As
India awakes to the razzmatazz of digitization and industrialization, it is
worthwhile to ask ourselves about the priorities that we set for economic
reforms. The next generation of economic reforms is more about a long haul in
certain aspects and an emergency in certain other aspects. Broadly assuming
that India as an emerging economy continues to reel under the problems of a
labour surplus economy as stated by celebrated British economist Sir Arthur Lewis,
it makes enormous good sense to assert that economic reforms that India needs
may be classified into two types namely: those for social overhead capital and
those for directly productive activities.
While
it is true that in an indirect democracy with federal administrative structure,
good economics may at times be held to ransom by good politics for the sake of
scoring brownie points in elections, it is equally true that some tough
decisions need to be taken in order to institutionalize the economic system
with much needed vitality in the long run. Land acquisition sadly is one of
those decisions that will never be easy to take but needs to be dealt with not
using an iron hand but by answering the incentive question.
Most
questions in a free market economy concern questions of fair incentives. The
incentive question is what bothers the stakeholders in cases of land
acquisition. Historically speaking land acquisition is a strategic imperative
for any economy before it gets set to take off on the route of
industrialization. There are two comments that need to be made here. Firstly,
the economy that initiated the industrial revolution, that is Great Britain had
to witness the agonies of an Enclosure Movement before the Industrial
Revolution. Historical accounts suggest that even a country as great as Great
Britain had to forcefully and brutally acquire land by using means that were
largely un-British to use the language of Indian economist and statesman Sir
Dadabai Naoroji. Secondly, the Indian
economy offers a curious case of economic growth sans any worthy contribution from
the manufacturing sector so far. The Clarke Fischer hypothesis that generally
applies to economic growth asserts a pattern of movement from primary sector to
secondary sector and them to tertiary sector. India’s case is different. Indian
economy has traditionally been an agrarian economy and slowly has shifted
course from agriculture to services sector by leapfrogging the manufacturing
sector.
India’s
growth story desperately needs a full proof land acquisition policy that
answers the incentive question. The lad acquisition policy has to come clean on
the method of assessment of price of land, the administering of remuneration to
sellers of land and in certain cases arrange for the relief and rehabilitation
of project affected people. Moreover the land acquisition policy needs to
answer questions on the guarantee of securing of property rights through an
effective legal economic structure as stated by the economist Hernando De Sotto
of Institute of Liberty and Democracy, Lima. Yet another challenge is to adhere
to the requirements of environmental clearances. Lands coming under the ambit
of forest cover and tribal regions are great challenges that need to be handled
with human touch. Tribal property rights present a major challenge and one has
to unfortunately admit that corporations should not impose the will of free
markets on tribes and indigenous people. It shall be great to assert that
corporations may think of offering decent options of training and development
to project affected people under their agenda of corporate social
responsibility and create value by better stakeholder engagement with project
affected people. Such initiatives or efforts to offer jobs to project displaced
people may be made tax free. Yet another solution may be to offer pay roll
subsidy to companies for offering jobs to project displaced people.
The
sooner that elected legislators of India, economists and advocates come
together to resolve issues mentioned above the better it is for India’s
ambitious plans of Make in India campaign. On the other hand farmers and
brethren from tribal communities need to understand that land as a factor of
production is subject to the law of diminishing marginal returns with every
season of cultivation of crops.
