Desicritics Comments on Ending Coercive Land Acquisition - Creating Options

Comment by IngridPittman28

Sat, 6 Mar 2010 03:08:29 EST

All people deserve good life and home loans or just college loan can make it much better. Because freedom is based on money state.

Comment by Somik Raha

Sun, 16 Nov 2008 12:41:51 EST

Sourav wrote: To wit, in West Bengal probably none of this good intentioned theories will work. It is a state where the ruling Left Front, the opposition parties of Trinamool and Congress-I and rag tag parties, ultra lefts like maoists/naxalites and their city based jhola bag fronts, NGOs, social activists, elites and intellectuals have adopted the motto of "Cholcche Na, Cholbe Na". With that kind of passionate love for status quo, the state has only one way to go - that is down the drain. It can as well change its name to Waste Bengal. I agree that the state is in a tragic time-warp. However, I am sure you will concede that this wasn't always so. There was a time when the communist ideology first appeared and took over the mindset. Perhaps it has also to do with the violent rebellion against the British. That rebellious attitude hasn't left the Bengalis. However, I believe that with changes in the current education system, we can teach constructive solutions and engage with people for change. In the Indian political spectrum, we have the Left, which believes in social freedom, but not in economic freedom, and then we have the Right, which believes in economic freedom, but not in social freedom. India badly needs what Amartya Sen calls a "Secular Right," which believes in both social and economic freedom. And I wouldn't be so pessimistic - I think attitude changes do happen, and people can decide to wake up the next morning in a different state - like those who slept off in East Germany to wake up to a united and non-communist Germany. I recommend the film, "The Lives of Others," which captures beautifully how people do change.

Comment by Sourav

Sat, 15 Nov 2008 15:49:58 EST

To wit, in West Bengal probably none of this good intentioned theories will work. It is a state where the ruling Left Front, the opposition parties of Trinamool and Congress-I and rag tag parties, ultra lefts like maoists/naxalites and their city based jhola bag fronts, NGOs, social activists, elites and intellectuals have adopted the motto of "Cholcche Na, Cholbe Na". With that kind of passionate love for status quo, the state has only one way to go - that is down the drain. It can as well change its name to Waste Bengal.

Comment by Somik Raha

Wed, 12 Nov 2008 02:21:35 EST

Dark Lord wrote: AFAIK, these were used a lot in Navi Mumbai and the last I heard, locals have started thrashing outside/non-navi mumbai agents. In fact, to visit these land sites, you need to take the local agent along for safety. That sounds familiar. I believe this is also true of Bengal and other places. I wish people wouldn't be violent - I wonder what they'd gain by it. Though, as land seekers, you would quickly learn which regions to avoid for your own good. Dark Lord wrote: Pricing is a issue. Roka is not exactly the way to go about it. Roka values it at current market prices (equivalent to renting for 1 week for an option of 1 week) esp in the rental market of Mumbai. You don't go about in the neighboring fruit and vegetable market buying options. Indian public is not used to it. and no, roka is not an option in the Indian context. I am not able to follow your argument here. If Roka is exactly the same as the real thing, then why not take the real thing? That does not make sense to me. An option would have to be priced less than the underlying asset you want to buy for it to make sense, and from what I gather about Roka, its like a small advance payment to hold the land for you, just like an option. So, I think you might want to reexamine your conclusion - ask people who've paid advances on land that they've subsequently bought (or not). Dark Lord wrote: lets assume Essar Oil plans to build a gas pipeline from gas finds in Andhra Pradesh to Maharastra/Gujarat. Essar Oil being a public limited company has to declare the gas find as well as future plans to build the pipeline to its shareholders (good corporate governance). It might not inform the investors the route but it would have to tell that it plans to set up a pipeline and is buying land. Now, XYZ is thinking my competitor is planning to build a pipeline, I know what are the possible routes he can go through, why dont I just buy some land and block it off. XYZ could do that, and it does happen. I don't see the problem here - how is this any different from present society? Why should we be interested in preventing people from being hypercompetitive (legally, I mean). Prudentially, you could try to educate the players and show evidence from industries that have gone up in smoke due to inter-company wars and lack of diversity. But legally, its upto individual companies and they should have the right to be stupid/short-sighted/etc.

