Friday, November 09, 2007

CAN BUDDHA SMILE AGAIN

(The acute dilemma facing the government in West Bengal after Nandigram and in the second part, a suggestion for a revised payment mechanism for land acquisitions with potentially far reaching implications)

In the way of tragedies, Nandigram goes well beyond what the common perception would believe. The official version, possibly a model of understatement, says 14 people were killed. They died because in our sixth decade as a democracy, we are still unable to manage our differences and carry out our debates within the bounds of civilised conduct. The other tragedy, with lasting detriment to the people across West Bengal, is that a set of sensible economic policies much needed to pull that state out of its economic morass, has now been laid to rest.

West Bengal is a state where the land reforms agenda is more or less dealt with and now, by all accounts, desperately needs a transition to industry led growth. The fact is that land reforms are not always the unmixed blessing they have been made out to be. In the beginning, the original beneficiary may well get land adequate for his needs and sustenance. But later on, as it gets sub-divided into two, three or more plots, there is very little to live on. In West Bengal, land reforms were pursued with missionary zeal and the state is littered with farming households subsisting on marginal holdings (Official statistics suggest that 91.4% of its farming households have land holdings less than 2 hectares against a national average of 78%.)

Moreover, it is well known that the process of economic development tends to marginalise agriculture, with a steadily declining share of the national income. In India, 70% of our population is engaged in agriculture (mostly small and marginal farmers) and we are just about able to feed ourselves. The US on the other hand has less than 3% of its population employed in agriculture and is capable of feeding almost the entire world. Across the developed world, the proportion of people engaged in agriculture is minuscule compared to those in services and industry. Put another way, these countries have attained development because, among other important reasons, they were also successful in diverting employment away from agriculture, towards industry and services. Land reforms, in this context, can actually be counterproductive over the long term. And that is because by providing a sense of comfort (false, or at best temporary) it merely delays this inevitable and secular movement of people away from agriculture. It is not so much a remedy as a palliative that postpones the pain without doing much for the disease. Worse, with those superficial improvements, it gives rise to an impression that the disease is under control when all along it might well be getting worse.

Of course, when talking about a movement away from agriculture, the underlying assumption is that industry and services are being allowed to develop unhindered to their potential. In West Bengal, ruled for long by wise folks who sincerely believed they knew best what was good for its people, this has singularly not been the case. The official Party line was always about the development of agriculture and the welfare of the rural areas where (and we were often reminded thus) the great majority lived. As for the industrial sector, the Party either did not care or cared only to the extent that it was a hunting ground for its CITU goons.

And that is why West Bengal presents us with something of a double whammy. On the one hand, there is severe pressure on land from the second generation beneficiaries of land reform. On the other hand, there is very little development in the industrial and services sector to offer them an alternative worth pursuing. Incidentally, it is also a pointer to why a centrally planned economy is always a disaster over the long term. Because planners (and they may all be well-meaning economists, politicians and bureaucrats) try to address today’s problems with the tools and solutions available today. The opportunities presented by new developments and the long term trends (including the impact of technology) are rarely grasped because their true significance is seldom realised in time. Nearly 30 years after the Marxists took over power in the state, NSS data indicates that the average consumption level in rural West Bengal is well below the national average and only about four percent higher than in rural Bihar. For a party that has laid claim to rural development as its focus, it is unhappy news indeed. This is not to suggest that the agricultural pie in the state has not grown, only that even as it has grown, there are more and more hands clamouring for a share, because the industrial pie has shrunk and there are no other options open.

Severe pressure on land with no alternative employment, this is the predicament that Buddhadeb Bhattacharya and the Marxist led government of West Bengal find themselves in today. They have scorned at and negated the role of private industry for too long. Now, there is belated realization that the state desperately needs to regain its lost industrial footing. It’s difficult to believe that West Bengal was once in the forefront of India’s industrial growth. Unfortunately for the Party leadership, they have cried wolf so often about profiteering, exploitation (the most exploited word in the leftist lexicon) and other evils of private enterprise, they are now the victims of their own past success. A generation of the rank-and-file indoctrinated by Marxist dogma finds it difficult to let go of its ideological hang-ups and embrace the new-found pragmatism of its leaders.

The Titanic is heading towards an iceberg. The captain is aware of it, but the crew below the deck are yet to get the message.

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