Archive for October, 2015

15 Oct

What goes around comes around

Posted by vramani in political economy, public affairs, public policy.

There was a young lady of Niger

Who went for a ride on a tiger

They returned from the ride

With the lady inside

And a smile on the face of the tiger.

This limerick came to mind almost immediately when Sudheendra Kulkarni, the organiser of the function to launch the book of former Pakistan foreign minister, Khurshid Mahmud Kasuri, had his face blackened by miscreants, following the veto by Maharashtra’s “Tiger” party, the Shiv Sena, of any function in Mumbai involving a personality from India’s western neighbour. That he was a prominent figure, till some years ago, of a political party, the Bharatiya Janata Party (BJP), which runs the governments in Delhi and Mumbai, with the Shiv Sena as a junior partner, apparently cut no ice with the Sena, which more or less said “serves him right” after the unfortunate incident. But then, after having consorted with a party like the BJP, many of whose members have made a virtue of divisions in society, Kulkarni ought to have been aware of the consequences of associating with a perceived “enemy” whose country is anathema to the professed worldview of his ex-party and its like-minded partners. It would, therefore be apposite to remember the Biblical injunction “they have sown the wind and they shall reap the whirlwind”. History is replete with instances of the consequences of one’s karmas (both of individuals and nations) visiting one in this rather than in a future life. The eternal wonder is that this unpleasant truth does not cause man to ponder over his actions. Events from the not so distant past down to the present day illustrate man’s continued myopic vision.

We can start with the two major totalitarianisms of the twentieth century, the Third Reich of Germany and the Communist Soviet Union. Touted to last a thousand years, the German Reich crawled to its miserable, ignominious end in just over twelve years. Riding to power on the wave of disenchantment of the German people with inflation and unemployment, the Nazi Party, with its openly anti-Semitic approach, capitalised on the weak-kneed approach of European powers to unleash aggression on many of Germany’s smaller neighbours climaxing in the conquest of France in 1940 and the assault on Great Britain. Along with the millions killed in actual combat, there was the horrific genocide involving over six million Jews. The Second World War ended with the devastation of Germany and its division into two countries for the next forty five years. The Soviet Union, founded on the promise of equality for all, witnessed some of the greatest purges of its citizens and the despatch of countless others to concentration camps. The contradictions of an inefficient economic system and an oppressive political system saw the uprooting of the entire Communist edifice in the Soviet Union and its satellite states before the dawn of the twenty first century.

The USA has been no exception to this karmic cycle. Its post-World War II attempts to keep communism at bay and secure the world for Western (read American) capital led to the standoff in Korea and the disastrous misadventures in Vietnam, Kampuchea and Laos. Unchastened by this experience, the USA leapt into the fray through its proxies, the Mujahedin and Pakistan, to counter the takeover of Afghanistan by the Soviet Union. These Mujahedin were to form the nucleus of the Al Qaeda which took the war into US territory sixty years after Pearl Harbor. Further American adventurism in Iraq destroyed the one regime (of Saddam Hussein) that might have checked the spread of Islamic fundamentalism. With the Arab spring, the path was open for fundamentalism to spread through a number of countries with tottering regimes in the Middle East. In effect, US policy since the Second World War has led it to shoot itself in the foot; the terrible consequences are unfortunately being borne today by the masses of refugees fleeing Syria and other war-torn countries.

Coming to India, we have the Grand Old Party, the Indian National Congress, suffering (and, collaterally, making the nation suffer for) the consequences of one historic blunder after another. The declaration of the Emergency in 1975 saw the suspension of civil liberties and the unchecked use of brute state power against the people, whether in the relocation of people in the name of city beautification or the forced sterilisation campaigns. Given a resounding slap by voters in the 1977 general elections, the Congress showed it had learnt no lessons when it came back to power in 1980. The tolerance of (and tacit support to) ethnic divisions for narrow electoral gains saw the horrific Nellie massacre of 1983 in Assam and Operation Blue Star in 1984. Dabbling in ethnic quarrels exposed India to domestic terrorism with the assassinations,within seven years, of a Prime Minister and a former Prime Minister. The encouragement by the Congress of the Shiv Sena in the 1960s to check the influence of the leftist trade union movement in Mumbai nourished the growing “Tiger”. So much so that the Shiv Sena and its allies have controlled the cash-rich Mumbai Municipal Corporation for most of the past forty years. The Congress gave yet another chance of grabbing power to the Shiv Sena and its allies when it mishandled the 1993 Mumbai riots; coupled with internecine warfare within the Congress, the Shiv Sena and its allies were able to capture power in Maharashtra in 1995. Just four years of this government and the voter was ready to give another chance to a squabbling Congress-Nationalist Congress Party alliance. Fifteen years further down the road, this alliance, with its inept governance, blew its chances yet again and handed a major state to its opponents on a platter.

