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Singur: What Happened, What Next and Time to Pay the Cost

Since Tata Motors has shifted the Nano project from Singur, the company will have to meet the cost of land acquisition, development and the police protection that was provided for two years. The state government should issue a global expression of interest to set up an automobile plant in the area - the land cannot be used for any other purpose.

COMMENTARY

Singur: What Happened, What likely to be needed to be taken by Government/Government Undertaking/Develop-
Next and Time to Pay the Cost ment Authorities, at the public expense for a public purpose (emphasis ours), viz,
employment generation and socio-economic
development of the area by setting up of
D Bandyopadhyay Tata Small Car Project, etc.”

Since Tata Motors has shifted the Nano project from Singur, the company will have to meet the cost of land acquisition, development and the police protection that was provided for two years. The state government should issue a global expression of interest to set up an automobile plant in the area – the land cannot be used for any other purpose.

D Bandyopadhyay (csdnd@del2.vsnl.net.in) is with the Council for Social Development, New Delhi.

Economic & Political Weekly

EPW
november 29, 2008

O
n 3 October 2008, at a press conference in Kolkata, Ratan Tata formally announced that he would move the Nano project from West Bengal, squarely blaming the agitation led by the Trinamool Congress for his decision to relocate the plant.

One cannot blame Ratan Tata for his lack of knowledge of the character, trait and heritage of the popular upsurge in West Bengal. Singur was one of the epicentres of the Tebhaga movement in the late 1940s that was led by the old Communist Party of India. There is a famous story by Manik Bandyopadhyay called Chhoto Bakul Purer Yatri on that episode. Its locale was Bara-Kamalapur in Singur. A blue-blooded bourgeois totally alienated from the common people cannot have any awareness about a popular movement against gross violation of their basic right to life and livelihood.

Wealth creates hauteur. Hence we may excuse Ratan Tata for his slightly less than civilised behaviour in slandering Mamata Banerjee in the press conference. He did not show any concern for or kindness to those who lost land at Singur, but it is reported that he donated $50 million to Cornell University only recently.

But what about the Communist Party of India (Marxist)? Did it not take a royal charter of monopoly for representing the “oppressed” who stood in constant opposition to the “oppressor” and who are in a constant fight, “a fight that each time ended, either in a revolutionary reconstitution of society at large, or in the common ruin of the contending classes”?

The Government of West Bengal (GOWB) published 13 notifications under Section 4 of the Land Acquisition (LA) Act 1894 in July 2006 declaring its intention to acquire roughly 1,000 acres of land in five mauzas of Singur abutting the Durgapur Express Highway. All the 13 notifications had one identical clause. It stated “that land mentioned in the Schedule below is

Since the government cannot acquire any land for a private company except through the procedure laid down in chapter VII of the LA Act, the GOWB openly committed a fraud on the law and on the public by acquiring the land in the name of the West Bengal Industries Development Corporation (WBIDC) – a government company – for leasing it to Tata Motors Ltd (TML). This chicanery on the part of the GOWB enabled the Tatas to get hold of 643 acres of land on lease without paying a paisa. But under this procedure, land could be acquired only for a “public purpose”. Section 3(f) of the LA Act defines “public purpose”. There are eight items under it. But the caveat to this definition is very significant. It says “but does not include acquisition of land for companies”. Thus the acquisition of land for TML was totally illegal. The issue is now pending before the Supreme Court.

Public Purpose

For the exercise of the doctrine of eminent domain, a “public purpose” is essential. Hence the GOWB tried to make out a case by stating that the small car factory would generate employment and result in socioeconomic development in the area. There is no basis for this assertion. First, it did not disclose how many direct jobs would be created in the factory. Second, it did not specify how many of those who were to lose land would get direct employment. Third, the promise of economic development and the resultant prosperity was a rehash of the discredited and discarded “trickle down theory”. Hence it was an exercise in falsehood. Though not conceding the point, let us accept these contentions for the sake of argument.

The whole proposal was predicated by the fact that the TML would set up a small car factory. Now that they have decided to move out and are relocating the factory outside West Bengal, the whole thesis vanishes into thin air. There is no small car factory. There would be no employment

COMMENTARY

generation. There would be no socio-economic development of the area. Therefore, there would be no “public purpose”. Thus the expenditure of public funds for this non-existing project was a total waste and, therefore, fully unjustified.

