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BW Businessworld

How The CPM Lost Bengal

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The triumph of the Trinamul Congress is old news. Its rule has been so capricious that many must be speculating how soon it would fall. Its record has been so inconsistent that the fall of the Communist Party of India (Marxist) after 30 years of unbroken rule has faded in public memory. It was nevertheless a spectacular collapse, appropriate for a journalistic potboiler. It would begin with the way protests against land acquisition for a car factory in Singur led the Tatas to accept Narendra Modi’s offer of land and move to Gujarat. The way the story was reported suggested that the Trinamul Congress adroitly exploited local discontent and turned it into an unstoppable rebellion. A deeper analysis by four economists of what happened was published in the Economic and Political Weekly of 25 May.
 
Obviously, land varies in use, productivity and location, which must affect its value. The government distinguished eight classes. The worst was sali — low-lying, unirrigated land which gave only one crop a year; temples and graveyards were clubbed together with it, and all were valued at Rs 6,01,718 an acre. Sona was irrigated multi-crop land on higher ground and hence not liable to waterlogging; it was valued at Rs 8,80,029. Bamboo gardens fell in at Rs 7,04,203. A shop or cold storage was valued much more at Rs 14,43,545. Homes were valued highest at Rs 18,04,431. The government also paid compensation for trees based on their age and produce, structures, value of standing crop, premium for closeness to a road, and 12 per cent interest on all these from notification to when the compensation was paid. It took account of whether the land was irrigated, whether it yielded one crop or more, whether it was fallow, homestead, or a water body, and its distance from highways and other strategic locations. Thus on the face of it, the government based compensation on extremely sophisticated calculations.
 
Why then were so many farmers dissatisfied? It was because in their assessment, their land was better than the government’s classification. This was not simply because an owner has a higher opinion of his land than an official. The difference arose because farmers had made improvements which the government did not record. In their view, 37 per cent of the land acquired was sona; according to the government, only 4 per cent was. The authors’ guess is that farmers had made improvements after the last survey; it is also possible that neither owners nor the government bothered to list all the little features that make land better or worse.
 
If the government paid the market price, these features should be taken care of. That would be true, however, only if the market was broad and active enough to permit calculation of their impact. A problem in India is that cultivation is a lifetime occupation; the government has made it even more so by making it difficult to sell land, especially to non-cultivators such as moneylenders. If people were moving in and out of farming all the time, land value would be better known, and people would not consider losing farm such a catastrophe.
 
And then there is the question of willingness to sell. Someone who got only a small proportion of his income from agriculture would go on to do other things if his plot was acquired; someone who had no other occupation would be badly affected. The authors calculated an index of willingness to sell. The most willing were government servants or pensioners; they would probably have been relieved to be rid of having to find workers to till a small plot of land. The next most willing were non-agricultural workers; if someone had work outside which supported him, he would not be sorry to be rid of his land. This was also true of shopkeepers. Those who owned or rented land were the least willing to sell; they were the vanguard of the opposition. Altogether, it is an illuminating study; governments thinking of compulsory acquisition should take advice from these economists. What they omitted to say, however, is what those compensated did with the money they got.  

The author is Consultant Editor of Businessworld.

ashok(dot)desai(at)gmail(dot)com

(This story was published in BW | Businessworld Issue Dated 01-07-2013)