Resettle People Differently

T K Arun / Mar 7, 2006, 00:00 IST

Text Size

Small
Medium
Large

Land should be held by agency in which oustees have stake.

For three consecutive years, the Indian economy has grown at more than 7.5 per cent a year. Such fast growth will probably be sustained.
Growth matters for ordinary people and the poor because it increases their incomes, loosens shackles of a long tradition of oppression and vastly improves chances that their young, at least, would realise their potential as human beings.
Enriching, empowering and, ultimately, liberating that is how we would like to view growth.
But for a lot of Indians, growth would first mean dispossession, of being kicked out of the land on which they make a living. They will resist it and violence would ensue.

Policy urgently requires to be forged to prevent growth from turning into a source of large-scale alienation and disaffection.
Growth is a land-intensive affair. It calls for altering the present use of large tracts of land. New factories, new towns and townships, roads, highways, power plants have to be built.
To feed growing India's gargantuan appetite for energy, we will need to open up new mines, lay pipelines and power transmission networks across the country. All this calls for land to be put to new use.

Demand for water will grow as manu- facturing gathers further momentum. Given the alarming depletion of groundwater over the last two decades, there is no alternative to harnessing surface water. This means building more dams. Dams generally mean displacement of people.
India is a populous country. It's not like nations in the Americas or Africa, where, if you want to build a new town or dam or open up a mine, chances are that you could do it without displacing existing settlements.
In Europe, such growth-induced change of land-use took place before the advent of democracy.
Sheep ate men in England, during the Enclosure movement that converted farmland into pastures to feed a growing woollens industry, and there was little those who were made into sheep-meal could do about it.
This is pretty much the case in China today as well, where people have limited rights vis-a-vis the state.
India has a lively democracy where people's concerns have voice and agency. Land-use changes cannot be forced upon people easily.
They must be compensated for their loss, fully and adequately. Most certainly, this has rarely happened in India, even with our democracy.
Compensation has tended to mean at best compensation at the prevailing market rates. The tribals of Jajpur, Orissa, 12 of whom were shot dead protesting the takeover of their land for a steel plant were offered prevailing market rates. This is both inadequate and unfair.
In the case of projects that displace people, a social cost-benefit analysis must throw up benefits in excess of costs to justify them.
Social benefits, however, can be spread over a very large number of people, a large area and many years. Water and power generated by a dam could benefit millions living over thousands of square kilometres for decades.
But significant costs fall directly on the relatively small number of project-affected people, who often lose their livelihood.
The asymmetry between gain to individual beneficiaries and loss suffered by individual project-oustees is one reason why the market value of the land in question is not fair compensation.
Another is that they lose out on accelerated appreciation of land value in the region of the project, thanks to the project itself.
A steel plant or a new road would boost land prices for all those who managed to retain their land. This breeds resentment among those whose lands were taken away at market rates prevalent before the project started.
This is precisely the kind of resentment that Deve Gowda tries to capitalise on when he accuses Bangalore's IT industry of cheating farmers.
The solution is to create institutional mechanisms that give those whose land is acquired for a project a stake in the project. Land-for-land and jobs in new projects have been the traditional solutions.
These do not work anymore. There isn't always sufficient, suitable land elsewhere to make land-for-land schemes work.
Modern manufacturing and other activity are skill- rather than labour-intensive and can absorb only limited amounts of unskilled labour of the kind that project-oustees can perform.
One possible solution is for the acquired land to be transferred not directly to the project in question but to a special purpose vehicle whose sole purpose is to own land for the project, and to give the project oustees a 50 per cent stake in the SPV.
The project could own the remaining 50 per cent and lease the land from the SPV, for an annual charge that could be linked to the market price of land in the area.
As land appreciates, the value of the SPV and of its shares held by the oustees would appreciate alongside. A lock-in could be prescribed, to prevent imprudent, premature sale of their stake by the project-oustees.
Such a scheme would ensure a steady stream of incomes to the project oustees that make them stakeholders in the project.
Converting them into stakeholders is the key. There could be other ways to do it. They need to be explored, with despatch.