisition in these areas, inhabited by some of our most deprived people.’

The way forward, said the Planning Commission, was to ‘move away from the colonial perspective of treating people as “subjects”‘, and instead treat them as citizens with rights guaranteed under the Constitution. That required a ‘fair land acquisition law which resorts to compulsory acquisition only where it is unavoidable and provides fair competition’. The law should also mandate resettlement and rehabilitation provisions that were ‘not reduced to what they have become, conditionalities without consequences’. Also required was an ‘unequivocal commitment to imaginatively exploring ways of rebuilding the livelihoods of those adversely affected by development projects’.

This view underpinned government plans for new land legislation to replace the old 1894-based laws. Parliamentary Bills were first prepared in 2007, but lapsed because they were not passed by the time of the 2009 general election. A new Bill was tabled in 2011,
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but it became the subject of controversy and amendments for over two years. It eventually became law in September 2013,
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after being steered through parliament by Jairam Ramesh when he became minister for rural development.

The legislation provided for substantial land acquisition, rehabilitation and resettlement arrangements designed primarily to protect the poor who had previously lost out. Owners were to receive four times the market value of their land in rural areas, and twice the value in urban areas, so that they shared in future land values. Not less than 70 to 80 per cent of the owners would have to give their consent for sales to go ahead during complex consultation arrangements. Land that had not been developed after ten years would be returned to them. These provisions horrified industrialists who said that land costs would rise, and that there would be long project delays and cancellations because of resistance from communities. It also seemed likely that companies would not go for developments that covered large areas because of the problems involved in obtaining approval from numerous owners, and that they might look for sites in rural areas in order to cut costs.

The arguments were polarized around the Indian economy’s basic dilemma – how to encourage industrial and other projects that are needed for growth while at the same time caring for the environment and for those whose lives are being uprooted. It is an argument that will continue, but it is important that the caring side of the argument is not lost in the clamour for growth.

Notes

1
.   ‘Land row murders trigger concern’,
The Telegraph
, 27 April 2012,
http://www.telegraphindia.com/1120428/jsp/bihar/story_15425698.jsp#.UVbYlhcSaSo

2
.   ‘Licence raj has been replaced by land mafia raj’,
DNA
, 30 October 2010,
http://www.dnaindia.com/opinion/interview_licence-raj-has-been-replaced-by-land-mafia-raj_1459666
; interview with Raghuram Rajan when he was professor of finance at the University of Chicago’s Booth School of Business and a part-time economic advisor to Manmohan Singh. A former chief economist at the IMF he became the chief economic adviser at India’s Ministry of Finance in December 2012. His
Fault Lines: How Hidden Fractures Still Threaten the World Economy
, was named the FT-Goldman Business Book of the Year for 2010

3
.   Rajan based these remarks on an article written in 2008 for
Outlook
magazine by Jayant Sinha of the Omidyar Foundation, formerly a hedge fund manager and McKinsey partner. See also ‘Has India’s Gilded Age Lost Its Luster?’, CNBC.com 5 November, 2012,
http://mobile.cnbc.com/special_reports/5/content/49306639

4
.   Raghura Rajan,
Fault Lines: How Hidden Fractures Still Threaten the World Economy
, Princeton University Press 2010,
http://press. princeton.edu/titles/9111.html

5
.   
http://ridingtheelephant.wordpress.com/2007/05/01/special-economic-zones-are-about-people-not-just-development/

6
.   Information given to JE privately by owners.

7
.   ‘Gurgaon master plan a gold mine for realtors’,
Business Standard
, 5 November 2012,
http://www.business-standard.com/article/companies/gurgaon-master-plan-a-gold-mine-for-realtors-112110500076_1.html

8
.   
http://www.ide.go.jp/English/Research/Region/Asia/201108_sato.html

9
.   ‘Blood on the road to Agra’,
Tehelka
, 21 May 2009,
http://archive. tehelka.com/story_main49.asp?filename=Ne210511BLOOD.asp

10
. In conversation with JE, January 2013.