Serious Consequences

It has very grave and serious consequences. The whole exercise of acquisition of 1,000 acres of land through the use of force, building up of infrastructure for a project which does not exist, supply of free electricity and water, round the clock police protection for two years, and construction of 18.75 km of a boundary wall with watch towers at regular intervals, were all done for nothing. Who is to bear this cost? Even with a contrived and convoluted argument of “public purpose”, there could have been a fig leaf of justification of such enormous public expenditure. With the withdrawal of the Tatas all these expenses lose validity. Some heads should roll.

The Tatas withdrew from Singur on their own volition. Therefore, they will have to pay for the cost incurred. That is the logic. That is also ethics. In fact, the Comptroller and Auditor-General (CAG) of India should conduct a due diligence audit of the WBIDC, Commerce and Industries Department, the West Bengal Housing Infrastructure Development Corporation (HIDCO) the Bhangore-Rajarhat Area Development Authority (BRADA) and the Police Directorate to compute exactly the loss to the public exchequer due to this abrupt decision of Tatas to move out from Singur. The CAG should also fix responsibility for this wanton waste of public funds. It would be a slightly time consuming process but it has to be done for the sake of public accountability, transparency and good governance.

Cost Tatas Have to Meet

Meanwhile to present a provisional bill to Tatas an attempt is being made here to compute a figure based on the facts and figures as published in the print media about the issue. The Tatas caused enormous loss of public funds for their misadventure in Singur. This provisional figure will be altered once the CAG’s report is made available. But it is fair that the Tatas should have an indication of how much they would have to pay West Bengal.

In the first place, but for the fraud perpetuated by the GOWB, the Tatas would have to pay upfront the estimated cost of land acquisition under Chapter VII of the LA Act 1894. Now that there is no public purpose, they would have to reimburse to the state government a sum of Rs 200 crore which is the paid out cost of compensation for the acquisition with some visible overheads.

Second, the WBIDC or some other state agency constructed the 18.75 km long boundary wall along the outer periphery of the acquired property. We do not know its specifications. It is locally said that the wall is eight feet high with a two feet foundation underground. Estimates made by a couple of A-class CPWD contractors indicated that it would cost Rs 275 per running metre for a wall of this type with supporting pillars at regular intervals. Thus the estimated cost of construction of this wall would not be less than Rs 51.56 lakh. To this, one has to add the cost of five big gates. At a conservative estimate that would cost not less than Rs 25 lakh. Thus the wall with gates will cost not less than 76.56 lakh.

Third, the government provided roundthe-clock police protection, both during the process of acquisition and after the land was leased out to the Tatas. Newspaper reports indicate that approximately 2,000 policemen had been deployed day and night for the last two years and several months for the protection of the property of TML. The government did not come out with any facts about this cost. But the police directorate of West Bengal has a standard formula of the cost of deployment of 1,000 policemen (one battalion strength) excluding the salaries of officers of the rank of an inspector and above. The salary cost per month comes to Rs 80,70,000. To this one has to add cost of the uniforms, and some basic equipment which would come to Rs 16,51,100. Thus the total comes to Rs 97,21,800 per month. This figure does not include the expenses of vehicles, petrol/diesel, and other heavy equipment without which a police force cannot function. Excluding these items, the annual cost of deployment of a battalion of policemen comes to Rs 11.67 crore. For two battalions deployed to protect the Tata property the cost would be Rs 23.33 crore. For two years it would be Rs 46.66 crore. This is basically the salary component. The actual cost is much higher.

Fourth, the GOWB committed another act of deception to give financial benefit to the Tatas. The principal secretary, Commerce and Industry (C&I), Department of GOWB, wrote a letter on 12 October 2006 to the managing director of the HIDCO in which, inter alia, he said:

In order to bring investment (obviously the Nano unit) in West Bengal, we had to face competition from other States, in particular, Uttaranchal which enjoys Zero excise duty benefit in a car proposed to be priced at Rs 1 lakh, the exemption of 16% excise duty makes a major difference. Therefore, in order to make the investment attractive to TML, the State Government has to offer significant support in the form of upfront infrastructured assistance.

