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Modi motorcade lands in trouble

A spectre is haunting India – the spectre of land acquisition. Why this is central to India’s growing political divide as ideologies blur and farms and industry lock horns.

By PARANJOY GUHA THAKURTA
New Delhi, June 2015

India's Land Acquisition Act stalls as farmers and big industry lock horns

Agriculture accounts for roughly 16 percent of India's GDP - but over half the country's population depends on it.

WHAT does left, right or centre mean in terms of political and economic ideology in today's India and the rest of the world? Many argue that these words associated with capitalism and socialism have become meaningless. Every politician on the planet will swear that she or he is pro-poor. But in the political economy of nation-states, particular policies either widen the gap between the rich and the poor or narrow this gap. Opportunism and rhetoric often blur the distinction between the government's role in ensuring the welfare of the underprivileged on the one hand, and, on the other, support for the interests of the owners of capital by initiating market-friendly policies that enhance the ease of doing business. Some argue that there are no contradictions between achieving the two objectives. Yet, what cannot be denied is that policies promoted by politicians in power either enhance the economic and social well-being of the majority – or they don't.

Paranjoy Guha Thakurta

Paranjoy Guha Thakurta


Land acquisition... has divided India more deeply than any issue in recent times. Political rivals – like the Samajwadi Party and the Bahujan Samaj Party in Uttar Pradesh and the Trinamool Congress and the Left Front in West Bengal – find themselves on the same side

A year after Narendra Modi was elected prime minister of the world's largest democracy in May 2014, India is currently more ideologically polarised than it has been in many years. The principal reason for this polarisation is the government's attempt to amend a law relating to acquisition of agricultural land for industrial purposes. Modi has been trying hard to dispel the notion that the amendments proposed by his government are against the interests of the poor in general and farmers in particular.

He and spokespersons of his government claim that unless it becomes easier for the government to acquire farmland, factories will not be set up and jobs will not be created for unemployed youth of the country. His opponents, however, argue that the manner in which the extant law is being sought to be amended, will deprive the poor of their only means of livelihood, that too, without their consent and without adequately compensating them.

The debate on the merits of the proposed changes in the land acquisition law has divided India more deeply than any issue has in recent times. Political rivals – like the Samajwadi Party and the Bahujan Samaj Party in Uttar Pradesh and the Trinamool Congress and the Left Front in West Bengal – find themselves on the same side. Many argue that by attempting to push through amendments to the land acquisition law, the Modi government gave a new lease of political life to the 43-year-old vice president of the Indian National Congress, Rahul Gandhi. He and his party had been languishing after a humiliating electoral defeat in the 16th general elections that concluded in May 2014. But he returned breathing fire against the allegedly pro-corporate, “suited-booted” Modi government – a veiled reference to a jacket that Modi wore that had his name hand-embroidered along its pin-stripes; which he subsequently auctioned, giving the proceeds to charity after a public uproar. The virulent personal attack on him made Prime Minister Modi reiterate from every platform possible that his government would never compromise the interests of farmers and the poor.

Land has always been an emotional issue in India. The world's second-most populous country with 1.25 billion people (roughly 17 per cent of the planet's population) has barely 2.5 per cent of the world's land area. Whereas agriculture currently accounts for 16-17 per cent of India's gross domestic product (GDP) and this proportion has shrunk consistently over the years, the share of the country's population dependent on agriculture has not come down commensurately. At least half – or more than half – of the people of India depend on farming for their livelihood. The average size of a farm is around 1.3 hectares (due to fragmentation of holdings) and roughly half the total cropped area in India lacks irrigation facilities. Among all countries in the world, India has the largest arable land area next only to the United States. In terms of irrigated area, India is ranked first before the US. Given the incredibly wide variety of agro-climatic regions that exist in this country, it is hardly surprising that India produces almost all types of crops, fruits and vegetables that are grown on the planet – in tropical as well as temperate zones.