Comment by Somik Raha

Wed, 12 Nov 2008 02:11:59 EST

Sourav wrote: My previous observations have nothing to do with ethics or prudence. They are about incidents that happened and why I think they happened. I agree. We are talking about two separate things - I am trying to find a philosophy that can guide our thinking through such challenges, in other words - I am focused on "what can be," while you are describing what happened, or "what is so." Sourav wrote: Do you think it will be ethical if Reliance went about acquiring land without mentioning the reason for it? It seems on the other hand to be an example of prudence. A "good deal" between Reliance and a farmer may be all about prudence and nothing about ethics. While a "good deal" is certainly about prudence, let us be clear about what we mean by "ethical." To me, ethics is about truth telling. Telling a lie is unethical. However, there is a third option, beyond telling a lie and telling the truth, and that is - keeping one's mouth shut. It is an underused and underexplored option, and can take us out of ethical quandaries. I don't see what ethical dilemma Reliance would fall into if they chose to keep quiet about what they want the land for (or that they are involved). There would be issues if they falsified information and misrepresented anything, but hiring agents to act as proxies should be fine - we do it all the time for several things. You might argue that if landowners knew Reliance was involved, they'd hike up the prices, and so Reliance should reveal their involvement. That is a prudential, not ethical argument, on the part of the landowners, just like the guy selling you a torch does not need to tell you how much he actually paid for it.

Comment by Sourav

Wed, 12 Nov 2008 01:16:09 EST

Samik, You raise some interesting points. Let me clarify. My previous observations have nothing to do with ethics or prudence. They are about incidents that happened and why I think they happened. You mentioned the example of L&T and I pointed out that there was more to it. I also pointed out why I think, the Tatas left and why the current scenario in West Bengal is not conducive to industrialization through land acquistion. Do you think it will be ethical if Reliance went about acquiring land without mentioning the reason for it? It seems on the other hand to be an example of prudence. A "good deal" between Reliance and a farmer may be all about prudence and nothing about ethics. The debate of ethics vs prudence is a complex matter - much beyond my scope.

Comment by Dark Lord

Tue, 11 Nov 2008 09:19:43 EST

Usage of third party agents AFAIK, these were used a lot in Navi Mumbai and the last I heard, locals have started thrashing outside/non-navi mumbai agents. In fact, to visit these land sites, you need to take the local agent along for safety. Using options Pricing is a issue. Roka is not exactly the way to go about it. Roka values it at current market prices (equivalent to renting for 1 week for an option of 1 week) esp in the rental market of Mumbai. You don't go about in the neighboring fruit and vegetable market buying options. Indian public is not used to it. and no, roka is not an option in the Indian context. Behavior of competitors lets assume Essar Oil plans to build a gas pipeline from gas finds in Andhra Pradesh to Maharastra/Gujarat. Essar Oil being a public limited company has to declare the gas find as well as future plans to build the pipeline to its shareholders (good corporate governance). It might not inform the investors the route but it would have to tell that it plans to set up a pipeline and is buying land. Now, XYZ is thinking my competitor is planning to build a pipeline, I know what are the possible routes he can go through, why dont I just buy some land and block it off.

Comment by Somik Raha

Mon, 10 Nov 2008 17:53:59 EST

Kerty wrote: I do not think any major project can be kept a secret from government, media or people. Leaks are inevitable and that is all it takes to spread the news. Yes, but if 70-80% of the land can be acquired without people getting to know (through third party agents), you'd save a lot of money. This happens right now in a number of areas - for instance, when you want to acquire a domain name, it would be very foolish for you to reveal your identity if you were a big firm like Microsoft. You would hire agents to do it for you. In land acquisition, you don't need to start buying the land as soon as you get the option (that would be counterproductive). As long as you don't exercise the option, it is hard for people to find out, and even if they do, they'd know only the agents who have the options, who are not obliged to reveal who their client is.

Comment by kerty

Mon, 10 Nov 2008 14:55:26 EST

Somik "First, as Reliance is a private party, they are not required to reveal the purpose of the acquisition. They can send out agents who don't even need to reveal that Reliance is behind the acquisition." I do not think any major project can be kept a secret from government, media or people. Leaks are inevitable and that is all it takes to spread the news.

