The Singur drama seems to be finally nearing its climax. What a brilliant cast of characters it has been! The maverick Mamata, enfant terrible, irresponsibility incarnate, frittering away Bengal?s only hope to stay in the industrialisation game. Buddhababu, Bengal?s own Deng Xiaoping, making amends for decades of Left hostility towards industry. Ratan Tata?India?s standard bearer in the global corporate battlefield, media-shy purveyor of the aam aadmi?s ultimate dream of dignity through car ownership, who had smiled upon West Bengal and has every reason to sulk now. And, last and least, an indeterminate group of farmers, too obtuse to understand what is for their own good, and too obstinate to let the country run its business as usual.
But is this the whole story? Let?s start at the very beginning. Why Singur? Why a thousand acres of well-irrigated fertile multi-crop land here while thousands of acres of barren land lay a few hundred miles to the west? Nearness to Kolkata, good roads and infrastructure, are parts of the reason for sure, certainly from Tata?s perspective.
What is perhaps less obvious is that Singur is one of only two assembly constituencies in the Hooghly district to have returned an opposition MLA. The other 17 MLAs belong to the CPM and its allies. Worse, it did the same in 2001. So, when it is time to locate the project meant to turn the ignition key for Bengal?s industry, what better location than Singur? Such projects, and the land acquisitions that go with it, are neighbour?s windfall, owner?s ruin. If industrialisation of the state is a must then what is better than making your opponent?s voters pay for it? A political masterstroke indeed.
To be fair, this is standard practice. Governments are unlikely to privatise firms, for instance, in regions where they face tough political competition. Opposition strongholds are the best places to show your determination to reform and industrialise.
Now for compensation. If the price paid exceeds market price, why should the farmers object? Truth is, in real estate, private valuations differ significantly from market prices leading to an illiquid market. To assume that a small premium over the market price should make the owner happy is economic naivet?.
Given this situation, Mamata, as the leader of the party the majority of Singur voted for, would have failed in her political responsibility if she had not fought for justice for the unwilling farmers. The fight has been a long and dogged one and Mamata has been rewarded with a political comeback no less spectacular than Sourav Ganguly?s. And she has earned every bit of it. Besides, she can hardly be blamed for starting the fight.
For a struggle this long in the national limelight, the Singur saga has been particularly sketchy on facts and figures. Media reports suggest moving out of Singur will cost Tata Motors about Rs 100-200 crore, roughly a month?s profits. The market didn?t seem to mind that when Ratan Tata gave his warning to pull out. Either it had already discounted the possibility, or, it believes this is only saber-rattling. Of course at least five chief ministers jumped at the possibility.
Mamata has now suggested a 500 acre piece of land for ancillary units a short distance away. Guess what, it reportedly belongs to CPM-backed promoters. Unfair? Hardly. The industry minister?s response after all this??can land be forcibly taken in a democracy?? If Buddhababu is serious about industrialising Bengal, this is his chance to concede political defeat for the greater good.
An estimate floating around is that moving the ancillary plants would raise the cost of Nano by less than 10%. If the Singur farmers can move their home and hearth for Bengal?s industry and the nation?s automotive aspirations, is 10% too much to ask the would-be buyers to pay? Or is it a matter of national pride not to let the Nano price cross a lakh?not at least for factors unrelated to steel prices?
What about Bengal?s industrial future? Here?s the skinny on Singur. An industrial major moves into a state with a deal in place with the government that the opposition scuttles. Sounds familiar?
At a different scale, this was the story of Enron?s ill-fated Dabhol power plant a decade and a half ago. The international flak that the newly liberalising India then took was feared to forever doom FDI flows. Today investments to India and Maharashtra tell a different story. Moral: investments will come if West Bengal is profitable for industry, with or without Tata?s Singur venture.
Over-eager state governments do not need to run around bending over backwards to industry without popular consent. Just set the conditions right, industry will arrive on its own.
The author teaches finance at the Indian School of Business, Hyderabad