Politics often has a pernicious effect on policymaking. In the heat of rivalries between parties, policy continuity—something vital for economic growth—is discarded in a matter of days. A story of this kind is now being played out in West Bengal. The rest of the country should pay attention.
Within a day of moving a Bill to reclaim land in Singur from Tata Motors and its component makers, people close to the Mamata Banerjee government unveiled a proposed land policy which, if adopted, would mean the state government would not assist any company to acquire land in the state.
Debabrata Bandyopadhyay, a former civil servant who along with a senior lawyer drafted the proposed policy, argues that companies that operate in free market economy must fight market forces on their own. In plain English, the government will have nothing to do with acquisition of land forany project—however vital it may be to the state—if it is located in the private sector.Bandyopadhyay, incidentally, was also part of the team that drafted the Left Front’s landmark land redistribution policy in 1977, under which it acquired land from landowners to distribute tilling rights to landless farmers.
This policy will be in marked contrast to the steep learning curve of the Left Front government after it learnt hard lessons from the Singur and Nandigram episodes. Land for projects that were to be located at these sites, was acquired under the Land Acquisition Act, 1894, a draconian piece of legislation.
In February, only two months ahead of the assembly elections in the state, the erstwhile commerce and industries minister Nirupam Sen unveiled a new compensation policy for land acquisition in West Bengal. The new policy aimed at making the compensation more “inclusive”. The state government offered at least 720 sq. ft of developed land to everyone surrendering at least one-third of an acre, and a five-year annuity of at least Rs25,000 to people who owned less, over and above the cash compensation determined through negotiations.
The “new” new policy that the Banerjee government has in mind will undo this learning in policymaking, and for no good reason. If anything it will make it very difficult for private firms to acquire land in the state.
Compared with other states, this is difficult in West Bengal because land holdings are very small. Some companies that have tried to buy land on their own have had horrible experiences—some managed to buy only 20 acres in two years when the requirement was 350 acres, and some have been swindled by brokers. Clearly the transaction costs involved in acquiring land will defeat almost all firms, save the very brave. For a chief minister who has vowed to revive West Bengal’s economic fortunes, this is one big misstep.
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