Comment by Somik Raha

Mon, 10 Nov 2008 14:17:47 EST

Kerty wrote: As soon as big business show interest in any area, the land prices in that area would shoot up and people would hold out to extort windfall prices - people know the projects worth mega money can not go anywhere without submitting to their terms. So there is no such thing as market prices - land-holdings create a monopoly bargaining position and owners would get to blackmail the buyers into windfall prices. All it takes for the land owners is to hold out and hold the projects at ransom - what is few crores to projects with outlays in maga crores? Did you read the full article? I quote from the article "There are several benefits to this approach. First, as Reliance is a private party, they are not required to reveal the purpose of the acquisition. They can send out agents who don't even need to reveal that Reliance is behind the acquisition. The government, on the other hand, is required to reveal the purpose of their acquisition, resulting in landowners realizing that they can make a lot of money if they hold out. The cost of acquisition will now be based on a good deal between the private party and the landowner." Kerty wrote: Who would trust the powers of eminent domain in the hands of politicians? I agree. That is why I am suggesting the scrapping of Article 300A and making it illegal for the government to get involved in land acquisition. Even if that is not done, the private sector can explore buying options to acquire land quietly, through third-party agents, without revealing their identity. They would save a lot of money by doing so.

Comment by Somik Raha

Mon, 10 Nov 2008 14:12:35 EST

Temporal wrote: there are some very serious flaws in above land use is subject to municipal, regional, county, province and country master plans.... the seller cannot dictate any land use to the contrary You are talking about "what is so." I am talking about "what should/could be."

Comment by Somik Raha

Mon, 10 Nov 2008 13:40:51 EST

Sourav wrote: The government completed most of the land aquistion ground work over many years, before it handed over the project to the L&T led consortium in 2004. After that it was quite a breeze for the project. That's kind of interesting. Are you saying people in Dakshineshwar didn't get a good deal from L&T, but from the government? Sourav wrote: As long as easier and swifter alternatives are available, private investors will not want to get involved in land acquisition without active government support. It doesn't make economic sense for the private investors. As I pointed out in the article, with government support, the Tatas were not successful. On the other hand, there have been several cases that going without the government can work. I do agree with you that the environment in West Bengal may be too vitiated for business to work without government or political interference. Sourav wrote: Time bound private industrial investment like the Tata Nano project will not wait for years (or even months) for consensus to arise amongst thousands of land owners who take their own sweet time to decide. As seen in the case of the Tatas, they will just move to another state where land is available. Tatas should make the best decision for themselves - it is alright if they don't come to West Bengal. It is not alright, ethically, for landowners to be pushed out of their homes if they don't choose to leave voluntarily. If we limit ourselves to questions of prudence, then we have much to learn from Hitler's regime which busied itself with questions of how to transport the most number of Jews to concentration camps most efficiently. However, in real life, prudence is not everything, and the ethical nature of a decision is very important. The point of my article is that we must be clear on our ethical foundation, and our prudential activity should not lead us into ethical traps, such as imposing our value judgment on others. If we do prefer ethics over all else, then we should not contradict ourselves by raising questions of "what other option is there?" and be happy with the failure of the business to acquire land (with or without options). But, if we use an argument of national or public good to justify ethical violations, then we should put ourselves and our loved ones in the position of the landowners, and check our consistency (in not just talking but actually doing).

Comment by Somik Raha

Mon, 10 Nov 2008 12:55:56 EST

Kaffir wrote: Somik, what is this free market? Care to give any examples of a country where it is practiced, instead of just being a theoretical concept? Kaffir, it depends on where you come from. If you are in Delhi, you can check Sarojini Nagar market. If you are in Chennai, go to Pondy Bazaar. If you are in Bangalore, go to City Market. If you are in Kolkata, go to Gariahat. If you are in Mumbai, go to Juhu beach. All of these places have vendors selling their products without the government telling them what the price should be. If there is a meeting of the minds between the buyer and the seller, there is a deal. If you are not in any of these places, go to the place where you buy your groceries. That should be a good example.

