Skidding into trouble

Font Size

Print

Feedback

Email

Discuss

Related Articles

IMF to expand crisis lending fundInflation challenging economy: GokarnRupee down 10 paise at 46.57 a dollar

: In 1994, around 120 farmers of Magarpatta, Pune, already at risk of losing their land to urbanisation, went to the Maharashtra government, offering to pool their combined holding of 400 acres to build a self-sustained township. A decade later, Magarpatta was a cyber city, housing some of the biggest names in software, and, what’s been a win-win for the land-losers, each of the farmers holds a stake directly proportionate to their land holdings. The example of Magarpatta has been invoked time and again when a proposed industrial project has got caught in land tangles.

At the heart of the land crisis at Singur — and the whole industrial resurgence in West Bengal — is a plain and simple numbers game, which goes beyond the fortunes of the Nano project. Consider this: Riding on the potential in sectors like steel and manufacturing, West Bengal attracted investment announcements worth Rs 87,037 crore between January and June, 2008-09. For such huge investments, the government will need to acquire a lot of land. But only 1% of West Bengal’s total land area is fallow. The government will have to use a chunk of agricultural land (at least 60,000 ha) for industrial purposes. For the year 2007-08, and up to January 31, 2008, the government has acquired 2,303 acres for different projects.

Singur in the spotlight

Situated in the fertile Hooghly district, Singur is lush all year round. It’s particularly known for its potatoes and paddy. The resistance to the small car project has been going on for two years now, ever since it was announced. Particularly rigid has been Opposition leader Mamata Banerjee, aided by disparate groups, who insist that 400 of the 997 acres acquired for the unit should be returned to landlosers, because they were forcibly taken.

State industry minister Nirupam Sen admits that 2,251 people had not accepted compensation and that they collectively hold 305 acres. Sen says 10,852 people have accepted their compensation cheques. If on the one side there are resisting farmers, on the other are those hanging on to the promise of jobs. Tata Motors, which is setting up the plant at a cost of Rs 1,500 crore including Rs 100 crore for the land, and its ancillaries have promised at least 4,500 jobs.

Land tangle

Experts agree that Banerjee’s agitation may force the state government to be more careful while acquiring land. The state’s land area of the state excluding Kolkata Metropolitan District is 86,87,521 ha. The area not available for cultivation is 16,360,38 ha; other uncultivable land excluding current fallows is 119,146 ha.

According to one estimate, land belonging to 500 sick industries adds up to more than 40,000 acres. Already, chief minister Buddhadeb Bhattacharjee has been talking about an “attractive economic package” for all farmers affected by land acquisition. As part of the package, each farmer who has given land will get an extra 10% of the compensation amount as an annual pension for a period of 10-15 years. In case the pension scheme fails to break the deadlock, the government is also ready to offer a “land for land” deal.

Pullout “disastrous”

“May God forbid it” — that’s how Assocham secretary general DS Rawat reacts when asked about the Tata pullout possibility. “If the Tatas pull out of Singur, it will have a major negative impact on the industrial climate of West Bengal. Especially now, when it is doing extremely well, the Singur setback will hamper the tempo and gusto with which the state is moving towards faster industrialisation,” he insists.

Gautam Thapar, chairman & CEO, Avantha Group, says with the Nano project putting India’s manufacturing capabilities on the world map, a pullout will “severely tarnish India’s image as an investment destination.” For Berger Paints MD Subir Bose, if the Tatas leave, “no other investor will touch West Bengal ever.” The people of West Bengal, says Bose, “must feel proud the Tatas chose Bengal over any other destination for a product the whole world is waiting to see… and do everything necessary to keep them back.”

With the Tatas threatening to quit because of the volatile environment — and an October deadline for the Nano looming large — the spotlight is as much on as the other projects in the pipeline as Singur .

