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SEZ land aquisition Reliance shows the way

Posted by Ramoo on January 16, 2007

The economic times has reported that in a major shift in strategy on special economic zones (SEZs) in Maharashtra, the Mukesh Ambani-led Reliance group has decided to buy land outright from farmers, instead of involving any government agency to acquire it. So far the debate on the setting up of special economic zones has been about the role of the Government. Typically a state agency acquires land and then transfers it on first lease to the developer. Reliance has now begun to buy land directly from farmers.  The economic times reports that nearly 80 purchase deeds have been registered in the last few days in Raigad district. The company has paid a stamp duty of around Rs 60 lakh on these registrations. This is an additional cost for the company, which is understood to have paid farmers three times the government-listed rates on direct purchase of land. As per the earlier plan, the Maharashtra government was to acquire land spread in 45 villages for Reliance SEZs at government rates, which comes to a couple of lakhs per hectare, against the market rate ranging Rs 40-Rs 75 lakh per hectare, depending on the location.

The Reliance Group was planning two mega SEZs in Mumbai —Navi Mumbai SEZ and Maha Mumbai SEZ. There are apparently 72 SEZ proposals in Maharashtra alone the fate of which remains unknown due to lack of clarity on land acquisition norms. According to the ET The delay in the passage of the Maharashtra State SEZ and Designated Areas Act, concerns raised by Congress president Sonia Gandhi on land acquisition and — most importantly — widespread agitation at Singur and Nandigram over forced acquisition of agricultural land by the West Bengal government have resulted in the state government going slow on the plans.

Offstumped examines the critical question of what role the Government or the State must play in fostering economic growth and opportunity.

The decades old stranglehold of the Social Justice Taliban on public policy specifically in the area of land reforms has resulted in a plethora of arcane laws that placed ceilings on how much land you could own legally and restrictions on who and when you could sell them to. A complex web of laws restricting the freedom of enterprises to acquire land and the freedom of individuals to sell land came into place all in the name of a dubious cause called Social Justice. The recent Ninth Schedule verdict by the Supreme Court concerns many of these laws. No wonder the loudest voices of protest against the verdict came from the Social Justice Taliban.

Nothing exemplifies the fallacy of social justice as practiced in India than the saga being played out in Andhra Pradesh over land cieling laws and the chief minister Y.S. Rajashekar Reddy as discussed by Offstumped on

The net result of the Social Justice resulting from the complex web of laws around land reforms and land ownership was that the backwards who were given land by the government sold them illegally to rich individuals and firms getting around the restrictions on sale of land. Over the years these rich individuals and firms accumulate land in amounts that embarasses the cieling laws. So what ensues in this day and age is a political witch hunt to enforce the cieling laws and start the re-distribution drama all over again.

Coming back to the issue of land acquisition, the ulterior agenda of the taliban is to preserve the role of the state as the middleman brokering social justice. As a result you have the needless drama that is playing out in Singur, Nandigram and elsewhere in the country where new bureaucracies are being created and tax payer rupees are being spent by the State to facilitate the acquisition of land only to be eventually transferred to a private enterprise. This arrangement suits the bureaucracy and the political parties very well for it creates a new role for the bureaucrats who are increasingly becoming irrelvant in areas from which the State is gradually withdrawing its role. For political parties the benevolent state is the vehicle for currying political favor by choosing where to locate SEZs, for making grand populist gestures like lavish compensation packages and for cozying upto industrialists with quid pro quo expectations.

There is no Social Justice in the State playing facilitator to get around a web of laws that were owe their existence in the first place to the State. The current approach to SEZ Land Acquisition with the State at its heart fails both the tests of Social Justice. Coerced acquisition by the state means the freedom and right of refusal is denied to some individuals to justify a quesitonable larger good. Centralized Bureaucracies making decisions on where and what to acquire means there is no grassroots consensus from the local community or entities that represent the local communities.  Thus the CPI-M and West Bengal’s Buddhadeb can barely justify their Land Acquisition that have the state playing an active role. The BJP’s position on SEZs is no different either with the state playing an active role. The muddled ideological basis for the BJP prescription to the SEZ issue is another reminder on how the principal opposition fails the Right of Center test when it comes to economic issues. However in Narendra Modi lead Gujarat which was the first state to pass a SEZ act and has taken the lead in setting up of special economic zones with flexible labor laws (and liquor laws) the issue of land acquisition has taken a different hue since most of the SEZs in Gujarat existed along the wastelands on the 1,600-km-long coastline, Gujarat was not facing the problems, unlike other States, in terms of land acquisition and displacement of people.