So the Tata Housing Development Corporation (THDC) would enter into an agreement with WBIDC to form a joint venture company. Five hundred acres of land belonging to the BRADA would be given at a concessional rate to the THDC+WBIDC combine. And 50 acres of high value land of the New Town Rajarhat should also be given to that combine. The letter clearly mentioned 20 acres should be given for commercial purpose and 30 acres for residential purpose at rates which were half of the prevailing rates. The letter went on to state that profits generated by WBIDC would be used by it “to meet its commitment of infrastructure assistance to TML project without having resort to budgetary support”. The term “infrastructural support” was deliberately used to hide the real intention of giving a subsidy to TML. This directive of the C&I Department violated several laws apart from being ethically unsupportable. But we are not going into that it here.

At one stroke, HIDCO suffered a loss of Rs 60 crore for 20 acres of commercial land and a loss of Rs 75 crore for the residential land, making a total loss of Rs 135 crore.

On the 500 acres of BRADA land, one could make some conjecture in the absence of hard facts. Assuming that the price of land per cottah was Rs 1 lakh and that BRADA had to sell it at Rs 50,000 to ensure profitability of TML, BRADA lost Rs 150 crore straightway (one standard acre = 60 cottah).

EPW
COMMENTARY

The provisional exit bill of M/s Tatas would be:

(i) Rs 200 crore (LA cost) + (ii) Rs 76.56 lakh (cost of wall) + (iii) Rs 46.66 crore (police protection) + (iv) Rs 135 crore + Rs 150 crore = Rs 285 crore (subsidised land transferred from HIDCO + BRADA) = Rs 532.18 crore (excluding all indirect and invisible costs).

Inside the Negotiations

This episode cannot end unless some titbits of the parleys that took place on 5 and 6 September 2008 in the Council Chamber of Raj Bhavan, Kolkata, are recorded and made public. Since the GOWB unilaterally and unethically repudiated the agreement it entered into with the Opposition, the writer has no moral compunction now to keep silent about some of the inner stories.

In the beginning, the facilitator the governor of West Bengal, set the ground rules. There should be no personal attacks. An attempt should be to find an amicable solution to the Singur impasse for the benefit of the “unwilling farmers”, agriculture, industry and the general well-being of the people of West Bengal. It must be admitted that both sides adhered to the ground rules and carried on the discussions in a civilised and polite manner.

The discussion centred around the amount of land that could be made available within the project area for resettlement of the “unwilling land losers” on land for land basis. Incidentally the “land for land” principle of R&R has been recognised in the National Rehabilitation and Resettlement Policy, October 2007. The leader of the Opposition made it clear initially that, though debatable, his side would not discuss the merit or otherwise of letting out approximately 643 acres for the mother plant of TML. It was a major concession and it immediately created an amicable ambience for negotiation. Thus discussions centred round the residual (approximately) 350 acres.

The government side pointed out that of this area, 294 acres have been set apart for ancillary units. After an hour of discussion it was found that the matter was not progressing. It was going round and round.

At this stage the minister for commerce and industry suddenly offered 40 acres of land in the project area for non-agricultural

Economic & Political Weekly

EPW
november 29, 2008

avocations on the basis of 5% of the land cost per land losers. He also introduced the concept of R&R “in and around” the project area. With 40 acres already declared in favour of those who lost land, there was an attempt to find out how much more land could be made available from the vacant and not yet utilised land in the project area, particularly, from the land earmarked for the ancillary units. Whatever proposal came from anywhere, the stock reply of the minister was “Tatas will not agree”. I counted this phrase 11 times before I gave up.

The facilitator, a suave, charming and elegant gentleman, did not show any sign of displeasure, but very sweetly he asked the minister “who had acquired the land”. The reply was, it was the government. Then there was a further query that if the GOWB had acquired land under the LA Act, should not it have some view as to how the land should be utilised by the ancillary units? Did anyone ascertain the real requirement of each unit? To that the minister replied “Tatas will not agree”.