Stuck in the mud

For example, a slew of projects announced by Indonesia’s Salim Group, one of the largest investors in the state, are on hold because of land acquisition problems for two years and more. Consider this. An agreement was signed between the West Bengal government, WBIDC and New Kolkata International Development Pvt Ltd (SPV promoted by Salim Group, Universal Success Group and Unitech) on July 31, 2006. The first hurdle came when a chemical industrial estate, including a chemical SEZ, was announced over 10,000 acres at Nandigram. When this led to violent protests on the ground, the government agreed to shift the chemical SEZ to Nayachar. But there’s been little progress ever since the shift was announced. Also on the anvil are a multi-product SEZ spread over 12,500 acres in Haldia, industrial estates for small and medium enterprises in South 24-Parganas and East Midnapore districts.

Besides, there are infrastructure projects, including the Eastern Link Highway, a 100km, 4-lane expressway with upgrade to 6-lane, service roads, etc from Barasat in north to Raichak in south, along Kolkata’s eastern flank. Land required: 2,500 acres. It’s also developing three townships spread over 12,800 acres. While the Raichak-Kukrahati expressway has been put on hold due to land acquisition problems, the Salim Group has already acquired 13,000 acres for some of its projects, and needs to acquire 12,000 acres more.

Success stories

But for every Salim Group project that’s in a limbo, there are several success stories, like Videocon or JSW Steel. According to Assocham, two of the largest investment decisions in the state last year came from JSW, which said it would spend up to Rs 35,000 crore to set up a 10 million tonne per annum integrated steel plant at Salboni near Kharagpur, and the Videocon Group which announced a capex of Rs 15,000 crore to set up a steel and power plant project in the Asansol-Durgapur area in Burdwan district, creating 10,000 jobs. “Our Durgapur project is progressing nicely,” says Videocon Group chairman Venugopal Dhoot. “We have had little problem in acquiring land because perhaps we went directly to the farmers,” he adds. But that’s not to say that Sajjan Jindal, vice-chairman and MD, JSW Steel, and Assocham president is not fretting about the possible Tata pullout. “If the Tatas leave it will take West Bengal back to the 1970s when the state witnessed a large exodus of industry.”

Projects on the horizon

The worry perhaps stems from the fact that last year around 31 major investments were announced in West Bengal covering a span of two to 10 years with an aggregated cost of Rs 2,13,822 crore. According to Assocham, the steel sector attracted a 28% of investment announcements, amounting to Rs 56,400 crore. Besides, JSW and the Videocon Group, Jindal Steel, Jai Balaji Group and Adhunik Steel have lined up investments worth Rs 24,400 crore.

In case of a Tata pullout, Rawat says “the worst affected sectors could be automobile and power. Potential investments lined up or being proposed for West Bengal would dry up and move elsewhere.” Harsh Neotia, CMD, Ambuja Realty, disagrees “The fence-sitters may rethink but those who have already committed huge investments in the state will stay. Symbolically, if the Tatas leave, it will definitely send the wrong signal but I hope and I suppose that other investments will happen.”

The booming real estate sector also saw investment announcements, with DLF Group alone proposing Rs 33,000-crore (Rs 45,000-crore at current prices) in a total of Rs 52,929 crore. Now, the DLF township project at Dankuni has caught the Singur flu and the government has gone into ‘consultation’ mode. Besides, the

Delhi-based DLF Group, Bengal-based Merlin Group and Ambuja Realty have announced projects worth Rs 12,900 crore. The oil sector too has announced investments worth Rs 29,750 crore with oil major IOC planning to set up a world class petrochemical production centre at Haldia. Other projects include three more from the Tata group — a metallurgical coke and power project at Haldia and a Tata Metaliks plant in Durgapur. Samir Modi, MD of ColorBar Cosmetics and President of TwentyFourSeven Retail Stores, says that if the Tatas go, industry will be wary of West Bengal.

As Assocham’s Rawat puts it: “The chamber will continue to play a proactive role and back the Tatas as they deserve to be supported. After all, they also want that West Bengal does not recede to the 70s era when there was an exodus in industry from the state due to Naxalism.”