The wasteland aspect of land acquisition by the State is similar to some of the provisions by which local governments in the United States are allowed to acquire private property to be transferred to private enterprises. Under what is known as Eminent Domain, the U.S. Supreme Court recently ruled that the local governments can indeed act to acquire private property if two conditions are met. First is that the said private land was condemned or blighted that is it is not being put to good use and second is that the tax revenues generated from the private purpose would exceed the current revenues by a significant factor.

Offstumped Bottomline: There is no Social Justice in the State playing an active role in Land Acquisition for private enterprises. Reliance by directly acquiring land from farmers reminds us of the efficiency of a free market for buying and selling land eliminating the role of the State as the middleman. If any the State’s role must be limited to acquiring blighted and condemned land to facilitate better tax revenue generation.

Industrialization is a means to economic growth and not an end in itself. Where and how it happens is best left to free enterprises and free individuals. The State must scrap all laws that limit the freedom of enterprises and individuals to foster industry and must limit its role to protection of these freedoms and their responsible exercise.

5 Responses to “SEZ land aquisition Reliance shows the way”

  1. S. Sengupta said

    What is the EXACT price paid by Reliance? Without that data this article is meanngless. The West Bengal govt has published the complete list of compensated owners and also published the compensation package for Singur. That is tranparency. Why cannot reliance follow suit? What about the media? What about the opposition? Are they all part of the game or are they too suitably compensated?

  2. D Bhatt said

    The article very rightly depicts the state of our Social, Legal & Political system.

    The acquisition of land, similar to all other activities pertaining to business or personal interests is subdued under a variety of murky laws. However it is not only Reliance and other business houses (if any), but also the Gujarat State BJP Govt. which shows the way ahead to other states as well as the Centre as to how to come out of this predicament.

    Companies like Reliance are purely professional and nothing is going to stop them from their goals. This is not to say that they employ unethical means to acquire and attain their goals.

    Companies just work around the normal norms and set a new way to lead others to follow them. Here the issue of Reliance acquiring the land directly has risen as the Govt. is not willing to be involved constructively (which is a prominent feature of the Congress), but they do want to have a share in the entailing benefits like taxes and employment and take the credit for it, without wanting the headache of acquiring the land from farmers and making them understand its economic and long term benefits.

    Due to this, Reliance has started to directly involve individual farmers to acquire land. Having sidelined the Govt from their role (and possible corruption and legal fee earnings) such articles harming the image of big industrial houses are published. Possibly the media and the Govt are together in tarnishing the image of RIL.

    Anyway, it is not the question of farmers getting improperly compensated.
    For eg. lots of people were displaced from their original employment of farming in Jamnagar where RIL started its operations in 1998-99. But they were amply compensated monetarily to start up any ancillary services or live out their lives satisfactorily.
    There were even some cases of people losing their mental balance when they received high amount of compensation from the company.

    Furthermore RIL also does not need to clarify its dealing to the general public unless required by law. This is because it is amply fulfilling all the necessary requirements under the legal systems and paying the required stamp duties to the Govt.

    Its relations with the media and the Govt are just to promote and show cause the good PR of the company rather than being a dominating influence for its own good cause.

    One of the final reason as to why RIL does not need to clarify on its actions is because the deeds speak for themselves. It acquired land in Gujarat, but there was no Singur like reaction here – that is not only because there is an efficient legal system being implemented by the BJP Govt, but also because the farmers are being efficiently compensated for the sacrifices they are making.

  3. Bhakti said

    Companies like Reliance are purely professional and nothing is going to stop them from their goals. But Reliance cannot usurp the governmental function under the garb of economic advantages and develpoment.What about the media? What about the opposition? Are they all part of the game or are they too suitably compensated?

  4. Dilbag said

    well actually you all people will agree with me on one thing,reliance definatly paid big amount under table to the policians of haryana & Center govt… they can get land transfer land feom HSIDC to reliance….for which farmers get paid around 20 lakh & this land per acre cost reliance more then 3 cr rupees …any body can understand this…..
    i think this is the biggest ever land scm happend in India so far…land in gurgaon with on the radius of 15 km get transfered to reliance …wow what a deal u can just imagine

  5. Bobby said

    everybody here trying to show what a company reliance is….but.who want to see..what actually ground reality is…can come to gurgaon sez villages….the cost of this land is crores & haryana govt accquire it for reliance in 20 lakh rs….now reliance sale this corporates….in hindi i can say”ye amir ko or amir…or garib ko or garib banane ki kahani hai”now everbody understand why ambanis r so rich..& it will acceptble to u if this happns to u….i think noooooooooooooooooooooooooo…

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