By staying the state government’s hand on the return of the land acquired by the Tatas for their automobile project in Singur, the Supreme Court has injected some sense into the handling of the matter. The Mamata Banerjee government created an avoidable mess with its hasty decision to find a legislative way out of a difficult political situation. Even as the Calcutta High Court was hearing the Tata petition, the state government had begun the process of returning the land to the farmers, forcing the company to move the Supreme Court. With the apex court’s stay order, which also asks the high court to complete the hearing of the case in one month, prospects of an early resolution of the Singur land dispute have brightened and the fears of a long-drawn court battle have disappeared.
However, the very first policy issue that Ms Banerjee has had to deal with has raised concerns about her arbitrary and whimsical style of governance. As developments in the past few weeks have demonstrated, Ms Banerjee’s zeal for the farmers of Singur has taken precedence over her larger concern for the entire state and its people. As West Bengal’s newly elected chief minister, Ms Banerjee should be as concerned for the farmers of Singur as for the need to attract fresh industrial investment to the state. The two goals are not necessarily contradictory and it is possible to frame laws in a manner that promotes industrial investment without compromising the farmers’ interests. It is also possible for the state government to have amicable negotiations with the Tatas to resolve the issues over returning the land and the payment of compensation. But the manner in which Ms Banerjee has dealt with the Singur land issue, industries across the country will have second thoughts about considering West Bengal as their next investment destination.
Ms Banerjee’s populism, as shown in her instruction to power distribution companies to desist from raising tariffs, even though the regulator has given its approval for a revision, and her knee-jerk tax reduction on petroleum products, will raise concerns about her fiscal management. Granting relief to the poorer sections of people from an increase in tariffs for public services or goods is a politically- and socially-desirable goal, but such a move can be counterproductive if the government fails to tailor the scheme to benefit only the needy. Failure to target such subsidies to the poor, as also evident in the general relief granted by her for all domestic consumers of liquefied petroleum gas last week, can put more strain on the state’s finances, which are already suffering from years of fiscal indiscipline. West Bengal’s fiscal deficit at 4.6 per cent of gross state domestic product (GSDP) is the second highest among the non-special category states and its debt at 40.8 per cent of GSDP is higher than that of Bihar. A state that is seeking a financial bailout from the Centre cannot afford either the luxury of financial imprudence or the misadventure of an uncertain industrial investment climate.