Jeremy Page in Delhi
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India’s plans to emulate China’s economic success were in crisis yesterday after farmers’ protests forced the government of West Bengal to drop plans for a huge low-tax industrial zone.
The unprecedented climb-down came after police shot dead at least 14 farmers who were refusing to sell their land for the zone in Nandigram, 75 miles (120km) south of Calcutta.
State officials said that the Special Economic Zone (SEZ) that was to house a petro-chemical plant built by Salim, an Indonesian company, would be moved to another location, but they have yet to decide where.
Biman Bose, the chairman of the Left Front, which has ruled West Bengal for 30 years, said: “There has been a lot of bloodshed and the Left partners decided in a meeting to shift the SEZ from Nandigram.”
It was the first time Indian authorities had been forced to shelve an economic zone, about 600 of which were being planned until recently to lure foreign investors with tax perks and modern infrastructure.
The Government had hoped that the zones — modelled on those in China — would form the backbone of a manufacturing industry employing millions of farmers left behind by the country’s economic boom.
It was forced to freeze all but 63 of the proposed zones in January after a series of violent protests by farmers refusing to give up their land. The worst protests were in Nandigram, where an estimated 40,000 farmers who were to be displaced dug up roads, built barricades and refused to allow the Government access for three months. Police stormed in on Wednesday to restore order, and when villagers fought back, opened fire with tear gas, rubber bullets and live rounds, killing 14 farmers and injuring dozens. Yesterday the farmers were celebrating the climbdown as they continued to search for dozens of people they say have been missing since the clash.
Siddiqullah Choudhury, the chief of the Jamiate-Ulema Hind, a Muslim group leading the protests, said: “We have taught the Government a lesson they will never forget. You can’t play with the lives of innocent villagers.” The decision sent a worrying message to foreign investors who have earmarked billions of pounds for the 63 special zones that have been approved, 14 of which are already operating. They fear that the move will embolden farmers in other regions, who are either refusing to sell their land, seeking a higher price from the Government or demanding to bargain directly with foreign investors.
In the neighbouring state of Orissa, 500 villagers marched in protest yesterday against another economic zone where Posco, a South Korean company, plans to build a $12 billion (£6.2 billion) steel plant in India’s largest foreign investment project.
Also yesterday, a crude bomb exploded at the site of another SEZ in West Bengal where Tata, the Indian conglomerate, is building a factory to make the world’s cheapest car. Police said they had recovered six more bombs from the site in Singur, which has also been racked by farmers’ protests for several weeks.
Another concern is that the issue is increasing support for Maoist rebels, who control a “red corridor” of jungle stretching from the southern tip of India to the Nepalese border. The Maoists, who killed 55 police in a raid last week, called for a strike across four eastern states yesterday in protest at the Nandigram shootings. “The people must come to terms with the fact that governments in these states are agents of imperialist forces, and should rise to fight their antipeople agenda,” they said in a statement.
Within the Government, the crisis has reignited a debate about whether SEZs are applicable to India and whether farmland should be bought forcibly.
Kamal Nath, the federal Commerce Minister, said the Government remained “absolutely” committed to the zones, which were legalised in 2005.
Land acquisition should be “fair, equitable and inclusive of the people”, he told the CNN-IBN television channel. He gave warning that India could lose out to other countries.
“If [foreign direct investment] is coming to our special economic zones, it can also jolly well go to Thailand, Philippines and Indonesia,” he said.
Story of growing success
—India’s share of the world GDP is set to rise to 11 per cent from 6 per cent by 2025
—Its industrial production growth rate is set at 7.5 per cent, compared with America’s 4.2 per cent
—By 2050, its economy could be larger than that of the US and second only to China, according to a report for Goldman Sachs, the investment bank
—The Indian Government had approved 237 special economic zones by the end of last year
—It has now frozen all but 63, of which 14 are operating India says that its first 63 SEZs will create almost 1 million jobs and attract $13.5 billion of foreign investment by 2009
—China has six such economic zones. The biggest, Shenzhen, below, has grown from a fishing village to a city of 10 million in 20 years.