Yet, in the same breath, it is often said that Indra, the god of the monsoon, is the most important god in the pantheon of gods worshipped by the Hindus in India. From the farmer in the field to the finance minister, everyone prays for a favourable rainy season that lasts roughly four months in a year during which period around three-fourths of the precipitation occurs. For the Modi government, the timing of the proposed amendments to the land acquisition law could not have been worse. Across large tracts of northern India, especially in the ‘grain bowl’ of Punjab, Haryana and western Uttar Pradesh, substantial portions of the winter crop have been damaged or destroyed due to unseasonal rains and hailstorms in March.

Before delving further into why land acquisition has become such a contentious political issue, it is worth going back to the importance (or unimportance) of ideology in India and the world. The Bharatiya Janata Party (BJP), which espouses Hindu nationalism, has always propounded right-of-centre policies and dubbed its political opponents, notably, the Congress party ‘leftist’. Still, during the 10-year period between 2004 and 2014 when the Congress-led United Progressive Alliance (UPA) coalition government was in power in New Delhi, the then Prime Minister Manmohan Singh was considered to be an ardent believer in the virtues of market-oriented capitalism although he paid periodic obeisance to the need for welfare schemes for the poor. In fact, Singh's detractors within his party were often critical of his allegedly right-wing ideological predilections even as he claimed he strived to strike a balance between capitalism and socialism. While the Congress considers itself ‘centrist’ with right-wing and leftist factions, the Communists in India have frequently dubbed the policies of the Congress to be ‘pro-business’ and ‘anti-poor’. In other words, the Congress has been different things to different people across the ideological spectrum.

During the tenure of the UPA regime, the government implemented the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) which is described as the “world's largest social security scheme" aimed at providing minimum wages for 100 days of manual labour to each and every rural family in the country. This job-creation programme also aims at containing lean-season migration from rural to urban areas. Modi has debunked the programme as one that ‘doles’ out money without creating durable assets. His critics claim his government is slowly but surely killing the MNREGA by squeezing funds that are meant to flow into the pockets of poor beneficiaries of the scheme.

In its last year in power, the Congress-led UPA government also enacted a right to food act as well as a new law to replace the colonial-era law on land acquisition enacted in 1894, which gave the government of the day arbitrary powers to acquire land. The new law was appropriately titled the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (LARR) Act of 2013. Despite the initiation of such ‘rights-based’ programmes, former Prime Minister Singh's political opponents on the right as well as the left accused him of turning a blind eye to crony capitalism and the brazen loot of the country's natural resources like coal, natural gas and telecommunications spectrum.

The capitalism versus socialism debate is over a century old. The clash of the two world-views acquired a new dimension after the Great Recession of 2008. Those who believe in laissez faire – a French term meaning ‘allowing events to take their own course’ and symbolising an economic doctrine arguing for minimal government intervention in markets – are on the back-foot. Believers in the position that markets had inbuilt self-correcting mechanisms are having second thoughts. They are wondering if the recession is a crisis ‘in’ the system or a crisis ‘of’ the system itself. What is noteworthy is that this debate is taking place in the United States among those who are schooled to believe in the virtues of free enterprise capitalism.

In June 2009, Fareed Zakaria, an India-born naturalised American journalist with a PhD from Harvard University who is the son of Congress politician and journalist from Mumbai, wrote a cover story for Newsweek entitled "The Capitalist Manifesto" in which he recounts how there was no dearth of economic observers who had predicted the demise of capitalism from 1637 onwards and adds that what was being experienced was "not a crisis of capitalism" but "a crisis of finance, of democracy, of globalization and ultimately of ethics". He added: "There will be many more bankruptcies...American capitalism is being rebalanced, re-regulated and thus restored".