All these events are warning signs for practitioners of political power today but they continue to blithely ignore the lessons of history. The BJP came to power in 2014 on the electoral plank of “Sabka saath, sabka vikas” (with the cooperation of all, for the development of all). Unfortunately, its 16-month tenure has been marked by growing tensions between religious communities and a deep sense of insecurity in minorities. The utterances and actions of members of the ruling dispensation have emboldened fringe groups to take the law into their own hands, whether it be the murder of rationalists, the lynching at Dadri or the recent shenanigans over Ghulam Ali and Khurshid Mahmud Kasuri in Mumbai. It will be argued that states ruled by different parties are responsible for the protection of their citizens. But when a government at the national level lends support to Orwellian thought-control processes for controlling at least three of the five senses (sight, hearing and taste) of its citizens, it is not surprising that impressionable sections of the majority community work out their perceived grievances and frustrations on those who are not seen as part of their fraternity. Irresponsible and incendiary statements at election time and at emotionally surcharged moments only add fuel to the fire.

This column is tired of reiterating that those who do not remember history are condemned to repeat it. Yet, the aspirations of the aam aurat/aadmi – jobs, houses, food – are lost sight of in the preoccupation with rewriting history and dictating moral codes to the population at large. India’s youth is far more concerned with a resplendent future than with a glorious past. Agitating emotive issues to win electoral support can take a political party only so far. As matters stand, the Dadri incident may well cost the BJP dear in the ongoing Bihar elections. If it does not recast its image as a right of centre party with a plural approach to diversity, it may find the going tough in the 2017 Uttar Pradesh elections. And come 2019, we may see the Indian voter, with her dreams of achche din (good days) not realised, trudging to the polling booth echoing the immortal words of Faiz Ahmed Faiz:

This stain-covered daybreak, this night-bitten dawn,

This is not that dawn of which there was expectation.

 

 

 

 

 

 

1 Oct

Land Acquisition – Much Ado About Nothing

Posted by vramani in political economy, public policy. Tagged: , , .

This is the way the world ends

Not with a bang but with a whimper.

(T. S. Eliot: The Hollow Men)

This famous poem, which ends with the above quoted lines, is linked to a number of overlapping themes. The entire drama covering the period from the introduction of the amendments in end 2014 to the Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act 2013) through an ordinance, to the “sound and fury” over its introduction in Parliament as a Bill in 2015 (LARR Bill 2015), down to its final quiet burial in the end of August 2015 reminded me of this piece of 20th century literature. What was touted to be a grand effort at reform in making land available for the nascent “Make in India” industries and the infrastructure to support rapid industrialisation came a cropper in the face of a politically motivated, generally ill-informed campaign to preserve the “pristine” nature of the LARR Act 2013 which the LARR Bill 2015 sought to amend. After the heat and dust of the battle settled, there was only one clear loser — the average Indian citizen who hoped for better amenities, job opportunities and an improved standard of living.

What was the LARR Bill 2015 trying to do that so aroused the ire of the supporters of the LARR Act 2013? The Amendment Bill sought to exempt certain categories of projects from the social impact assessment and public consent provisions, including public private partnership infrastructure projects on lands owned by the government, going beyond the exemption from public consent already available in the LARR Act 2013 to projects of the government, its public sector undertakings and other entities essentially in the public sphere. There was no dilution of any of the provisions relating to compensation or resettlement & rehabilitation. This makes the defensiveness of the government of the day about the LARR Bill 2015 all the more inexplicable; it dissimulated where it should have unequivocally come out with a confident statement about its commitment to improving the lot of India’s citizens. In any case, as has been pointed out by Sanjoy Chakravorty (A Lot of Scepticism and Some Hope: Economic & Political Weekly, 8 October 2011), about 90 percent of land acquisition and displacement of people has been occasioned by government projects, so it is rather strange that an impression has been created that the LARR Bill 2015 is intended to further private corporate interests. A lot of hullaballoo has been created around non-issues to score political points and the likely damage to India’s long-term growth prospects by a seriously flawed Act has not been analysed or debated.

The manner of calculation of compensation has major implications for the economic viability of projects requiring acquisition of land, apart from its implications for the distortion of already imperfect land markets. Land valuation at four times the market (or consented) price, for rural areas, and twice for urban areas has no rationale. This will sharply raise project costs and also create a piquant situation in peri-urban areas, with demands for compensation as in rural areas impacting the economics of urban and industrial development in the peripheral areas of cities. The requirement for the social impact assessment to be carried out before the preliminary notification of the land is incomprehensible; any administrator connected with land acquisition will tell you that this will immediately lead to land speculation in those areas. Bengaluru witnessed this phenomenon when land was to be acquired for the NICE corridor road on its fringes; the Vijayawada-Guntur belt is also experiencing sharp escalations in land prices with the forthcoming development of the capital city for the new state of Andhra Pradesh. Inordinately high land cost will act as a dampener for land acquisition and will also exert upward pressure on prices of land privately acquired.

