Development v/s displacement

DEVELOPMENT
AND
DISPLACEMENT

- AKHIL PRABHAKAR
09411004
ES-1 BATCH

INTRODUCTION

 Firstof all, I would like to specify that
“Displacement caused due to Development” is
the actual meaning of the topic.

 Allthe contents in the presentation have been
derived from the article of ABHIRUP SARKAR
named Development and Displacement.

 The presentation is concerned with the process
through which agrarian land is acquired to build up
infrastructure, industries and various services, in the
process displacing people from their traditional
occupations and livelihood.
 The area of prime focus is West Bengal.

 Presentation discusses why such acquisition is
necessary for industrialization, for the long-run
development of West Bengal.
 It also clarifies how success of industrialization
depends crucially upon a well thought out
compensation and rehabilitation program, which
has so far been seriously lacking in the state

 For detailed understanding this topic first let us
understand the basic concepts of -:
LAND,
DEVELOPMENT and
DISPLACEMENT

LAND, DEVELOPMENT AND
DISPLACEMENT
 What is the meaning of development in this
article?
 In 1950s economists defined development as
a process of transferring labor from low
productivity agriculture to high productivity
modern industry (by capital accumulation in the
modern sector).
 The emphasis on physical capital accumulation
shifted to human capital accumulation from the
mid-1980s.

 However, neither of the two definitions , one
emphasising on physical capital and the
other emphasising on human capital as the
main constraint to development, had
visualised that land could also become a
serious constraining factor to the process of
development.

 Hence,in today’s scenario LAND also acts as
a major limiting constraint in development
process.

A very good example of this fact from recent
times is development led displacement in
China which gave birth to issues like forced
land eviction and land riots.

Hence, for understanding the core issue we need to
first have a basic idea of the following -:

I. The economic scenario of West Bengal.

II. Industrialization and Food Security in West
Bengal.

III. Land Acquisition and Property Rights

IV. Compensation and Rehabilitation

1. ECONOMIC SCENARIO
 The first decade of Left Front rule in West
Bengal marked significant progress in the
agricultural sector. This progress was mainly
based on following phenomena:-
 Series of far-reaching land reforms(“Barga” &
“Patta”) introduced by left front.
 A new method of cultivation using high yielding
variety of seeds(known as boro cultivation) was
introduced.
 decentralization of rural power through the
three-tier panchayat system.

All this led to prosperity and growth in rural West
Bengal.
Land reforms, especially tenure security, provided
the farmers the incentive to work harder.
Boro technology helped them raise multiple crops
with higher yields.
Decentralization of rural power ensured social
stability and security so crucial for growth.
As a result, West Bengal emerged as the largest rice
producing state in India contributing more than 15
per cent of national production.

 Unfortunately, agricultural growth significantly
slowed down in the 1990s.
This was due to a number of reasons-:
i. frontiers were reached in bringing new land
under boro cultivation.
ii. Productivity increase could not be achieved
either.
iii. due to faulty marketing strategies West Bengal
failed to export its rice to other states and abroad
iv. a rise in input prices, especially that of fertilizers,
electricity and diesel.
As a result, overall agricultural growth slowed
down to a little above 2 per cent in the 1990s.

 West Bengal agriculture has an additional
perennial problem of having a very adverse man
to land ratio.
 Population pressure on land started building up
in West Bengal from the time of independence.
 The productivity of West Bengal agriculture is
not very low.
 But if that production is divided by the number
of heads dependent on land, the per capita
availability is certainly low.

We could summarize that -:

 There are two major problems of West Bengal
agriculture -:
i. an extremely adverse land-man ratio and
ii. the lack of market accessibility of the farmers

 West Bengal remained just a middle ranking
state in the beginning of the 21st century, in
spite radical land reforms, the boro revolution
and decentralisation of rural power.