—China did not have to buy private land to form the zones because all land was owned by the State
Sources: CIA, Economy Watch, news agencies
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Kiran - probably we are on same page and without the point of contention being clear, we are trying to clarify our points. Other than tax concession, I also talked about free land given to industries, subsidized mining rights, land acquisition at dictated prices, etc. (your point included, rich farmers should also be taxed, presently they get more subsidies compared to the tillers/small farmers). I tried to justify that with some numbers, which should make any citizen concerned. Point is: state needs money for development (with good governance that would drive good business) and some bargaining power also (again please don't mix it with 'conspiring' part) when states discuss industrial projects.
Ranjit Goswami, Kolkata, India
Ranjit, it appears your point is that billionaires do not contribute tax revenues proportionate to their wealth. But then farmers in India are exempt from taxes altogether. If around 70% of Indias economy is agrarian, surely there should be some contribution by this sector of the economy. Most of the SEZs have tax exemption for a limited period only (typically 5 years) as an incentive to bring in investment. This does not have to be FDI. It may well be indigenous investors.
What is exasperating is that there is an ingrained attitude against the rich and successful in some sections of Indian intelligentsia. I am reminded of what V.S. Naipaul has said (in INDIA A Million Mutinies Now) and I quote .. when people and governments conspire to frighten away the money and the life they need, when, in a further inversion, the poetry of revolution becomes its own intoxication, and Marxism becomes the opiate of the idle people.
Kiran Mehta, London, UK
The recent spate of incidents has only gone to show one more aspect of indian politics--hypocricy, in its worst form. The west bengal goverment is leaving no stone unturned to woo investors, and this is is the same goverment that systematically and deliberately destroyed existing industrialisation in Kokata and bengal all the way from 1970s. The situation would have been totally different today had they not destroyed industry then. I hear stories that the west bengal government told Tatas in 1970s that they will sell every brick of their property, which prompted them to shift out their office from Kolkata overnight. And now its so funny to see the same government wooing Tatas for small car factory in the state. Where has all the agony against the "capitalists" gone!
To summarise, west bengal is now facing the frankestien that its government itself created.
You reap as you sow!
Viranchi Raje, Kolkata, India
The problem with democracy is that every one is allowed to have a say in every thing, irrespectibve of the accuracy of the opinion.
The farmers, burderned with decades of illitracy and poverty, are unable to decide or differentiate between good and bad and the politicians & other vested interests are taking advantage of this by provoking them to revolt.
Though there are examples all over the world of Industrialisation having adversly affected the farmers in the short term, the resultant benefits do trickle down over a period. What the government needs to do is increase the flow of benefits trickling down to bottom of the pyramid.
However, to stop the growth and development of an entire nation of over a billion people because some people are not able to decide and are being coerced by others..... is wrong .... pure madness. We need to take a leaf out of history and come down hard on peopple who are instigating voilence and go ahead with the projects with full force.
AH, Delhi, India
Kiran, I think Shouvik has a point there. Indian states happen to be in a mad race to the bottom by offering tax concessions to free lands to subsidized mining rights for few millions of dollars every now and then, irrespective of money brought in or not, or the credibility of the group. If one looks at Forbes billionaires wealth from India, in two important parameters; India happens to be at extremely difficult position: GDP/billioaires' wealth at 25%; and tax revenue/billioaires' wealth at around 1/3 (all nominal measures, global average for first is 7% and 2nd is at 3). And it's not hard to see who these billioaires are. The states are getting poorer at the cost of few, and losing their burgaining power even more. Both those two ratios are at their highest and lowest. And billionaires' wealth is growing fastest probably. So that's a concern for us (and as a researcher, to me personally).