Comment by Somik Raha

Mon, 10 Nov 2008 11:03:28 EST

Temporal wrote: pls. don't mind my saying so but this is a badly laid out article...too crammed what is the need for "boxes"?....and...where is box 1 and 2? Thank you for the feedback, temporal. The need for the "boxes" was to keep the flow of the main argument while presenting reference information that you could check on your own. This is similar to boxes that you'd see on newspapers. The preview showed the boxes looking like boxes, but in the final published version, they got messed up. The editor has kindly agreed to fix it after the fact, and I guess it should show up soon. Box 1 is after the first horizontal line, starting with "Almost every country..". Box 2 starts in the next paragraph with "At this time,.."

Comment by kaffir

Sun, 9 Nov 2008 18:52:24 EST

K.M., methinks you misunderstood. I am questioning the use of "free market" to describe what exists today, not something that may or may not exist tomorrow.

Comment by temporal

Sun, 9 Nov 2008 16:45:03 EST

somik: pls. don't mind my saying so but this is a badly laid out article...too crammed what is the need for "boxes"?....and...where is box 1 and 2? *** Second, I agree that private parties should be allowed to freely purchase agricultural land and the land owner should have the right to decide how the land should be used. If the current land owner feels it is important that the land use should not be changed, this can be specified in a contract at the time of sale. there are some very serious flaws in above land use is subject to municipal, regional, county, province and country master plans.... the seller cannot dictate any land use to the contrary

Comment by Sourav

Sun, 9 Nov 2008 16:29:38 EST

Somik I understand your point of view completely. The Nivedita Bridge project proposal started taking shape in 1993 when a techno feasability study was undertaken by GOI. There were plenty of delays for a variety of reasons including land acquistion. The state government had to evict hundreds of residential and commercial land owners on the Howrah side. On the Kolkata side, there was a litigation with the land the Baranagar jute mill. The government completed most of the land aquistion ground work over many years, before it handed over the project to the L&T led consortium in 2004. After that it was quite a breeze for the project. Time bound private industrial investment like the Tata Nano project will not wait for years (or even months) for consensus to arise amongst thousands of land owners who take their own sweet time to decide. As seen in the case of the Tatas, they will just move to another state where land is available. As long as easier and swifter alternatives are available, private investors will not want to get involved in land acquisition without active government support. It doesn't make economic sense for the private investors. Also it is not that they are not trying that route. USEL has proposed to buy land direct from farmers for their mega power plant project in coastal West Bengal. But the reception from farmers has been cold and USEL is signing an agreement with Gujarat government on Monday as the Gujarat Government has the land available. Also as you mentioned, laws may have to be changed about land ownership and type - I believe there is a ceiling on land that can be owned by a private entity and also rules about conversion from agricultural to industrial usage. So no private company can do large scale land acquistion without government intervention. In West Bengal, the current unique political, social and economic situation will never make it easy for land acquistion.

Comment by K. M.

Sun, 9 Nov 2008 16:13:00 EST

kaffir, Let me just go back about 250 years in time and ask "What is this democracy? Care to give any examples of a country where it is practiced, instead of just being a theoretical concept?"

Comment by kaffir

Sun, 9 Nov 2008 15:23:41 EST

Somik, what is this free market? Care to give any examples of a country where it is practiced, instead of just being a theoretical concept?

Comment by kerty

Sun, 9 Nov 2008 14:33:25 EST

Soumik As soon as big business show interest in any area, the land prices in that area would shoot up and people would hold out to extort windfall prices - people know the projects worth mega money can not go anywhere without submitting to their terms. So there is no such thing as market prices - land-holdings create a monopoly bargaining position and owners would get to blackmail the buyers into windfall prices. All it takes for the land owners is to hold out and hold the projects at ransom - what is few crores to projects with outlays in maga crores? That is why Government intervention is often needed. India needs to study how municipalities of small towns and suburbs attract industries - they put subsidized land, tax incentives infrastructure support etc on the table to attract industries. In India, sad thing is none of the solution would work. Who would trust the powers of eminent domain in the hands of politicians? As soon as government gets involved, political parties enter the fray to extort their pound of flash - project can't move ahead unless powers that be give their green light. Than there are professional NGOs and self-appointed social activists - unless the projects are blessed by them, they can organize andolans and morchas to stall the projects for years - there can not be shortage of people who feel they got a raw deal and movements can be built around them to stall the project. Some groups feel they have priority access over resources and government - they need to be appeased every time government makes major decisions - government is not allowed to deal with people directly, it must deal with people thru such groups and leaders and go thru them to people. Yet, that is what it takes when scope of project is so big that private players can not cope with it on their own.