In the US, there are many who disagree with Zakaria's views. One of them is Joseph Stiglitz, winner of the Nobel Prize in economics in 2001 and a known critic of ‘free market fundamentalists’ and gung-ho liberalisers. He has argued that what is going on at present is a "a worldwide battle over ideas"

A one-time supporter of Ronald Reagan in the 1980s and described as one of the 25 ‘most influential liberals’ in the US media by Forbes magazine, Zakaria was convinced that "in the midst of a vast crisis…at heart, there needs to be a deeper fix within all of us, a simple gut check". The main title of his article is meant to be a takeoff on the Communist Manifesto written by Karl Marx and Friedrick Engels in 1848, which began by contending: "A spectre is haunting Europe – the spectre of Communism". It argued that, "the development of modern industry… cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products..." More than a century and a quarter after he died, the question remains at to how relevant are the views of the scruffy-haired and bearded German economist-philosopher in analysing the current state of the world's economy. The subtitle of Zakaria’s essay is inspired by a film of more recent origin, the 1987 version of Wall Street, directed by Oliver Stone, in which actor Michael Douglas plays an unscrupulous corporate fixer named Gordon Gecko who remarks: "Greed, for want of a better word, is good". This celluloid character was loosely based on rogue trader Ivan Boesky who is believed to have once said "greed is right".

In the US, there are many who disagree with Zakaria's views. One of them is Joseph Stiglitz, winner of the Nobel Prize in economics in 2001 and a known critic of ‘free market fundamentalists’ and gung-ho liberalisers. He has argued that what is going on at present is a "a worldwide battle over ideas – over what kind of economic system is likely to deliver the greatest benefit to the most people..." He believes this battle of ideas is at its most intense in Third World countries and adds: "While there may be no winners in the current economic crisis, there are losers, and among the biggest losers is support for American-style capitalism" (Vanity Fair, July 2009).

Criticising Francis Fukuyama, the erstwhile poster-boy of Reaganomics who wrote about the "end of history", Stiglitz contends that he was "wrong to think that the forces of liberal democracy and the market economy would inevitably triumph" and goes on to contend that the international recession "created largely by America’s behaviour, has done more damage to these fundamental values (of liberal democracy) than any totalitarian regime ever could have".

What indeed do the words capitalism and socialism mean today? In late-2008, the major shareholder of General Motors was the US government. So was GM a corporation in the ‘public sector’ or one in the ‘private sector’? Are the Scandinavian countries of Norway, Sweden, Denmark and Finland together with Iceland ‘socialist’ or ‘social democratic’ since all of them have high tax-to-GDP ratios and spend relatively large portions of their respective national incomes on healthcare, education and on the infrastructure? Is the People's Republic of China politically ‘communist’ and economically ‘capitalist’?

Where does India figure in the debate? The country's first prime minister, Jawaharlal Nehru, wanted India to assimilate the best elements of both capitalism and socialism. More than six-and-a-half decades later, the verdict is almost unanimous: we took the worst of both worlds. Currently coexisting in India is a range of political and economic systems including different forms of feudalism, capitalism and socialism. Private enterprise (the hallmark of capitalism) was stifled by excessive and mindless bureaucratic controls till the 1990s. At the same time, the state has hardly been able to provide healthcare and elementary education (of the kind prevalent in socialist societies, including in the erstwhile Soviet Union, Cuba and Vietnam) to the vast majority of its people. There is all-round consensus in all sections of Indian society that the country’s healthcare and primary education systems are in a pretty pathetic state. The government used to spend more per head on healthcare during the 1950s and 1960s than it does at present. India still has one of the highest school dropout rates in Asia. Yet, the country’s best educational institutions turn out some of the world’s finest doctors, engineers and managers.

The one generalisation, it is said, that can be made about India is that no generalisation can be made about this subcontinent. The most commonly used cliché about India is that this is a country of crazy contrasts; it is very rich and very poor; it is extremely educated and extremely ignorant. Perhaps India’s biggest achievement since it became politically independent on 15 August 1947 is that it has remained united despite innumerable prognostications to the contrary by doomsayers. The fact that India has remained undivided is significant since this is arguably the world’s most heterogeneous, and at the same time deeply divided, country – a nation that categorises its peoples not only along traditional lines of class, race, region, religion and language but also (uniquely superimposed on the other divisions) on the basis of an ancient and oppressive caste system.