11
. ‘Blood on the road to Agra’,
Tehelka
, 21 May 2009

12
. ‘Gurgaon toll plaza attendant killed, manhunt on’,
Hindustan Times
, 24 September 2011,
http://www.hindustantimes.com/India-news/Haryana/Gurgaon-toll-plaza-attendant-killed-search-on-for-killers/Article1-749533.aspx

13
.
http://archive.tehelka.com/story_main48.asp?filename=hub220111THE_INVESTIGATION.asp

14
. ‘India’s Urban Awakening – building inclusive cities’, McKinsey Global Institute, April 2010

15
. Story told to JE by Andhra Pradesh contact

16
. ‘Faster, Sustainable and More Inclusive Growth – An Approach to the Twelfth FiveYear Plan (2012-17)’, paras 5.24-5.26, Government of India, Planning Commission, October 2011,
http://planningcommission. nic.in/plans/planrel/12appdrft/appraoch_12plan.pdf

17
. All About the Land Acquisition Debate, PRS Legislative Research
http://www.prsindia.org/pages/land-acquisition-debate-139/

18
. ‘President gives nod to Land Acquisition Bill’,
The Hindu
, 27 September 2013,
http://www.thehindu.com/news/national/president-gives-nod-to-land-acquisition-bill/article5175768.ece

11
Protests and Blockages

India is rich in minerals but it has failed to capitalize on this potential wealth in a way that would enable three main interest groups to benefit – the national economy, the state where the minerals are found, and the farmers, tenants and tribals who lose their homes on land whose surface they own, though not the rights to mineral extraction. The same applies to industrial projects such as steelworks and special economic zones (SEZs). For years, companies have secured licences and environmental clearances – and the freedom to bypass them – by bribing politicians and officials in the central and state governments.

Large-scale projects became especially controversial in the 2000s, sometimes with violent clashes and deaths. Twelve tribals were killed in January 2006 during protests against a massive 3,400-acre Tata Steel project at Kalinganagar in Odisha. Other steel ventures planned by Arcelor Mittal – the world’s biggest steel group, controlled by Lakshmi Mittal, a London-based Indian-born entrepreneur – also failed to move ahead in Odisha and Jharkhand, as has a $12bn steelworks in Odisha planned by Pohang Steel Company (POSCO) of South Korea. In West Bengal, politically backed opposition escalated to such an extent that 14 people were shot and killed by police during a demonstration in March 2007 over a proposed chemicals SEZ at Nandigram, and Tata Motors abandoned its proposed factory outside Kolkata for its Nano ‘one lakh’ car. A bauxite mine run by Vedanta Resources, a London-based group originally founded in India as Sterlite by Anil Agarwal, was hit because of dubious environmental clearances and other problems in Odisha’s Niyamgiri Hills where tribals protected what they regarded as a sacred mountain. Vedanta had previously run into environmental problems and international controversy over cutting down forests and other work in the state.

Soon after it was elected in 2004, the Congress-led UPA coalition government tried to speed up such industrial and mining projects. It also started a new phase of SEZs, of which most floundered in controversy. Manmohan Singh gave prime ministerial support to the plans, but the edifice came tumbling down because it was built on weak social and economic policy foundations at a time when India’s economy was booming, and there was a growing demand for the new wealth to be shared with those displaced by industry. Controversies over the use of land escalated from local protests to become national issues with the violent clashes, and Kalinganagar, Nandigram and Singur were seen internationally as symbols of what was wrong with the new India. At the same time, Jairam Ramesh, as the minister for environment and forests, was slowing down projects by rejecting or overturning environmental clearances in his attempt to clean up the ministry’s operations.

The SEZs, Tata Motors and Posco stories, along with Odisha, show how development opportunities have been wasted in India’s complex and often corrupt political and business environment. In all four examples, the losers have been the people living on the land because of the potential economic wealth that has not been realized, while India has lost out on growth.

SEZs

Kamal Nath, an energetic and engaging Congress politician famous for his handling of far-flung business and political connections since he worked with Sanjay Gandhi at the end of the 1970s, pushed the SEZ idea as minister for commerce and industry. He announced new tax breaks plus substantial investment, planning and labour law concessions. The idea was to emulate China’s big and successful zones, such as Shenzhen adjacent to Hong Kong, which have become cities and have driven the country’s growth. But he did nothing to ensure that the zones would be firmly based on manufacturing industry, which had provided the early Chinese zones with their foundations, as I saw when I lived in Hong Kong and visited Shenzhen and other areas in the late 1980s. He also did nothing to prepare for the social and human side of his SEZ dreams. His plans brought industrialists and real estate speculators rushing to his Delhi office, eager to demonstrate their enthusiasm and sign up for vast tracts of land. He built up the hype and encouraged international and domestic interest by unrealistically declaring that the zones would account for $5–6 billion foreign direct investment by the end of 2007.
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