Tuesday, October 14, 2008

When everyone lost, October 5, 2008

When you teach people for two generations not to respect the property of others you are bound to have a tragedy. Singur is 50 km northwest of Kolkata where Ratan Tata made the surprising decision to set up a factory for the world’s cheapest car, the Nano. Bengal’s image may have improved but it still has a poor work culture. But its chief minister Buddhadeb Bhattacharjee is a charming man. He sees himself as the Deng of India, and he persuaded Tatas with an attractive plot of 1000 acres.
Although the state offered farmers a higher than the market price, some refused to sell their land. When they protested, the ruling CPM party let the police loose and acquired their land forcibly. Mamata Banerjee, an opposition leader, sensing an opportunity for votes, arrived on the scene and insisted on the return of 300 acres. By now the factory was almost ready; Tatas claimed they needed the land to house component suppliers to keep costs down. Mamata’s agitation soon went out of control. Tatas fearing for their staff’s safety, decided on Friday to leave Singur.
Here is a tragedy in which everyone lost! CPM’s culture of violence has been exposed. Buddhadeb’s hopes for an industrial renaissance of Bengal are dashed. Tatas and their vendors face massive relocation costs which have jeopardised Nano’s magical price. Mamata will now only be remembered for destroying Bengal’s future. For the people of Singur the dream of a better life is over. And India’s image is unhappily tarnished.
So, who does one blame? Clearly, the state violated the farmers’ right to property when it forcibly acquired their land. We used to think that property rights concerned only the rich—especially when the targets were zamindars and big business, whose banks and insurance companies were nationalized without due compensation in the 1950s and 1960s. The judiciary, however, kept warning successive governments that the right to property was fundamental. But our socialists were impatient, and on one sad day in 1978, the Janata government removed ‘property’ from the list of fundamental rights in our Constitution. Today, thanks to Mamata, we have realized that the even a poor farmer has a right to his land.
Just as I have a right to my life, I also have the right to the shirt on my back or my home, so that I may live in peace. I can only give up this right when I voluntarily sell my property. If someone forcibly takes it away, the state has a duty to get it back. In societies where property rights are secure and legally enforced, citizens feel safe. They have the incentive to buy, sell, engage in business, and everyone's life improves. There are times, however, when the state has to acquire private land forcibly for a public purpose such as a road. But acquiring property from farmers for the sake of industry does not qualify as ‘public purpose’. To our democracy’s credit, our government has now realised its mistake. A new land acquisition bill is up for Parliament’s approval in the next session. In the future, industry will have to negotiate with farmers, and only if there is a deadlock and only if 70% of the farmers have agreed to sell, will the state step in.
The lesson from this Bengali tragedy is give the poor a clean title to their property—their huts and plots--so that they may take a loan against it. Also, put land records on the Internet so that corrupt revenue officials will not exploit the poor. Karnataka has done it—it has computerized 2 crore land records of 67 lakh farmers. This is one way out of poverty. The Bengalis are our Irish, who as Yeats said, have an abiding sense of tragedy. Their tragic sense lies in striving to be rational but recognising life’s underlying irrationality. One cannot avoid tragedy, but strengthening institutions like property rights can help to minimize it.