Bengal's economy will suffer if Tatas leave: Amartya Sen

Indo Asian News Service
Saturday, September 20, 2008 (Kolkata)

Expressing concern over the happenings related to the Tata Motors factory in Singur, nobel laureate economist Amartya Sen has said West Bengal's economy will suffer a big jolt if the auto major decides to shift its small car plant out of the state.Sen found the fresh compensation package announced by the government "just".

"Apart from the fact that the state will lose out on the investment relating to the motor factory and the ancillary industries, (if the Tatas go away) the view that will gain currency across India is that West Bengal's brand of politics makes it impossible for any economic initiative, and street politics can jeopardise any venture," Sen said in a letter published in the vernacular daily Anandabazar Patrika.

Though the state government had erred during its failed bid to set up a chemical hub in Nandigram, it did not commit any such fundamental mistake regarding the Tata Nano project, Sen said.

He felt the small car facility and the ancillary industries would be good for the state and would help it in dispelling the notion, at least partially, that the state's industrial climate was not conducive to set up projects.

The Nobel prize winner termed it as a "bit unfortunate" that the factory was coming up on fertile farmland.

"I am not at all concerned over the quantum of land being used for the project, as it is very small compared to the total farmland in the state," he said.

"Moreover, the losses due to acquisition of farmland would be more than compensated by the increase in employment opportunities and income in Singur. But to those unwilling to give their land, it's a big loss, and that's a vital question," the economist said.

Sen said the best case scenario would have been if the required land was purchased directly from the landowners. "Acquisition should be the last resort."

He also felt the 40 percent over the then market price given to the landlosers at the time of the acquisition was not enough. "Because it was always expected that due to industrialisation, the price of land in the area would skyrocket.

"But now if the Tatas leave Singur, and there is a high possibility of that happening, then Singur will be back to its old self, and the land price will nosedive. Those holding protests must be worried over that. But the government should have paid much more than what it paid for the land at the time of acquisition," Sen said.

"The compensation package announced by the government recently is much more just. And along with the promise for alternative employment and other benefits, the new proposals can be rated as a good compromise formula," he added.

With several other states announcing sops for Tata Motors to set up the small car plant, there is a possibility that the company was preparing to move out. "If the deadlock is not resolved within a short time, then it is widely believed that the company will leave Singur. But in that scenario, even if the owners get back their land, they will not get it in its original shape," he warned.

Sen regretted the state's political character would change only when the ruins, both in terms of industries and economy, become more visible. "But this is a futuristic statement. Now, there is a strong attraction for street politics. To that has been added the wrong notion of physiocrats of yesteryears that agriculture is the only way to prosperity," he said.

FULL TEXT OF THE LETTER

From THE TELEGRAPH,

Issue Date: Saturday , September 20 , 2008
Huge price of street politics

AMARTYA SEN ON THE SINGUR SITUATION

Nobel laureate Amartya Sen, in a letter emailed to The Telegraph editor Aveek Sarkar, assesses the Singur situation and warns of the consequences if the “attraction of street activism” persists and the Tatas pull out.

"Thank you for asking me about my assessment of the Singur situation. I have, in fact, been trying to follow the events as closely as possible, and I must confess I am greatly concerned about what is going on. It is a complex subject, and we have to consider many different issues together.

First, as I argued in my two Telegraph essays on December 29 and 30 last year, unlike the Nandigram decision, which was (I believe) significantly mistaken, the Singur project with the Tatas was basically sound. West Bengal badly needs industries and new employment and income earning opportunities, and Tatas with the ancillary enterprises would help in that greatly, and also encourage a new image of West Bengal as being no longer hostile to industrial investment.

Second, it is a pity that the plot that the Tatas wanted for the factory, based on their concerns (including closeness to Kolkata), is not only well suited for their project but also fertile for agriculture. It would have been easier if the location were different, but that is no longer a possibility. I am not concerned here so much about the aggregate loss of agricultural land, since that is relatively small, and the income and employment gain from economic expansion in the Singur region would be incomparably larger. What is not, however, small is the loss for those owners of land who did not want to part with their plots, and that is a serious issue.

Third, I argued in my Telegraph essays that (1) it would have been much better to buy the land involved without any compulsion, rather than acquiring it (acquirement has to be the last resort, not the first move), and (2) even with acquirement, giving a 40% higher price than the existing market price was not adequate, since with the entry of industries the land prices would rise much more than that. Of course, if Tatas move out now (as seems likely), the land prices in and around Singur would drop dramatically as Singur returns to its old economic state. That should be a big concern right now for the political protesters, but on the part of the Government of West Bengal, there was a strong case for offering a higher price originally as part of the Singur project, since — with the Tatas there — land price in Singur would be much higher than what the government initially offered and paid.

Fourth, the new compensation offer made by the government is much more reasonable. The higher land prices now offered (combined with the other facilities that have also been offered, including employment arrangements) make it a good compromise.

Fifth, the protesters might be persuaded by their political leadership that their interests would be best served by getting back their old piece of land. Attachment to particular plots is certainly an understandable desire. But the world in which all this will happen will be very different. The Tatas have made clear that they will move out if they get less land than they have been given (they judge that they need that land for the viability of their project). Not just Maharashtra, but also Karnataka and Uttaranchal, among other states, seem to be ready with alternative offers much more favourable to the Tatas. Indeed, there is good reason to expect that the Tatas are very much in the process of relocating, unless there is a fairly immediate breakthrough (which now seems unlikely). With their departure from West Bengal will come a huge fall in land prices all around Singur, and also loss of job opportunities that will affect the local population. I am not sure how much the leaders of the protest movements have thought through these issues.

Sixth, for West Bengal as a whole, it would be a huge economic setback, if the Tatas do move out. Its impact would not be confined only to the economic loss from the withdrawal of investments of the Tatas and the ancillary producers, but also from the general sense across India that the politics of West Bengal makes it nearly impossible to base any new economic move in the state, and that the single-minded politics of the street can drive out any new enterprise.

That politics might change over time once the terrible consequences of industrial and economic stagnation are more widely appreciated and understood. But for the moment the political attraction of street activism seems dominant, supplemented intellectually by the old physiocratic illusion of prosperity grounded only on agriculture. The latter piece of romantic thought cannot but fade over time with the influence of realism (no country has ever achieved much prosperity on the basis of agriculture alone). But at this moment realism looks like a distant dream."

Great loss to West Bengal if Tatas leave Singur: Pranab

September 21st, 2008 - 7:00 pm ICT by IANS

Kolkata, Sep 21 (IANS): It would be a “great loss” to West Bengal if Tata Motors shifts its Nano unit out of Singur, External Affairs Minister Pranab Mukherjee said here Sunday.”It will be a very unfortunate incident if Tata Motors leaves our state. It’ll be a great loss to West Bengal,” Mukherjee told reporters at Baharampur town in Murshidabad district, about 220 km from here.

He said: “There’s no conflict between agriculture and industrial reforms. Both can go hand in hand.”

“If we want to progress in the modern civilisation we’ve to maintain a balance between both. We can neither ignore agriculture nor the need of the industry in today’s world,” Mukherjee said, expressing concern over the ongoing stalemate in Singur.

Tata Motors began constructing the Singur factory two years ago to launch the Nano, the world’s cheapest car at Rs.100,000 (about $2,250).

However, work at the plant has been suspended due to an agitation by the Trinamool Congress for returning part of the land allotted for the project.