Author, economist and former American ambassador to India during the John F Kennedy years in the early 1960s, John Kenneth Galbraith, famously described India as a functioning anarchy to ‘attract attention’ and also to emphasise the point that India’s success did not depend on its government but on the energy and ingenuity of its people. A report prepared in April 2004 by US financial services bigwig Goldman Sachs observed: "India is often characterized as a country of contradictions. This idea is exemplified by the popular phrase that India accounts for close to a third of the world’s software engineers and a quarter of the world’s undernourished."

We in India drew a spurious differentiation between the public and the private sectors. Thus, public sector undertakings often served as the personal fiefdoms of politicians and bureaucrats in power – the state thus became the ‘private’ property of a privileged few. At the same time, private corporate groups prospered thanks to a generous infusion of funds from government-controlled banks and financial institutions. Thus, the losses of the public sector got translated into the profits of the private sector and, more often than not, the gap between the ‘right’ and the ‘left’ became obliterated insofar as economic policies were concerned.

The BJP approved the LARR Act in 2013 when it was the principal opposition party. In fact, a Parliamentary committee led by Sumitra Mahajan (now the Speaker of the Lok Sabha) had suggested many of the provisions of the law that were enacted.

The issue of land acquisition has become a watershed event that will define Indian politics in the coming years. It has arguably become the single biggest constraint encountered by the Modi government to push through corporate-friendly changes in the law. In the absence of a majority of seats in the upper house of India's bicameral Parliament (called the Rajya Sabha or, literally, the council of the states or provinces), the government will not be able to amend laws without building a political consensus with its political rivals.

During the decade of the two UPA governments, India witnessed unprecedented food inflation that hurt the poor and widened inequalities in an already highly unequal society. High food prices, tardy creation of employment opportunities, accusations of big-ticket corruption and perceptions of ‘policy paralysis’ – all contributed to the unpopularity of the Congress-led coalition government and this was successfully exploited by Modi during his election campaign. The month after the BJP lost the Delhi elections in February 2015, the Union government encountered a setback when it was unable to amend the law relating to land acquisition, an ordinance for which had been promulgated on 30 December. Those opposed to the amendments argued that the government was seeking to dilute certain key provisions of law relating to prior consent of those whose land is going to be acquired and a mandatory social impact assessment before the acquisition.

The Modi government's problems compounded because the amendments to the law were opposed not just by its political rivals, but also by the BJP's partners in the National Democratic Alliance coalition, namely the Shiromani Akali Dal from Punjab and the Shiv Sena from Maharashtra. Opposition to amending the LARR Act has also come from organisations affiliated to the Rashtriya Swayasmsevak Sangh or RSS, the ideological parent of the BJP. Such organizations include the Bharatiya Kisan Sangh, an organisation of farmers and the Swadeshi Jagaran Manch, which espouses the cause of economic nationalism. The Modi government's move to make the country's labour laws more industry friendly has also been opposed by the trade union wing affiliated to the RSS, the Bharatiya Mazdoor Sangh, which describes itself as India's biggest organization upholding the rights of industrial workers.

The BJP had approved the LARR Act in 2013 when it was the principal opposition party. A Parliamentary committee led by Sumitra Mahajan (now the Speaker of the Lok Sabha or the lower house of Parliament) had suggested many of the provisions of the law that were enacted. Those opposed to changes in the law argued that that there had been a broad political consensus on the 2013 Act. Modi, however, argues that the law was enacted in a hurry before the elections and that many state governments subsequently opposed many of the provisions in the LARR Act by arguing that these provisions would make it virtually impossible for the government to acquire agricultural land for industrial purposes. In India, land is on the ‘concurrent’ list of the Constitution. This means all issues relating to land acquisition come under the purview of the both the federal government as well as the country's provincial governments. In other words, while the Union may enact a particular law, it is up to the states to implement it in full or in part or not adhere to specific provisions of the statute. If indeed, this is the situation, why the huge hue and cry?