Then the facilitator sought the permission of the minister to ask a few questions of the managing director of WBIDC. He asked the managing director who had selected the ancillary units. The reply was the Tatas. Then he enquired who had decided how much land each unit would require. The reply was, the Tatas. Thereafter, he wanted to know who decided where that parcel of land would be located. The answer: the Tatas. Getting, perhaps, a bit perplexed, though not showing any sign of it, the facilitator politely asked whom the land belonged to. The reply was: the WBIDC. He further queried “In that case should not the WBIDC have some say regarding areas to be allotted and their location?” This time the minister replied “Tatas will not agree”. The managing director supplemented the answer by adding that WBIDC did not have technical competence to assess the requirement and, therefore, it depended entirely on the Tatas.

Never in my service career of more than three and a half decades, both in the state and at the centre, had I seen such shameful subservience of a government to a business house.

It is time to relate an anecdote about B C Roy the chief minister of West Bengal in the 1950s and 1960s. In 1951, he received a proposal from Morris Motors of the UK for technical collaboration with an Indian entrepreneur for the manufacture of Morris cars in India. After studying the proposal, one day he told his personal staff Oke dako (call him). Totally confused, his personal staff left his chamber not knowing whom to call. Then it occurred to someone that it could be G D Birla who had sought an appointment earlier. So they rang up Birla and fixed the appointment at 3 pm on the same day. Birla arrived at the appointed hour. B C Roy was informed. He told his staff “Request him to wait for a while”. After a while G D Birla went in and stayed with B C Roy for almost an hour. That was the beginning of the Hindustan Motors at Konnagar, the first motor car factory in Asia after the second world war. The chief minister of West Bengal did not kow-tow to any business tycoon to locate an industrial unit in the state.

A Future Project at Singur

Now what happens after the exit of Ratan Tata from West Bengal? First, to the best of our knowledge life continues in West Bengal in its normal pace and stride since 3 October 2008.

Second, since an area of more or less 643 acres was let out to TML for setting up a car factory, now that they have decided to go, a notice has to be given for the cancellation of the lease. Similar notices have to be given to all the ancillary units because they were captive to TML.

Third, it appeared from media reports that about 200 to 250 acres of land where heavy construction had already taken place, agriculture would not be possible without enormous capital cost to restore its original fertility. Hence that area could be kept reserved for a future automobile unit. In fact, the advice of a reputed consultant should be obtained to ascertain how much land would be required to set up a manufacturing facility of 500,000 small and medium cars per year. On the basis of his assessment, an area of say 350 or 400 or 450 acres of land could be set apart for the future factory. This should include the built up area of TML.

Fourth, instead of any sweetheart agreement there should be an advertisement for a global expression of interest for setting up a small/medium car factory in Singur.

COMMENTARY

The government should openly advertise what benefits and/or facilities it would offer. Respondents should be requested to indicate what terms and conditions they would offer for the well-being of those who lost land and for the state in general. After appropriate technical and financial assessment, the party whose offer is the best should be selected to set up the manufacturing unit. The agreement should be open and transparent and there should be no secret annexure as in the case with TML.

Fifth, the rest of land should be returned to those whose land was acquired. The commerce and industries minister had been repeating that land once acquired cannot be returned. This is not correct.

There are various processes for restoring the land. There is Section 21 of the General Clauses Act 1897. Its heading reads as follows: “Power to issue include power to add, to amend, vary, or rescind notification, order, rules or bye-laws”. Under this section land to be returned could be denotified.

Land for Panchayat

If one wanted to stay within the four corners of the Supreme Court judgment in the Bhaskaran Pillai case (1997- 5 SCC.432), the surplus land should be handed over to the Singur Panchayat Samity for “planned development or improvement of existing village sites”. Five mauzas have been devastated by reckless land acquisition proceedings. These villages should be developed in a planned manner as provided for under section 3(f)(I) & (v) of the LA Act, 1894. Those who lost land should be initially given 999 year lease.

In due course, a local amendment should be made in the LA Act, on the lines of the Tamil Nadu amendment to return land to the original owners. It may have to wait for a change in government. The CPI(M) needs to be cautioned that it would be totally illegal to go on a fishing expedition to find a project which could fit into the definition of “public purpose” to utilise this land. The acquired land has to be used primarily for the purpose for which it was initially acquired.

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