Catch-22 in West Bengal

The policies that kept the Left Front in power for 30 years are proving major obstacles in the state's bid to industrialise.

In 2005, the West Bengal government started acquiring farmland in Bhangar, 25 km from Kolkata, for a 100 km, four-lane expressway and township to be constructed by Indonesian giant, the Salim group.

Soon after, Trinamool Congress leader and former railway minister Mamata Banerjee lost no time summoning a rally, attended by more than 50,000 people, to protest the appropriation of farmland for industry. Significantly, Abdur Rezzak Mollah, the Left Front's land reforms minister, raised questions about viable rehabilitation packages for farmers who would lose their land. Subsequently, in state elections in 2006, the Bhangar assembly seat, which had been a CPI (M) stronghold for decades, was narrowly won by a Trinamool Congress candidate.

Though the protests were localised, Bhangar was a clear signal that the ruling four-party Left Front would see turbulent times over land acquisition. Yet, within the year, Chief Minister Buddhadeb Bhattacharjee announced plans to acquire larger tracts of farmland as the state's industrialisation drive went into high gear.

Soon, more vocal protests were heard in Singur, 40 km north of Kolkata, and Nandigram, 150 km south of the city, respectively, locations for the 1,000-acre hub around Tata Motors's small car project and the 14,000-acre Special Economic Zone (SEZ) for the Salim group.

Last week, when villagers in Nandigram were killed in clashes with the police, West Bengal became a national symbol of the evils of unfettered industrialisation in general and SEZs in particular.

One of the world's longest-serving Communist governments now suffers the ignominy of being labelled "anti-people". Indeed, as the CPI (M), the leading constituent of the Left Front, has discovered to its chagrin, its faithful rural support base is proving inconveniently intractable in the state's bid to stoke industrial investment.

This has put the Left Front government in a bind. With returns from agriculture diminishing, the state urgently needs to industrialise. To bootstrap the process, however, the state needs more than 1,00,000 acres of land. Half of this must come from agricultural land, which covers 68 per cent of the state's land mass.

A land ceiling Act, which limits the acquisition of agricultural land to 12.5 acre, has meant that most of the acquisition must be done by the state rather than the private sector (the Act has now been referred to a standing committee for possible amendment).

Yet, as Nandigram has shown, the government cannot take the rural support base, which sustained it for for three decades, for granted in this land acquisition drive.

Ironically, the spectacularly successful land reforms that handed land to small farmers and share-croppers (or bargadars) in the seventies (known as Operation Barga) have become a source of weakness. West Bengal's land reform programme was unique in that, unlike Punjab and Haryana, it created a green revolution based on a small peasant economy. With high-yielding seeds and deep tubewell irrigation provided by the state, Bengal was able to achieve high yields "" two or three rice crops a year "" with average landholdings as small as 5-7 acres.

Today, West Bengal produces around 8 per cent of India's cereals and is one of the country's principal vegetable producers.

The flip side of this unique green revolution was that, as a generation of landholders passed on, multiple inheritors have acquired even smaller plots of land. Today many own just three or four bighas (three bighas = one acre).

Over the decades, growing land fragmentation, declining soil fertility and a falling water table have made farming an unviable business for Bengal's 1.2 crore farming community. This fact is evident in a paradox highlighted by economist Omkar Goswami. Writing in the Kolkata daily The Telegraph, he pointed out that despite impressive growth in agricultural productivity and farm incomes, rural household consumption in West Bengal was 9.6 per cent below the national average in 2001-02.

"It doesn't speak well of a state that lays claim to agrarian dynamism [that] its rural households consume only 4.3 per cent more than the average rural family in Bihar," he writes.

Not surprisingly, the second generation of small-holders has been uninterested in farming, increasingly turning to the cities for jobs. Today, almost half the rural population earns its income outside agriculture.

No one understands these inherent contradictions in West Bengal's economic future better than Buddhadeb Bhattacharjee, who took charge in 2001, and a small element within his government.

As state industries minister Nirupam Sen told Business Standard, "The success in agriculture cannot be sustained. We need to take the pressure off agriculture and land is required for industrialisation."

Yet, industrialisation in West Bengal had always been a controversial issue. Powered by its rural support base in the seventies and eighties, the Left Front government did little to support industry.

In turn, plagued by state-supported union problems and a chronic shortage of infrastructure, industry began retreating in favour of more congenial locations elsewhere in India. Big groups like the Birlas, Hindustan Lever, Britannia, the Thapars and so on sought to locate their new investments in the west and north.

Despite being isolated within his party and the Left Front, Bhattacharjee's efforts have largely been to try and reverse decades of neglect. But globalisation has changed the nature of the game. Integration and economies of scale require vast tracts of land to be acquired for industrialisation. Indeed, the state has attracted numerous projects that require thousands of acres (see chart), that will displace large numbers of people on fragmented land-holdings. In Nandigram alone, the Salim group's chemical hub would have displaced more than 40,000 people.

