Nano stalled as India juggles factory vs. farm
Tata Monors hasn't resumed production of its $2,500 car, even though protests against the Nano factory ended Sunday after farmers were promised more compensation.
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It is a problem facing all nations with significant indigenous populations, from Brazil to Australia, says Devesh Kapur, head of the Center for the Advanced Study of India at the University of Pennsylvania. "These are huge issues. Most countries find it difficult to find a balance" between development and ancestral tribes' claims, he says.Skip to next paragraph
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India's state governments have also, in some cases, leapt headlong into industrialization without proper consideration of those who will be displaced by it, Mr. Kapur continues: "There are a lot of elements of raw capitalism at work, and it is not always pretty."
He says this not in condemnation of capitalism but of the Wild West mentality that has at times typified India's embrace of free-market economics since the country liberalized in 1991. Rather than acting as a check on the natural tendencies of businesses to maximize profits, the government has at times amplified them in the rush for investment money, he and others say.
"The government should be the whistle-blowers," says Binnet Mundu, a coordinator for the Bindrai Institute for Research Study and Action, a tribal advocacy group in the state of Jharkhand. "But it has often been more in favor of companies than the people."
The Nano plant is a case in point, Kapur says. In its attempt to lure Tata, West Bengal bought the land for the company. But nationwide, state involvement on a company's behalf has generally made the compensation process more contentious, not less.
Under a law that dates back to the British raj, state governments can compel landowners to sell their property to them for projects intended for the public good. But states have interpreted the vague Land Acquisition Act in a way that allows them to buy land for economic ventures, such as low-tariff, export-friendly Special Economic Zones. "How do you designate an SEZ as a public good when most of the benefits go to private parties?" says Kapur.
When villagers cut their own deals without state intrusion, "that is when the people are at a bargaining stage" and have some power, says Mr. Mundu.
Indeed, in many instances the transfer of land between farmers and corporations has occurred without conflict. In others – such as Reliance Industries Limited's plans to build industrial and residential campuses outside New Delhi and Mumbai (Bombay) – there are delays, with landowners holding out for higher prices. But negotiations have been peaceful.
Signaling the need for some change, a government panel suggested last month that 70 percent of land for SEZs be bought by companies at market rates. The Land Acquisition Act is also set to be amended.