Industry vs farmers | How it hurts India

on LIVE MINT.com
Posted: Wed, Sep 15 2010. 5:45 PM IST
Reuters


New Delhi: As India rapidly industrializes, the government and private firms are seeking large tracts of farm land to build factories, power plants and highways, sparking off violent protests by farmers and others.
Why is land a big issue?
For many Indians, land is the only asset or social security that they possess and is a mark of social standing. Nearly 60% of India’s 1.2 billion citizens depend on farming for a living and each hectare of farmland supports five people.
Most projects require huge amounts of land. A proposed steel mill by South Korea’s Posco in Orissa will be built on 1,600 hectares. A six-lane highway between the Taj Mahal city of Agra and New Delhi will require 43,000 hectares.
Compensation ranges from between $4,300 a hectare, in the case of top steelmaker ArcelorMittal’s proposed plant of over 4,400 hectares in Jharkhand, to $14,600 per hectare, offered to farmers displaced by Posco’s Orissa mill.
Despite the seemingly attractive prices, farmers have few other livelihood options and land taken over for industrialization has been blamed for displacing hundreds of thousands of people.
Protests against land being taken over have become more visible as the economy expands and the rich-poor gap widens.
What does the law say?
The land acquisition law gives the state the right to take over land for public purposes with little compensation.
Critics say the government interprets “public” to include private investments and this amounts to land-grabbing. They want private firms to buy the land from the owners at market rates.
India is considering a new law which would guarantee market or higher rates.
Congress chief Sonia Gandhi last week threw her support for greater land rights for farmers, following up after her son, Rahul Gandhi, extracted a promise from Prime Minister Manmohan Singh to pass legislation this year that is seen benefiting farmers.
What is at stake?
Analysts cite problems in acquiring land as the biggest hindrance to rapid industrialisation of Asia’s third-largest economy, pointing to several stalled highways, power utilities and factories.
Prominent amongst these are multi-billion dollar investments by top steelmakers like ArcelorMittal, South Korea’s Posco and Tata Steel.
Protests over mining on tribal land in Orissa have stalled plans of British-based mining group Vedanta Resources Plc to extract bauxite.
Who benefits and who pays?
Proponents say setting up industries and infrastructure will boost economic growth to double-digit rates which are needed to pull out of poverty the hundreds of millions of Indians who live on less than $1.25 a day.
They say more jobs will be created, shifting people from farms to the higher-paying industrial and service sectors, and that this will deepen the domestic market for goods and services.
Opponents point at the land system that has multiple layers of tenancy and where the peasant or farm labourer is often not the owner of the land and hence receives no compensation. They also question the benefits of industrialization, saying displaced people do not get the jobs that may be created as they do not have the required skills or qualifications.
How are other countries faring?
China faces similar problems over land rights and property seizures, with an increase in the number of clashes between peasants and local government.
Some analysts have warned the confrontation could ignite broader popular demands that challenge the Communist Party’s hold over 750 million rural residents.
What are the security implications?
Maoist rebels have tapped into the resentment of tribal and rural citizens who have been displaced from their land as a result of industrial projects.
They have been linked to protests that forced Tata Motors to shift the site of a plant to build the world’s cheapest car. The rebels have also sided with farmers opposing a $3 billion chemicals hub complex and a steel plant planned by India’s No 3 steelmaker JSW Steel, among others.
A government panel has said forcible acquisitions could shake the faith of citizens in the rule of law and would have serious consequences for internal security.
How does it affect farm output?
India’s food productivity is nearly stagnant and using farm land for other purposes means the country cannot raise farm output rapidly enough. This could leave it vulnerable to food shortages in times of a bad harvest, forcing it to go for costly imports.