Till the Nandigram crisis, the pro-changers in the government seem to have assumed that the Left's stranglehold on the countryside precluded the need for sensitive and well-crafted communication and rehabilitation programmes ahead of the land-acquisition drive.

This apart, years of industrial neglect have also meant that, unlike Gujarat and Maharashtra, there is no credible demonstration of the benefits of industrialisation. Outside of Kolkata's polluted outskirts, there is little to convince the rural populace to substitute the seemingly solid assurance of land ownership for the ephemeral gains of factory jobs.

Certainly, on the outer edges of east Kolkata, where vast tracts of farmland have been given over to mega-housing projects and factories, there appears to have been no virulent protests to land acquisition.

At Singur, some 4,000 farmers representing 300 acres of land have refused to accept compensation. But most other landholders here were absentee farmers with jobs in Kolkata who were willing to sell their plots. Thus, despite sporadic protests here, the Tatas have been able to power ahead with the project, albeit under heavy police protection.

A wall enclosing the land is already up and workers from Shapoorji Pallonji, the Tatas' major contractor, have started building roads and levelling the land. The first Rs 1 lakh small car is expected to roll off the ramps by 2008.

Nandigram, however, was a potent demonstration of Bengal's Catch-22 situation. It is an isolated and starkly backward group of 40-odd villages in which the inhabitants own land, but little else. Most villages here have no electricity, few pucca houses, and landholders subsist on three crops of rice and vegetables.

Betel leaves represent the only commercial crops and brick kilns constitute the only industrial activity. Annual incomes vary between Rs 18,000 and Rs 20,000. Literacy rates here are as low as 27 per cent, against the state average of 64 per cent. Many of Nandigram's younger sons travel up the river to the industrial hub of Metiabruz to work at low-paid jobs.

Certainly, the plan to set up a chemical hub here made both business and economic sense. Nandigram is close to the port of Haldia through which a pipeline would import the raw material. The hub would, as Sen said, "change the economic pattern of Nandigram".

For the villagers, however, this transformation is far from evident, not least because no one from the party has made a case for it. As they see it, they will lose their land and livelihood. "What will I do with the compensation money?" asked Sudarshan Pain, who farms one acre of land and runs Ma Kali retail outlet selling fertiliser and pesticide.

He and many others, mostly over 30 years, also doubt their employability in the Salim group project. "What jobs can they give us? They will need engineers and computer specialists, we only know how to farm," said Pain. "Tell them we don't want any change, we want to live just as we have been doing for years," an elderly woman added.

Ironically, last week's tragedy here took place after Bhattacharjee had unequivocally announced that the SEZ would be scrapped following virulent protests in January this year.

But by then poor communication stoked by simmering discontent boiled over into pure political rivalry. With the local administration cut off from the area by road blockades, the local CPI (M) strongmen, fearing a loss of control in other parts of rural Bengal, decided to reassert their power.

The police were ordered in on so-called intelligence that Maoist guerillas were operating in the area. In the ensuing confusion, they fired on villagers including women and children who had been pushed to the front. The death toll is yet to be officially verified. Police sources did not rule out the presence of lumpen elements of the Left who committed atrocities as well.

After a stormy meeting of the Left Front a day later, Bhattacharjee merely reiterated what he'd said in January "" that there would be no SEZ in Nandigram. Meanwhile, the area has become a green fortress, subject to brutal political rivalries between the Trinamool Congress and the CPI (M).

In the aftermath of Nandigram, the state government has finally understood that the success of its industrialisation programme depends on winning the battle for the hearts and minds of rural Bengal. As Sen has promised, "The state will go beyond compensating people. They will be rehabilitated."

Meanwhile, investors, though worried, appear to be backing chief minister Bhattacharjee. No one has pulled out yet, though they admit that Nandigram might set back their plans for a time. The Salim group says it will continue to look at other sites in the state.

Adds Venugopal Dhoot of Videocon, which has heavy commitments in the state, "I believe in Buddhadeb, he is very pragmatic." B K Birla, who has seen Bengal in its anti-industry days, says, "Nandigram may not happen but industrialisation in West Bengal will continue."

On the whole, most investors take the view that such problems are inevitable and, as with all such issues in India, will eventually sort themselves out. Backed by a state economy that is growing at 7 per cent, a relatively literate workforce and a growing market, Bhattacharjee has the strong backing of one set of stakeholders for his reform programme. His challenge is to extend this mandate to the other major stakeholders to achieve the inclusive growth to which he aspires.

With reports from Ishita Ayan Dutt and Tamajit Pain