Comment by Somik Raha

Sun, 9 Nov 2008 12:48:17 EST

Sourav, Vidyasagar Setu and all the other projects you mentioned involved the government as the land acquirer. As I mention in the article, the government is required to reveal its purpose. The moment the purpose is revealed, people realize that holding out is a good idea. This is not so with private parties. The government, IMHO, should not get into land acquisition at all, and instead encourage private parties to do it themselves, by buying options. Of course, some of the legal infrastructure around land use might need to be reformed for this. If a thousand acres of land has 12,000 legal stakeholders and countless non legal stake holders, it will be near impossible to acquire such land through private deals in a short time basis. It can take years and no industry will wait that long, they will just shift to another state. It depends really - after all L&T managed to get what they wanted and the bridge opened in record time. I think people, left to themselves, and restricted to non-coercive options, can be quite creative. Construction companies tend to have a long horizon - if they don't perhaps there is a need to start a new one that does, either as a for-profit or a non-profit.

Comment by Sourav

Sun, 9 Nov 2008 11:25:42 EST

It's a long and interesting article. In West Bengal however government or private land aquistion of huge contiguous chunks, is going to be very tough always. The article mentions the successful acquistion by L&T for the Nivedita Bridge. However consider the Vidyasagar Setu. For almost a decade land for the ramps in Howrah side could not acquired because of litigation and opposition. So even after the Bridge was complete, the bridge led to nowhere (except Andul Road and Foreshore/GT Road). The Kona connectivity came after many more years. The Mandirtala connection still ends in a narrow lane. On the Kolkata side ramps, a place of worship created a lot of delays and heartburns too. Now consider the Metro Rail extension. It is being delayed by more than two years because of a few property owners not wanting to give up their property. The East West Metro is already in trouble with people not ready to move in the Bowbazar area. In Bonhooghly, people renting government flats are not ready to move out temporarily (with Rs 2000 rent paid by Govt) so that the nearly condemned buildings can be demolished and new apartments can be built which will be given free to them. The renters are not happy with getting free apartments. They have gone into litigation and are even questioning why part of the government land will be used for joint sector development. Private developers trying to acquire land in eastern Kolkata for a new township have been hit by organized agitation. The Dankuni township is in a limbo. The Katwa power plant will not happen in all probability. The extension of the Burnpur Steel Plant was held up for long by organized agitations. The expansion is now held up because the people apparently don't want to give up a football ground! The Midnapore deep sea port is in deep trouble as the organized protestors have said that they will not give up land. The national highway 34 cannot be expanded because organized protests are holding it up. The airport runway could not be expanded because a place of worship had to be shifted and despite getting new land and compensation, religious sentiments politics put and end to the project. The reason for such problems in West Bengal lie ironically in the empowerment of small farmers under operation Barga. That land re-distribution scheme did bring initial success in the field of land reforms. The families that benefitted at that time today have many more family members holding a stake in that same little piece of land. So not only is land holding fragmented, each land holding has multiple stake holders (legal or otherwise). The opposition party in the state has seen a golden opportunity in this. They have tasted success in Singur and Nandigram. So they will not allow any land acquistion process to go through without massive hurdles even if it means loss of investment. The loss of investment means nothing to the opporition parties. The gain of votes is all that matters to them. One cannot blame the opposition party alone for this attitude. Today's ruling party would have done the same if they were in opposition (see their activities in other states like Orissa for proof). Also legality of land acquistion hardly matters because even after courts declare that land acquistion is legal, opponents will claim that the laws are flawed and never give in. If a thousand acres of land has 12,000 legal stakeholders and countless non legal stake holders, it will be near impossible to acquire such land through private deals in a short time basis. It can take years and no industry will wait that long, they will just shift to another state. In the short term, there is very little hope for large scale land acquisition in West Bengal for industries or urbanization. The whole issue has been too deeply politicised. Also the fact that many other so called advanced states don't have such levels of organized violent politics, makes it doubly difficult for West Bengal to be a viable investment zone. Reliance (or any group) will not wait for people of West Bengal to decide over ten years whether they will give land or not (sell, lease or sit tight). They will simply go to Gujarat or TN or Maharashtra where there is very little organized opposition to industrialization.