Business Today

P-Watch Column

The why, what and how-to of policy making.

By Balaji Chandramouli        Print Edition: Sept 23, 2007

'Lease' of life for SEZ?

Late last month, the 180-odd SEZ developers were greeted with news that left them much relieved. The government was now planning to allow states acquire up to 30 per cent of the land for the developers. Evidently, the ghost of Singur, Nandigram and Raigarh managed to impose only a temporary ban on land acquisitions, no further. However, that offers little comfort against a repeat of such incidents. After all, the fundamental issue remains unaddressed for the most part-that of meeting the farmers' aspiration to share the gains of industrialisation.

To attempt an answer will require a wide lens angle of the situation. There is no denying that planned urbanisation is a key aspect of sustainable growth. Robust industrial growth fuelled by the erection of new factories across sectors will be accompanied by new cities being born, and suburbs mushrooming around these employment hubs. And all this will happen on land that the farm sector must relinquish. Hence, central to the sustainable growth theme is the need for a land utilisation policy at the national level. For example, the least productive farm lands need to be identified for industrialisation to ensure that agriculture growth does not suffer. Further, reforms in the agriculture sector need to improve the yields in the farmlands. Hence, the food security aspect must blend with the industrialisation policy.

At a social level, as farmers sell their land, they need to be gainfully employed, and not disgruntled with the happenings around them-industrialisation will bring prosperity all around. The central government's rehabilitation policy of a one-time settlement does not ensure this. In the neighbouring villages of Pune, farmers have more than made up for government failure on this count-they have got together and decided to develop an SEZ. They continue to till the land and milk the cows; but this income will be a fraction of the lease rentals from the SEZ. However, expecting entrepreneurial skills from farmers across the country is rather ambitious. Ironically, Singur, West Bengal, where farmers have protested against the Tata project, offers insight. The automobile major's small car will be manufactured on land belonging to the state-the main plant is situated on land leased from the state government and not belonging to Tata Motors. According to the Tatas, the government will earn Rs 1,000 crore towards lease rentals. Why can't the farmer earn this rental rather than the government acquiring land from the farmer and leasing it out to Tatas?

Tale Bearer
 
Cross Fertilisation

Industry never shies away from lobbying the government when its case awaits approval. Who would know it better than RIL, which has spent over $5 billion on its KG Basin gas project and is in the process of obtaining approval for the gas price. However, it evidently chose not to work too hard on the Fertiliser Minister Ram Vilas Paswan, a key member of the Empowered Group of Ministers (EGOM). For, a fertiliser ministry official conveyed to a key petroleum ministry official, the minister's desire to meet Mukesh Ambani before the meeting of the EGOM. It goes to show that lobbying is a double-edged weapon.


Delivery Pangs

The poor reputation of the government's delivery mechanisms is only too well known, be it in infrastructure or subsidy disbursal. It turns out that the story is not different even when it comes to delivery of documents to Cabinet Ministers prior to a Cabinet meeting. On August 27, Finance Minister P. Chidambaram was horrified to find that he had not received the documents for the evening's meeting on RIL's gas price. It turned out that the papers had been sent to his residence over the weekend.

In other words, rather than buying land, the government should facilitate the leasing of land, with the SEZ developers having the first right of purchase as and when the farmer chooses to sell land after a lock-in period. A diluted form of this option has been adopted by RIL in its Maha Mumbai SEZ, where it will return 12 per cent of the land bought from the farmers after developing the SEZ.

Surely, 'inclusive' growth is not an option. It is a necessity.

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