The zeal of the newly converted can be invigorating, but also blinkered. Buddhadeb Bhattachar-jee’s conversion to capitalism is a case in point. He is chief minister of West Bengal, India’s most densely populated state, but also a card-carrying Communist who for many years resisted much of Delhi’s strategy for transforming the Indian economy. After a recent change of heart he embraced the Special Economic Zones (SEZs) intended to act as catalysts for the growth of the manufacturing sector. “The calculations have been done,” he declared. “The local people stand to gain.” He is right, but the local people were not persuaded. Last week 14 were killed in running battles with police summoned to clear farmers from land earmarked for a significant Indonesian petrochemical plant in Nandigram. On Saturday the project was shelved indefinitely, and West Bengal’s attempt to catch up with the rest of “the Indian miracle” came to a shuddering halt.

The stakes at Nandigram are high. The local government’s U-turn poses in stark terms a question that all of India must urgently address: can a country still hamstrung by a vast and corrupt bureaucracy create mechanisms to ensure that the agricultural workers who account for 60 per cent of its 510-million-strong workforce benefit from its economic boom? And if not, how long can that boom be sustained?

India has achieved growth rates of between 7 and 9 per cent for the past five years thanks to even faster growth in its IT and service sectors. But these sectors account for barely 20 million jobs in a country with 700 million voters and 300 million people living on less than a dollar a day. Special Economic Zones have been seized on by the Government of Manmohan Singh, as they were by Beijing in the 1980s, to build manufacturing capacity by using tax incentives and streamlined red tape to attract foreign investors. Yet those investors may simply go to Thailand, the Philippines or Indonesia if not made to feel welcome.

Properly administered, SEZs offer the quickest solution to the two problems that most threaten continued growth — a physical infrastructure of bullock carts and potholed roads alongside gleaming new business parks, and prohibitively complex and obstructive labour laws. But these zones are being improperly administered and inexpertly explained.

West Bengal’s Communists have used an ancient British law to set compensation for farmers losing land to an SEZ, and to justify their removal from it. This is neither fair nor transparent. Government’s role in what is an historic process of accelerated industrialisation should be to ensure that farmers receive a fair price for their land by maximising investors’ competition for it. Instead, deals are being done behind closed doors between regional governments and favoured bidders, many of them property developers specialising in housing and shopping malls that would have been built anyway. For farmers whose earnings are growing at less than half the rate of inflation, this feels like expropriation.

Last week China at last recognised private property rights. In India, they are in danger of being trampled on. As a democracy, India has a significant long-term advantage over China, but a landgrab is a landgrab, whether done in the name of progress or of personal profit.