Don't lose the plot
There is a depressing predictability about the politics surrounding industrial and infrastructure projects in India. Most of it is crafted around the transfer of land.india Updated: Aug 19, 2010 21:34 IST
There is a depressing predictability about the politics surrounding industrial and infrastructure projects in India. Most of it is crafted around the transfer of land. The announcement of plans to build a new car factory, power plant or highway immediately attracts a motley crowd of carpetbaggers seeking to score political points through accusations of crony capitalism and sweetheart deals. That most of these charges eventually stick says a lot about the Indian way of doing business. But a more sinister game is afoot meanwhile. The affected people, mainly those who will be displaced, are sold the idea that they are being shortchanged by a State bent on acquiring land cheap for the fat-cat capitalist. This sparks a chain of agitation, often violent as the government wheels out its law- enforcing apparatus. Think Singur, think Taj Expressway.
If this template has been with us for a while now, so has the solution. The most trenchant opposition devolves on the perception that those displaced are being paid for the resources they hand over at today's market rates while profits are made on rates that obtain after a project is fully developed, be it an industrial complex or a township. This is readily addressed by breaking the compensation in two parts: an outright purchase and stock options in the company setting up the project. The idea of making the dispossessed stakeholders in development is ages old, it is a matter of actualising it. India Inc has learnt to live with job reservation for locals and it surely is not difficult to work out a quota for shareholding. Equity, being skill and technology neutral, is a more transparent currency for transfer of resources from one section of society to another.
The pace of infrastructure development will have to double for India to be able to house half its people in cities in a couple of decades. The State does not have the money to do this on its own. Private partners will have to be sought. The government's stake in such projects is increasingly land that private capital finds logistically and financially difficult to acquire. The recent experience with special economic zones has laid out a few guiding principles for land acquisition by official agencies. Individual state governments would do well to heed them. Litigation resulting from corners cut could slow them in the race for development. On its part, the Centre would not be remiss in nudging regional satraps into a viable growth matrix that does not involve beggaring the neighbour.