Ranjit Goswami, Kolkata, India
"Farmers put Indias growth in doubt as they win battle of the boom zones" Tiltel of the story is misleading. It is wrong to measure growth in numbers. Development should be all inclusive and for all in the country. Unless prosperity comes along with peace it is not worth it, as it will always be lopsided and for a small section of the society. Our numbers could look small and slow - we are not in the race. Development is not a faceless phenomena, as it is made out to be. It will differ from society to society. Development path need not be what has been defined as by the "Modern Economics". Alternatives will have to looked into. An agrarian economy can remain so and yet be called developed, should be the alternative that needs to be looked into.
Prerana, Mumbai,
India is a democracy. All problems are clearly visible. One can't just suppress any issues. The Chinese government can do that and paint a pretty picture when things may not be the same.
So the only difference is China has been successful in cleaning up its urban area so you don't catch a glimpse of poverty unless you actually travel to the rural countryside (which investors and business people will hardly do). India's situation is not the same where you see the rich and poor side by side. But the fact remains that both countries face an equally great challenge related to the economic divide.
P R Reddy, Hyderabad, India
The usual excuse that "China has been violating human rights for decades now" is offered by Abhishek...as usual. What they all forget is that the Chinese have done it all before in Hong Kong, Taiwan, Singapore and even in Thailand, Malaysia and Indonesia.
For India's problems, you should look elsewhere
Frank , Halifax, UK
China got efficiency at the price of farmers, and surely India government is hard to resist the temptation of imitating China,above all, farmers and agriculture is easy to be ignored when people are indulged in modernization. They have forgotten their responsibility,not only govern and also protect their people, ending up the collapse of status quo. Is democracy premature for them?
alan, wuhan, china
Economics is all very great. But what you guys have not taken into account is that all the jobs that will be created will be white-collared. All the land that is being taken away is farm land. The majority of Indian farmers are illiterate and the best of them can barely sign. They have worked for centuries only as farmers. I am not saying that the move is bad but there is no clause which provides the farmers with training. All the jobs there will be taken over by youth from cities. The natives of the land will get some money but nothing else. There are no long term plans for their development.
What has been written in the report is a very good example of only one side of the story. China has been violating human rights for decades now and the west has simply let them, so I think the comparison is unfair. If one takes a proper look at the whole SEZ terms, one will see how unfair it is to the natives. The headline itself is so misleading.
Abhishek Raghunath, Mumbai, India
I quite agree with Bill from Bristol, UK that Maoists sour things everywhere. The irony of it is that, that very ideology that has been dumped by China. With no democratic checks and balances, it can ride roughshod over any dissenting voices. Shovik does not appear to have understood the reasons for the creation of SEZs. As the commerce minister Kamal Nath has said If [foreign direct investment] is coming to our special economic zones, it can also jolly well go to Thailand, Philippines and Indonesia. Mr Datta seems to be harking back to the bad old days of communist Jyoti Basu running West Bengal (load shedding, strikes every other day etc.) which drove most industries out of the state in a big way. The fact is the farmers do not trust the corrupt politicians and bureacrats. Root out corruption and educate the masses. The only way forward for India, I would say.
Kiran Mehta, London, UK
Almost certainly it won't be the farmers who are offered jobs in the industrial zones. Having earned your lively hood for years on a patch of lan, it must be daunting to trade that for a lump sum. So I must say I can at least understand their fears.
Maybe offering jobs would help to allay them.
(Apart from that, Maoists sour things everywhere, but you should not give them an incentive.)
Bill, Bristol, UK
There is no reason why multinationals, who will make big profits from using these SEZs, shouldn't pay taxes at a reasonable rate for their use. Therefore, I disagree with the zones' tax-free status. Also, the taxes should be paid, not to the central government in New Delhi, but to the local states, so that the local voters in the states benefit from the investments made.
Shouvik Datta, Incheon, South Korea
What is happening at Nandigram and Singur is unfortunate but these agitations are inspired by political motives and not for the concern for the farmers.Protecting farmers while inviting industrialist to invest in the state has long been a political conundrum..The parties buying the land will have to work out symbiotic relationship with the farmers who have sold their land by offering them or their family members employment commensurate with their skills.
M.M.GURBAXANI, Bangalore, India