Multiple layers of bureaucracy will have an adverse impact on prompt acquisition. A potential investor will have to run the gamut of a social impact assessment, getting public consent, fixation of land compensation and approval of the resettlement and rehabilitation package before getting possession of the land for actual construction. This is, of course, presuming that environmental clearances and approval of the District Collector for conversion of agricultural land to non-agricultural use are forthcoming in a timely manner and that the proceedings do not get bogged down due to, firstly, lack of public consent and, secondly, demands for enhanced compensation and other contentious issues to be decided by the Land Acquisition, Rehabilitation and Resettlement Authority set up under Section 51 of the LARR Act 2013. Recourse to other legal procedures (e.g. writ petitions) by interested parties to secure higher compensation or to contest the need for acquisition can further delay matters. Even with an outmoded Act like the Land Acquisition Act 1894, with its anti-landowner bias, it took anywhere up to several years for land to actually come into the possession of the acquirer. The LARR Act 2013 is likely to further increase this period, leading to project cost escalations.

Historically, industrialisation has proceeded based on the conversion of land from agricultural to nonagricultural use and on the ability of the agricultural sector to feed a population increasingly dependent on off-farm employment. This process has not been without its share of conflict, as brought out by Richard Hofstadter in his seminal book “The Age of Reform (1955)” where he describes the agrarian revolt of the 1890s in the USA and the attempts to harness it for political purposes. Not only did these agrarian movements fail to take off, quite to the contrary, as Hofstadter puts it “…the prosperity of the commercial farmers was achieved not only in spite of but in good part because of the rise of American industry and the American city“. As urban demand for food grew, agricultural prices registered a significant upturn. Improved efficiency in and mechanisation of farming operations, coupled with finance and transportation arrangements, contributed to a rise in farm incomes. At the same time, the excess rural population found employment opportunities in the cities. State support and guidance on farm produce distribution issues and the rapid growth of farmers’ cooperatives (in the areas of credit, mutual insurance, public utilities, marketing and purchasing) reduced the exactions of middlemen and diverted more income into the pockets of farmers.

What is truly unfortunate about the entire land acquisition mess is the ill-conceived effort to create a hostile relationship between the agricultural sector and the industrial/infrastructure sectors. On the one hand, there has never been a holistic approach of government to tackling issues from the farm to the table, nor has there been any concerted effort by organised farm lobbies to get government to invest in measures designed to enhance agricultural productivity and incomes. The result, with a large population still dependent on agriculture for survival, has been increasing pressure on land and temporary or permanent migration to urban settlements. With greater access to education and growing aspirations, the younger generation seeks a shift from an unviable life in agriculture. The distressing occurrence of farmer suicides is testimony to the failure of government to address farm issues, be they irrigation, crop insurance, productivity or remunerative markets. Archaic labour laws and an entrepreneur-unfriendly business environment have limited job creation in industry and related ancillary services. When 3 million people, many of them graduates, apply for a few hundred jobs as peons in government, something is definitely horribly wrong. And yet, the present debate on land acquisition procedures has not sought to focus on what could be done to ease the availability of land for industrial growth while also protecting the interests of the agricultural community. One interesting suggestion from Maitreesh Ghatak and Parikshit Ghosh (The Land Acquisition Bill: A Critique and a Proposal, Economic and Political Weekly, 8 October 2011) is to allow the land transfer price to be determined through an auction process rather than rely on bureaucratic determination through generally flawed sales statistics. Displaced farmers would be given the option to receive compensation either in cash or in the form of land. The government would buy more land than needed for the project to enable offer of land outside the area acquired for the project to those farmers who want land in return for land surrendered. This approach has the advantage of allowing the farmer to quote his consent price, which will probably reduce subsequent litigation for enhanced compensation. I am not advocating this or any other specific measure; what I seek to highlight is that there has been no informed debate on possible solutions that meet the needs of industry for land while also giving farmers a fair deal.

In fact, the entire brouhaha is reminiscent of the lines of another famous poet, W. B. Yeats “The best lack all conviction, while the worst are full of passionate intensity“. A law which was passed in a spirit of misguided sympathy for the farmer but is likely to severely impede economic development did not come up for a sorely needed review. The government of the day sought cosmetic changes in the law but, faced with an obstructive opposition in Parliament, meekly capitulated, consoling itself with the reflection that, since land acquisition is a concurrent subject under the Constitution of India, state governments can pass their own laws to simplify and speed up the land acquisition process. In that case, no purpose is served by Section 107 in the LARR Act 2013 which only permits such legislation by state governments as provides more favourable terms in respect of compensation and rehabilitation and resettlement provisions; it is anyhow unlikely that any state government will enact legislation that is seen as more onerous than the Central law, since this gives its opponents a ready political handle to beat it with.

We are, therefore, in a situation where a neo-Luddite combination of professional politicians and city-bred intellectuals, both without exposure to the realities of the farming sector, are effectively sealing opportunities for a large agricultural population to benefit from industrialisation. Adding to land market rigidities, while also stumbling on labour market reforms and doing little to improve the ease of doing business (best exemplified by the flip-flops on the Goods and Services Tax legislation), are hardly the best recipes to enthuse private Indian and foreign investors. The brunt of this economic obtuseness and political opportunism will, as always, be borne by the long suffering masses of India.