The lesson from Singur

States with high population density must re-imagine industrialisation

On the face of it, the Supreme Court’s decision to set aside the land acquisition in Singur, West Bengal, by the Left Front government for the Tatas marks a remarkable political victory for the All India Trinamool Congress leader and chief minister, Mamata Banerjee. The Left, already emasculated, will lose face and self-confidence further. The court has ordered that 11,000 of the 13,000 land owners, who had accepted compensation, will get back their land and also get to keep the compensation they had received in lieu of cultivation income foregone over the past decade. Those who didn’t accept compensation will also get their land back as also the compensation on the same ground of income foregone.

But it is clear that the farmers cannot resume cultivation straightaway because the Tatas had spent a lot of money on readying the land for industrial use and it will now take a considerable time and expenditure to make the land suitable for agriculture again. The Supreme Court verdict also notes two significant anomalies in the Singur case. One, the state’s acquisition of land for private parties does not classify as a “public good”. Second, the compulsory provisions to be adhered to before acquiring land were not met by the state government.

However, these are only the symptoms of a more fundamental problem that West Bengal, in particular, and many of the eastern states, in general, face: The excessive population density and how it impacts the economic choices. On that count, West Bengal is second only to Bihar in the country and has a population density in excess of 1,000 people per square kilometre. That is close to three times the national average and significantly higher than several states such as Jharkhand (414), Gujarat (308), Rajasthan (201) and Chhattisgarh (189). This essentially means that any industrial project in West Bengal (and some other states such as Bihar and Uttar Pradesh) will displace far more people than it would in states such as Gujarat, Rajasthan and Madhya Pradesh. This is valid even for the less populated parts of Maharashtra, Karnataka and Telangana. The Singur numbers bring out this point quite clearly: A total of 13,000 landowners for 1,000 acres or 13 owners per acre.

This kind of population density puts the east at a natural disadvantage when it comes to industrialisation, and many of the eastern states will have to figure out strategies to make sure they do not lose out on industrialisation — needed not just for jobs, urbanisation and associated benefits, but also for tax revenues. They could perhaps focus on industries that do not need so much land, but this is not easy because the east has natural resources (coal, iron ore, etc) which lead to land-intensive industries. A second response to the problem might be to focus on agricultural productivity: The east has plenty of water resources, and agriculture should be more productive and more employment-intensive. But that won't be enough of course.

If industrialisation has to happen, some amount of conflict or tension over land acquisition is unavoidable, and the political system has to figure out what kind of policies would make the trade-off more acceptable and indeed feasible — such as higher prices for land and long-term annuity payments that compensate for the loss of agricultural income.