2.INDUSTRIALIZATION AND
FOOD SECURITY
 Both the problems discussed in the previous slide
could be partly solved by inviting big capital,
including multinationals, into the agricultural sector.
Hence corporatization of agriculture has many
positives like -:
i. providing the farmers certain and wider markets.
ii. making them aware about new technology, new
products
iii. helping the economy to develop agriculture-
based industries.
iv. help farmers break their dependence on the
feudal traders.

 There is a major problem of corporatization of
West Bengal agriculture
 Rehabilitation of the farmers who will become
surplus and jobless once agricultural production
is organized efficiently.
 But quite apart from whether agriculture is
corporatized or not, jobs need to be created
outside agriculture for the simple reason that
the population pressure on land is ever
increasing.
 In other words, there arises the need for
industrialization of the state.

 But, industrialization of a state requires
development of a pre-requisite infrastructure in
order to attract investors.
 As a result, a large amount of land is required
for any large scale industrialization of an state.
 Hence, for a state like West Bengal (where 63%
of land is under agricultural use), the question
arises that “Where will this land come from?”
 The answer to that question is the land which is
cultivated must be transferred for industrial
purpose.

 At the first look it appears that transferring of
land may lead to a possibility of an ensuing
threat to food security.
 But on the contrary the study depicts a
completely different picture.
 The fact is if industrialization is undertaken by
proper measure then it will have a positive
effect on agriculture in contrast to what we
think.

 The following points may suggest that transfer
of land is not actually a real cause of worry :-
i. West Bengal has about 5,59,12,50,000 ha or
about 14 million acres of land under
cultivation. Suppose West Bengal requires
1,00,000 acres of land for building up
infrastructure, industries and a modern
services sector, which will be less than 0.7 per
cent of the total agricultural land in the state.
It is highly unlikely that if this small amount of
land goes away from the agricultural sector,
total food grains production of the state is
going to be substantially reduced.

ii. Industrialization is likely to have a favorable
effect on agricultural productivity and will also
increase the labor productivity.
With industrialization, as more and more
people shift to the industrial and the services
sectors, pressure on agricultural land will fall.
This will further lead to de-fragmentation of
land and hence will make it easier for the
framers to use modern techniques of
cultivation.

iii. Also the cry of food security is not as justified
for a state (which is a part of larger nation)
One can perhaps understand that there is
some justification for a nation for ensuring
food security but for a small geographical
region within a country, e g, West Bengal in
India, there is no compelling reason why food
security is desirable.
West Bengal may lag in the agricultural output
but may aim to acquire comparative
advantage in the industrial sector.

 There is, however, a very serious microeconomic
problem associated with land transfer.
 Acquisition of land entails displacing people
from their land and livelihood.
 Therefore, if the acquisition exercise is not
handled properly, social and political unrest will
emerge.
 This will gravely endanger the industrialization
process itself.
 So, we shall presently turn to the problem of
land acquisition.

LAND ACQUISITIONS AND
PROPERTY RIGHTS
 There are two alternative ways of acquiring land
by the investors -:
i. acquire it from the owner by directly
negotiating a price with him.
ii. the government can acquire the land on
behalf of the investor and transfer it to him in
exchange for some prearranged price.
Though many of the states follow the 1st way
whereas in case of West Bengal the 2nd way is
preferred.

 In West Bengal the 2nd way was preferred
because landholding is much more fragmented
(because of land holding and excessive
population pressure).
 Fragmented landholding makes direct purchase
of land by the investors both difficult and
undesirable.
 Clearly, when landholding is fragmented, the
buyer has to negotiate his purchase with a large
number of landowners and this in itself can be
extremely costly ( There is also a possibility of
speculative hold out by the owners).

 Not only from the buyers point of view, but also
from the farmers (which are mostly large and
scattered) point of view government
intervention is favorable.
 This is because in such a case, farmers cannot
bargain effectively with big industrial houses
and only the government can bargain on their
behalf looking after their interest.
 But actually, the West Bengal government
under- performed in bargaining for the farmers.

