Infochange India

Trade & development

Wed26Nov2014

You are here: Home | Trade and development | Analysis | Leasing land instead of buying it

Leasing land instead of buying it

By Aseem Shrivastava

Could the Magarpatta model in Pune be a way out of the SEZ impasse? Here farmers have leased - not sold -- 400 acres of farmland to developers who are paying them a royalty in perpetuity, besides giving them new housing in the township and various kinds of supply contracts

"To build the SEZ, Reliance needs use of the land, not ownership of it."
-Kisan Jagrukta Samiti (Farmer Awareness Association) poster, Jhajjar, Haryana

It is the populous countryside of India that has borne the brunt of what has sometimes been called the collateral damage of 'development'.

For those who live in Bharat, not India, development has always been a euphemism for war stretching across the half-a-dozen decades of 'independence'. Millions have countenanced rude displacement from their homes and fields, officially unreckoned loss of livelihood, loss of customary access to water, forests, pastures, fisheries, the ruin of their traditions and culture, the breakdown of communities, and the devastation of a whole way of life rooted in the centuries.

At the root of all conflicts over resources has been the issue of land: who owns it, who controls access, and for what purpose. The land battles over Special Economic Zones (SEZs) are only the latest manifestation of a tragic drama that has been enacted countless times in one region of this country or another for decades now, the State relying on such legal anachronisms as the 1894 Land Acquisition Act, one of the most handy bequests of British colonial masters to our policymaking elites.

For the sake of the present argument (and only for its sake), let us agree temporarily that industrialisation on the Western model is necessary. Let us grant that despite all the collateral damage, this Westernised modernity (whatever the latter term might mean) is necessary.

So we are assuming, much in the heroic manner of an economist professionally accustomed to his convenient abstractions, that energy and resource-intensive industrialisation - which makes possible large-scale power generation, rapid overseas travel, satellites, subways and the elaborate and sophisticated paraphernalia of giant metropolitan cities, to name but a few of the putative benefits of industrialism - has never really been a matter of public choice, but one of historical inevitability which, to deploy Lenin's famous words, is the sort of progress that is predestined "to sweep all before it".

Where does such a worldview leave us today? In more concrete terms, how are we to face the potentially devastating consequences of land battles that are brewing across India not merely over acquisition for SEZs, but for all manner of activity - dams, ports, highways, roads, power plants, mining projects, industrial units and much else - involved in the making of industrial modernity?

Leasing land from farmers

Why isn't land being leased from farming and tribal communities by corporations or governments, rather than being bought (or simply taken over forcibly) by them? After all, strictly speaking corporations only need use, not ownership of the land.

The idea came from Jat peasants in Jhajjar, Haryana, where Reliance Industries is trying to acquire no less than 25,000 acres of farmland for one of their two giant SEZs in the country. "SEZ agar bane bhi toh malkiyat hamari honi chahiye" (even if the SEZ is built we must have the ownership), they told our team of researchers while we were conducting a study of the area.

It is important to note that this solution is applicable only to those SEZs where the ecological consequences and disruptions are tolerable, and where the local owners of land - whether peasants or tribals - are freely willing to part with it if offered better economic prospects. Everything else is morally and politically incompatible with an environmental democracy.

The idea is hardly as far-fetched as might be presumed. This writer knows of at least one case - the modern township of Magarpatta near Pune, built on 400 acres of what used to be farmland till recently - where farmers have been willing to dramatically change their way of life and allow use of their land for the price of a royalty earned in perpetuity (for landowning farmers and their progeny) from the developer. They live in comfortable housing in the township, have been awarded supply contracts of various kinds and their per capita income has increased significantly. All this while their land is on rent to software companies, shopping malls, schools and hospitals. Farmers also have the right to cultivate land which will not be used for some years to come.

It is not a perfect arrangement. For instance, one wonders what has happened to landless farm workers who were employed by the farmers earlier. Have they found equivalent or better employment in the township?

One can also take issue with the fact that fertile agricultural land has been diverted towards industrial use, when there is so much wasteland in the country. At a time when food prices are rising on account of shortfalls in supply and there is some doubt about the long-term food security of the country, one can justifiably criticise the adoption of approaches like Magarpatta's.

