The Land Bank Ledger

The Karnataka government is getting ready to host the Global Investors Meet ( 3- 4 June). A similar jamboree held some years ago, when S M Krishna was chief minister, had been a resounding flop, but this one, the government believes, would be a runaway success. There has been no dearth of publicity for the event in the media and there has been no shortage of roadshows on foreign soil. A couple of days ago, Chief Minister Yeddyurappa, who is usually seen rushing around in a white 'safari', changed over to dark suit and tie to look like a corporate boss for a photo shoot in connection with the meet. It isn't Yeddyurappa's new style that gives his government confidence that this meet will be a success, but it is because they think they have something more substantial to showcase this time.  

What is it? Rather, what else can it be other than land?

In what is an unprecedented move across the country, the government has acquired close to 50,000 acres and has identified another 50,000 acres to set up a huge 'land bank'. Let me get a little specific here. The total land identified for acquisition in the 30 districts of the state is 95,744 acres (as on April) and for nearly 49,136 acres a primary or final notification has been issued. In districts like Ramanagaram, just outside Bangalore, nearly 12,205 acres have been identified, in Belgaum, at the other end, 10,842 acres have been identified. In Dharwad, another 9347 acres have been identified and so goes the list, shared by a top official in the Industries and Commerce Department.

Before I go into other issues, let me first express my disbelief at the positive connotation the phrase 'land bank' has come to acquire in government parlance. Only five years ago it was a phrase situated exclusively in the corporate domain. When I had picked it up in the annual report of Infosys for a story I wrote in 2005, there was shock, surprise and outrage expressed in government circles. But today, it has casually crossed over to find a pride of place in government policy. That should indicate to us the direction in which our governments are moving.

Why did the government come up with this out-of-the-box plan? Apparently, the people in the Yeddyurappa government grieved after the Tatas chose Gujarat over Karnataka for the Nano project, after being booted out from West Bengal. A senior official told me: "The Tatas were in hurry, they needed a few thousand acres of land and we did not have it ready. We said we’d acquire and give it to them. But by then, Gujarat offered them land that was ready to occupy and so we missed out on that project. That incident was a trigger. We thought we should concentrate on quickly building a land bank and set ourselves a target of 50,000 acres. The CM went ahead and announced it in his budget speech." 

Prior to this policy turn, the land-acquiring agency, Karnataka Industrial Area Development Board (KIADB), would acquire only on request. That is clearly after the government had signed on a project. At best, it would have a couple of thousand acres in its possession in different parts of the state. But now everything has been reversed. A minimum of a thousand acres target has been set for every district. Even before a single paisa of industrial projects have come in, thousands of acres are being acquired to be developed and kept ready. In other words, the government, instead of working as a facilitating agency, has started functioning as a real estate developer. This is being done under the garb that infrastructure development is non-remunerative and the government has to take the initiative. Even if once concedes to this point, a simple question remains: What happens to the land if industrial projects do not come in as much as anticipated? Also, why hasn't this acquisition process been staggered? Why such tearing hurry? What dynamics will the notified land unleash in its vicinity? We have all seen some years ago the political game of notification and de-notification that took place in Bangalore after nearly 10,000 acres was identified for an IT corridor along the Outer Ring Road (ORR). 

In the one-lakh acres of land bank, officials say there are government land, dry land, single crop land and multi-crop land acquired on consent. How much consent there is for acquisition, is visible in the protests that has been suppressed in various districts of the state, especially Davangere, Dakshina Kannada and Bellary. After the chief minister announced the acquisition of the first 50,000 acres in his budget speech, I had an opportunity to ask him if he was not worried about the protests taking an ugly shape like those witnessed in Nandigram and Singur. He had shrugged off the threat by saying: "There are three crore acres of farm land in the state and we are only planning to acquire one lakh out of this." Given the fact that small land holdings dominate the ownership pattern in the state and the rich have a way of escaping the tentacles of the state, those who would be affected by the 'land bank' policy will be the poor. This may compound the problem that already exists among agrarian communities. 

However, government officials argue that people are 'voluntarily' giving up land because the government's compensation package is 'very good.' The new mantra is that they would be made part of the development process. "In most places the compensation we are offering for land is far higher than the guidance value fixed by the local authorities," says an official. They say that landowners will be taken as partners in the project by offering a small equity to them. There is also a clause in the industrial policy, which says: "Land owners except in case of acquisition for single unit complex and infrastructural projects, will have an option to get part of the developed land in lieu of specified compensation." Another senior official said that if there were resistance to the acquisition by local MLAs then they wouldn't touch such land. The huge assumption here is that a legislator is a sincere voice of his constituents.

There are several other issues to be debated here and some classical questions to be asked: First of all, the government is totally insensitive to the social cost of alienating such huge tracts of land from people. What would happen to these people who surrender land in the course of, say, five years from now? How would they have utilised the money that had come as a windfall to them? Do they have sufficient intellectual capital to rework this money? The government makes a stereotypical argument that if they promote industries in rural settings, jobs would be generated and poverty would be checked. Now, this is a very superficial counter. Will the government commission a survey to check the number of jobs generated and number of locals employed in industries that it has sanctioned in the last three decades? Such a survey, one can be assured, will demonstrate that concessions given to industries in terms of land and other infrastructure far outweighs the benefits accrued for the local communities. Besides counting the tangibles, we should also count the intangibles like social, cultural and environmental costs of setting up these industries.

Interestingly, a former secretary to the government told me that the government is only interested in shoring up its statistical image: "All these measures may reflect in the state's GDP figures looking big, but our experience has shown that it will spread very little cheer at the ground level. How many jobs will a company like Arcelor-Mittal, which has been promised close to 4000 acres near Bellary keep aside for the local community? Will at least one job an acre be given to the locals? If they try to take refuge in the trickle-down theory, let us be sure that it has been proved erroneous in the last couple of years," he said.

I am not making a case against industries, but simply asking: Why should the government so keenly participate in the setting up of profit-making private enterprises? Is an industrialist so naive that he has to be told what raw material is available where and why he needs to pitch his tent around it? Let us reverse the question: Will the industrialist arrive, even after all the steep concessions are made and land is offered on a platter, if he is not sure of making profits out of his investments? When he is not out there with charity motives, why should a democratically elected government border its policy on philanthropy? The job of the government is to thoroughly negotiate in public interest. Do give concessions if you have to, but be sure of what you get back in return. And do pursue that return after the industry is set up.

One final thing. Is land alone enough to attract investments? Is land the only infrastructure? Especially, when Karnataka has seen such severe shortage of electricity and water in the recent months. The power situation is so bad that Bangalore, the capital, experiences four to five hours of power cuts daily and the rest of the state only gets that many hours for the whole day. When the Global Investors Meet happens, the air conditioner at the venue is sure to run on diesel generators.