Tata Nano plant at Singur: A critical sidebar about property rights in India

While most of the Net is still inundated with the original announcement of Indian automobile manufacturer Tata's new ultra-cheap Nano (and I can't resist this "why it's so cheap" picture), there is a part of the story that ought to be of far more interest to Libertarians and other Americans.


We tend to assume too many similarities to our own culture and customs in other countries.

Tata obviously needs a factory at which to churn out the production models of this new mini-box, right?

I pick up this story from an Indian blog, Through the Corridors of Uncertainty, which required a fairly strange search pattern to locate. I started looking for it after viewing this picture of farmers burning the Nano in effigy in protest against their land near Singur being sold for the Tata Nano plant.


Here's the set-up, from a political insider's point of view:

The Singur controversy has attracted a strange set of bedfellows-the Tatas and the Left Government on one side representing the so-called “capitalists” and Mamta, BJP, Medha Patkar on the other representing “people’s interests”. Politically, the Rajas and Yechurys are conveniently silent and the entire issue has become Buddha’s lone fight. It's best to ignore Mamta madam’s theatrical outbursts and so I am keeping aside the politics involved here, though the clincher in the deal may be politics.

Singur is a village about 50 km northwest of Kolkata and is predominantly an agricultural area. The Tatas want to set up their small car unit here and have estimated about 997 acres of land for this. 950 acres has already been agreed and the remaining 47 acres is still being negotiated, but we know what the result would be. The compensation agreement entails owners of single-crop land to receive Rs 8.4 lakh per acre and Rs 12 lakh an acre if the land was used for double-cropping.

But the protesting farmers are not necessarily the land owner who have sold out to Tata, because patterns of land ownership in India are different:

There seems to be a fairly good consensus that the compensation package paid by the Government is more than adequate and more than 94% of the land owners have agreed to sell of the land because of this. But then, it’s not just the land owners who are involved here. After the land reforms instituted here under Operation Barga, most of the land rests in the hands of land owners while the revenue/produce is shared between the land owners and the share croppers (who get the land cultivated). There are also the farmers who do the actual tilling on the land and work as daily wage earners – all this makes it a more elaborate sub-contracting set-up among owners, croppers and workers. It needs to be ensured that all the three concerned parties are compensated for this sale adequately and not just the land owners.

So if the share croppers have a right (and I mean that--a right) to part of the crops and revenue under Indian law, then it follows that they possess some kind of partial equity in the property that is not being recognized in the sale.

As mentioned earlier, there are several daily wage workers who would lose out when this land goes to corporates. This loss of livelihood may have to be compensated by the company in terms of employing them in the company or elsewhere and would again require them to train the workers in other skills. The Tatas reportedly plan to train workers for this but past records of most land acquisitions do not give us much of a comfort. We do not have a system to evaluate the effectiveness of the compensation provided and the aftermath of such acquisitions. There have been cases where the displaced receive monetary compensation but their future remains uncertain due to lack of investment knowledge and absence of any other skill sets.

And that's when I discovered that property rights have been redefined in India:

Currently, agricultural land in India cannot be sold for non-agricultural purposes, so such sales happen only when the government comes into the picture by a back door approach of acquiring land from rural areas and selling it to corporates. But should they involve themselves in such transactions only for public utilities like roads, flyovers etc. or should they do this even for sale to private individuals? There may be people who do not wish to sell the space but are forced to do so because the Government thinks it is for the “greater good”.

Do we give farmers the right to sell their land to anyone they wish to? Since right to Property is not a Fundamental right (it was removed under the 44th amendment Act in 1978 by the Janata Party), it becomes an arbitrary call by the government. This naturally depresses the land prices due to lack of buyers and becomes a liability for farmers who want to move out of agriculture. The very idea of this law was to prevent reduction of agricultural land and acquisition of land by loan-sharks and corporates.

However, freeing land sales may also lead to the land going back to the hands of money lenders and zamindars – again a reversal of the process of democratization of land. Moreover, we cannot reduce the worker’s dependence on agriculture suddenly without adequately training him otherwise. And if you train him, will he be gainfully employed?

Wow, look what we've just learned in a brief sojourn to India:

1) Just owning property doesn't mean you have the right to sell it.
2) Giving land owners the right to decide for themselves to whom they will sell their farms is at best a controversial issue.
3) The government of India pursues a conscious strategy to keep money lenders and corporations from monopolizing the land.

And, believing in property rights as the fundamental to any free society [hey, it says Delaware Libertarian on the masthead], I am now struck with the urge to track down the Indian constitution, so I can find what takes the place of property rights as that society's political foundation.

First off, when you land on the Indian Constitution, you may find yourself somewhat chilled. Here's Article 19 (in part):

19. Protection of certain rights regarding freedom of speech, etc.—
(1) All citizens shall have the right—
(a) to freedom of speech and expression;
(b) to assemble peaceably and without arms;
(c) to form associations or unions;
(d) to move freely throughout the territory of India;
(e) to reside and settle in any part of the territory of India; and
* * * * *
(g) to practise any profession, or to carry on any occupation, trade or business.

What the hell happened to Item "f"?

And thanks to Amendment 44, Article 31 is completely gone, leaving us with this:

The 44th Amendment:

3. In view of the special position sought to be given to fundamental rights, the right to property, which has been the occasion for more than one amendment of the Constitution, would cease to be a fundamental right and become only a legal right. Necessary amendments for this purpose are being made to article 19 and article 31 is being deleted. It would, however, be ensured that the removal of property from the list of fundamental rights would not affect the right of minorities to establish and administer educational institutions of their choice.

4. Similarly, the right of persons holding land for personal cultivation and within the ceiling limit to receive compensation at the market value would not be affected.

5. Property, while ceasing to be a fundamental right, would, however, be given express recognition as a legal right, provision being made that no person shall be deprived of his property save in accordance with law.

OK, admittedly, this is a looongg way from where I started.

But my main point is that the superficial posts and press releases you see on the Net don't even tell half the story, don't bother to plumb the question of property rights in India.

You have to do you own research. (Or else you can just keep your eyes here.)