The government claims that the changes proposed in the law will not only determine procedures for acquiring land but also determine how the grievances of land-losers will be redressed. But its political opponents are far from convinced. The ordinance to amend the law has been re-promulgated twice and is being deliberated on (at the time of writing in early-June) by an all-party committee of Parliament. The debate over its provisions is unlikely to die down in a hurry.

This Indian summer has been long and extremely hot. Many have died on account of the heat wave sweeping across large parts of the country. The Modi government faces an uphill task in changing popular perceptions about its ideological stance. It has a long way to go before it conclusively demonstrates that its policies are not tailored to favour wealthy capitalists.


Paranjoy Guha Thakurta is an independent journalist and an educator whose work over 37 years has cut across print, radio, television and documentary cinema. He is a writer, speaker, anchor, interviewer, teacher and commentator in three languages: English, Bengali and Hindi. Paranjoy is a regular contributor to newspapers, magazines and websites and is featured regularly on television and radio programmes as an anchor and commentator. He served as a member of the Press Council of India and, among his recent books, is Gas Wars: Crony Capitalism and the Ambanis (April 2014) with Subir Ghosh and Jyotirmoy Chaudhuri.

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Raman (20 July, 2015) – India
Will be interesting to see how this plays out in the monsoon session of Parliament.
Ranjit Singh (25 June, 2015) – India
It looks like the Land Acquisition Bill is already falling apart. It is a divisive issue and one that must be resolved.
June Fraser (21 June, 2015) – United kingdom
Land is at the bottom of things in most developing countries. It needs to be tackled and resolved within the ambit of law.
Sharad Shah (8 June, 2015) – India
A farmer over the years works hard tilling and leveling the land. Why does an industry want only such leveled and cultivable land whereas Waste Land is available in plenty? Industry does not want to work hard but wants everything that is ready and subsidised. Let them work hard by buying Waste Land and Modi will have no opposition.
Arjun Mendiratta (8 June, 2015) – India
Good coverage!But no suggestion/recommendation.What
should we make out?It's easy to earn laurels in opposed environment based on misinformation spread by scam marred Congress coupled with other fearful other political parties facing annihilation should Modi's performance spread amongst agrarian society.It's easy to criticize Modi's policies of change vis a vis 60 years of static situations. Journalists need take independent view and spread positive message for the good of India.
Girija Krishen (4 June, 2015) – Thailand
It is easy to criticize Modi. At least he is trying to move the country forward - something the Congress never did in 50 years! And if agriculture provides just 16% of the GDP what's wrong with reallocating land for manufacturing, industry and other high-yield, job-creating sectors?
Jill Penlington (4 June, 2015) – United Kingdom
Every time I visit India I feel it is on the verge of a momentous leap forward. Every time I have been proved wrong. Yet it is good to see the ducks coming in a row at last. But there is work yet to be done. As the phrase goes, 'give a man a fish and you feed him for a day. Teach him how to fish and you feed him for life'. There's something in this for displaced farmers who need livelihood alternatives.
Jeff (4 June, 2015) – Hong Kong
Watching Mr Rahul Gandhi suddenly reanimated on television is perhaps the biggest surprise of all. I recall watching some rather dull interviews when I was in India last year. Bottom line, India needs massive infrastructure development, agrarian and fiscal reform, confidence in the reform process, and a huge amount of investment (which is not happening despite all the Make in India noise).
R Parthasarthy (4 June, 2015) – India
Very true. Balancing the need for poverty eradication with rapid development is a high wire act all Indian political parties have failed to pull off.

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