SEZs and rational expectations

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: an interview to The Telegraph, Kolkata, the Nobel Laureate Amartya Sen emphatically said, “Prohibiting the use of agricultural land for industries is ultimately self-defeating”.

Land acquisition is a state subject in India. Unfortunately, the liberalisation process in the country has not been matched by reform in the rent-seeking patwari system of the states. Girish Sanghi, MP and industrialist, argued at a Cuts’ parliamentarians meeting at New Delhi on May 3, 2007, that once the SEZ application is approved by the Board of Approval, on the basis of a State Government recommendation, there should be no need for any administrative/legal requirements for land conversion.

According to the commerce department, only 0.000012% of India’s cultivable land will be used for establishing SEZs. Following the land-acquisition related controversies, an eGoM has decided that state governments would not buy land for private entrepreneurs and that only barren/wastelands or single croplands would be acquired for SEZs by them directly. There is now a consensus across political parties and CSO/NGOs, against the acquisition of agricultural land by private SEZ developers even at market prices. On the crucial issue of rehabilitation of landowners, another government policy is in the making to ensure that the dispossessed are suitably compensated.

Demolishing the romantic argument of farmers in love with their land, Sharad Joshi, MP, observed at a May 2007 meeting that in today’s changed circumstances, they are ready to sell it for their own betterment. If given the option to sell their land (obviously at ruling market prices), which amounts to voluntary retirement from farming, and gain employment in industrial activities, they will opt for it. This has been corroborated by many, including Cuts staff via personal interviews with farmers.

One innovative model to deal with rehabilitation came up in the case of the JSW Steel plant in Salboni, West Bengal, where farmers were compensated with cash, shares in the company taking over the land and also an assured job to each family. Even if the land-owning company fails, the landowner gets the market price for his land.