It may be argued in response that a free, democratic society ought to leave the decision about land-use (below a certain quantum) in the hands of the owner. Isn't it the case however, that millions of farmers across India have begun finding agriculture a poor economic proposition (and have often been driven towards debt and even suicide in the thousands) only during the last decade-and-a-half, thanks to hostile World Bank/IMF/WTO-friendly state policies towards agriculture - which have raised input costs for farmers, even as they are having to compete with subsidised grain from the West without the aid of support prices guaranteed by the government? (Free trade as Washington understands and wants it.) For instance, companies like Monsanto are slowly taking full control of India's seed supply (and costs), thanks to World Bank pressure (often exercised subtly through such institutions as the National Seed Corporation). And public investment in agriculture has fallen sharply under pressure from the IMF to curb public spending (though it doesn't complain about defence expenditure rising by a shocking 60% during the last four years alone!).

The argument is difficult to knock down. Yet, in a world of third-best solutions, one has to acknowledge that even if it has led to the creation of yet another gated community, what Magarpatta symbolises is certainly among the more amicable resolutions of land issues in present-day India.

An arrangement like Magarpatta also ensures, especially if land rights are made non-transferable, that no real estate speculation - by Indian or overseas finance capital - can come about. This addresses a major area of concern for critics of the SEZ policy.

The issue of compensation is critical. Compensation in cash (even at so-called market rates) is not merely not enough, it fails to appreciate the significance of land as the only source of security and insurance in an agrarian context, and in a society which has avoided providing any sort of safety-net to the underprivileged, let alone one comparable to a developed country.

Compensation in cash also fails to understand that the farmer will feel cheated in the new situation - in whose overall gains his part will be zero, as he watches the developer run away with the growing jackpot. Moreover, inevitably inflation will cut away at his little stash of cash in the bank. We all know how much faster land prices rise compared to everything else.

The approach of cash compensation also pays little attention to the habits of farmers and tribals, unaccustomed as they may be to handle such capital. Alcoholism among men, for instance, has been known to grow rapidly when a whole way of life is brought to an end by state fiat and cash is given to make up for it. Women then have to typically bear the burden of raising families, doing hard labour day after inhuman day.

Further, cash compensation reflects a complete absence of understanding of the sentiments of the losers. It assumes that all injustices - including the rupture of old filial bonds and the termination of the joys and comforts of community living - can ultimately be made up for in terms of money. Forcible acquisition, even with cash compensation, violates the right to private property and disregards the loss of dignity and feeling of violation that follows dispossession, not merely for a Baiga tribal but for just about anyone - especially in a perverse society like today's where almost anywhere, you are seen as little more than the sum total of your assets.

If farmers are compensated via (inflation-indexed) royalties, much in the manner that patents or any other wealth-generating asset is compensated, some of the above problems are obviated or at least their impact is lessened. If I am not mistaken this is precisely the approach that has been adopted in places like Europe in order to change land-use in favour of industry.

Imaginatively sensitive consideration also has to be given to those with de facto ownership of land (tribals often do not have the papers to prove their ownership), and to those like sharecroppers, landless workers, pastoralists, common property users and artisans whose means of livelihood is seriously disturbed by land acquisition. There has to be long overdue recognition given to pre-existing local economies of the poor. If, as the economists would have us believe, in the new industrial set-up "everyone can be made better-off, without making anyone worse-off", the claim has to be met in practice not merely by policies of redistribution of income, but by more creative approaches which do not rob the underprivileged of "development with dignity".

If SEZs are not aimed at enriching developers and builders at the expense of farmers and tribals and are not about real estate speculation at all, this, two months after Nandigram, is perhaps the last call for the governments in New Delhi and the state capitals to consider a serious rethink, tear up the 1894 Land Acquisition Act, draw up a completely new land rights legislation, in addition to a rehabilitation policy which will restore the dignity and respect due to Indian agriculture and its long-standing guardians as also to pastoralists, forest-dwellers, fisherfolk and artisans who have all suffered from long neglect by Downtown India.

There is no greater lie in today's newspapers than the "there is no alternative" (TINA) syndrome. There are many. They are viable. They are being tried out amidst Herculean odds in far-flung corners of the land. In many cases, communities are struggling hard to maintain their modest traditional economies, whether of betel nut or of small fisheries. They know much more about sustainable living than many of our environmental pundits. To learn from them, one does not have to know how to compute general equilibrium models. One only needs to shed urban hubris and view matters in the light of a new sympathy.

Continued thoughtless policies, corporate overreach and a failure to think justly about the land question will pave the path to more Kalinganagars, Nandigrams and Maoist violence, ultimately opening the door to new and unsuspected national nightmares - soon coming to a shopping mall or theatre near you.

InfoChange News & Features, May 2007