 The government must also keep in mind that
Property Rights are not violated during such land
acquisitions.
 In other words, government should avoid secured
investor’s property rights coupled with loosely
defined property rights of the land owning farmers
(which happens most of the times).
 Hence, violation of property rights and the
consequent discontent among the masses can be
minimized through proper compensation and
rehabilitation package for the displaced.
 Does the government of West Bengal have a
satisfactory compensation and rehabilitation
package?

COMPENSATION AND
REHABILITATION

 The government of West Bengal has been using
Land Acquisition Act, 1894 to acquire land.
 The Act empowers the government to acquire
any land for a public purpose or for the purpose
of use by a company by prior notification and by
paying a compensation to the owner.
 It is a bit strange to find that the act doesn’t
mention anything regarding the rehabilitation of
the displaced farmers.

 How is compensation calculated?
 The compensation is based on the current
market value of similar land in similar use.
 A common practice is to look at an average price
at which similar land has been transacted over
the last few years and then compensating the
owners accordingly.
 Compensation also includes certain types of
damages associated with acquisition of land.
 As there are no proper methods of calculating
compensation, there has been a lot of protests
by the farmers of the state.

 Some of the causes of under-valuation of land
(compensation) are:-
i. The prices of the land are always increasing.
ii. The market price of land reflects the discounted
sum of the expected value of output produced by
land in future net of material and labor costs(as
the loss of opportunity is not accounted).
iii. A small farmer owning a piece of land usually
markets a very small part of the produce and
keeps the larger part for his self-consumption.
o The current practice of evaluating land is on the
basis of earnings arising out of its present use.
o Even the employment, etc generated will not
benefit the farmers as they are not specialized in
industrial work

 Over this, there is lack of a proper resettlement
and rehabilitation policy, or R&R policy
 The displaced are offered a menu of cash
payment, homestead land, employment
opportunities and training apart from the
compensation paid for his land as per the Land
Acquisition Act.
 But, no resettlement has so far been planned for
the sharecroppers or the landless.

 Till
now we have understood the meaning of
the topic “Development and Displacement”
and the economic and physical issues
associated with the topic (mostly in context
of West Bengal).
 Now, we would like to check the credibility
and perceptions of the discussion.

RESULTS
 In West Bengal, chief minister Buddhadeb
Bhattacharjee has taken his drive for
industrialization rather seriously.
 The drive for industrialization entailed wooing
investors by giving them subsidies, incentives,
tax breaks, low-interest loans and easily
available land.
 The Endeavour though had a favorable effect on
potential investors and on those who were
sympathetic to market-oriented reforms.

 The other part of the endeavor and rather the
more important one was related to acquiring
land for industrialization.
 Unfortunately, very little thought, energy and
effort went into the planning of this part.
 Over the last few years, Buddhadeb’s
Government has been talking about the
improved perception of West Bengal among the
investors.

 On the contrary, compensation and
rehabilitation questions were largely ignored.
 In many cases eviction was brute forced upon
the croppers.
 Hence, there emerged incidents like Nandigram
and Singur.
 The Government should realise that the
people’s perception about the process of
industrialization is more important in a
functioning democracy.

CONCLUDING REMARKS
 In spite of so much protests and policy
formulations the puzzle still remains unsolved.
 Still the basic questions like- “Who are to be
compensated?”, “Who is supposed to
compensate them?” and “Why are they not
being compensated?” still remain unanswered.
 It seems that the real problem lies with states
entering into an unhealthy and inefficient
competition between themselves to attract
private investments.

 In short, it could be said that the government is
very much interested in wooing investors by
providing them cheap land at the cost of its
farmers (who are drastically affected the fall in
their Human Capital)
 But, still the government is constantly reminded
that even if a sizeable minority perceives that
industrialization is going to hurt them, then it
will be impossible for the government to carry it
out.
 And the incidents like Nandigram and Singur
must act as an eye-opener for the policy-makers.

Development v/s displacement

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