envisages payment of twice the market rate for land in urban areas and four times the market rate for land in rural areas — enough to make any project, public or private, economically unviable. Then, it calls for the consent of 80% of landowners before any acquisition can proceed.
The Times goes on to spell out the consequences: the law mandates a windfall bonanza for landowners, requires social impact studies that will drag out the process of land acquisition for “years if not decades” and will make the acquisition of large plots of land for development uneconomic all across India.The problems don’t stop there. The Times concisely describes why the final passage of this law would be a disaster of the first magnitude:
This provision could well spell the end of India’s dreams of emerging as a manufacturing superpower. The only way to quickly lift what the western media pejoratively refers to as India’s teeming millions into the lower middle classes and then progressively higher, is to create industrial jobs.The farm sector accounts for 16% of GDP but supports 60% of the population. This is clearly unsustainable. We need rapid industrialisation. And for this, we need land — not land that has been acquired from their owners for a pittance and given to industry cheap, but land that has acquired at a fair value and given to industry at a price that keeps projects viable.
We couldn’t have put that better ourselves. India can only hope to provide a better way of life for its hundreds of millions of poor rural people by rapidly developing as an industrial power. To do that, private investors have to be able to buy land, and the government has to be able to acquire land for roads, electricity plants and transmission lines and all the other necessities of an industrial society.Land blockages and infrastructure problems have so far blocked India from benefiting fully from the globalization of industrial production and landed the country in a Catch-22 style development trap. Because there is no massive industrialization, most of the jobs and other benefits of Indian globalization go to the well educated—the techies in the cyberparks and the fluent English language speakers in the call centers. These are the types of international businesses that can flourish in a country filled with talented people but lacking the basic infrastructure that can support a modern manufacturing economy.But because the benefits of globalization are so thinly spread, many in India resist further changes. In China, whatever that country’s political problems, massive numbers of ordinary people know that their jobs in manufacturing or in servicing companies that manufacture for export are linked to China’s integration into the global trading system. While China is in many respects a dangerously unequal economy, its global opening has at least created opportunities for people in all walks of life. That is much less true in India, so dangerous laws like this one have more support.India must move towards an industrial revolution; tens of millions, hundreds of millions of Indians must move from the countryside to the city, from agriculture into manufacturing and services. That is never easy, even under ideal circumstances, and India will be attempting to accomplish this transformation as Indian labor faces tough competition from China, other developing countries— and automation. There is no time to lose, but India at the moment seems stuck.This isn’t just an Indian story. Whether or not India moves forward toward a modernizing economy is partly a story about Indian incomes and social conditions; it is also a story about world geopolitics. If India hesitates on the threshold of industrialization while China moves swiftly ahead, the balance of power in Asia will become shakier year by year. If India can keep pace with China, it is likely that Asian geopolitics will settle down over time. With two economic superpowers rising together, and a strong Japan on the scene, the Asian balance of power looks reasonably stable. With one superpower rising and another potential superpower on the sidelines, the picture could change.In the long run, what India does about its industrial and land use policy matters much more to the world than anything that happens in Syria. It matters more to the happiness and economic security of billions of human beings, and it matters more to the prospects for world peace.Even in the middle of yet another crisis in the unhappy Middle East, Americans need to keep their eyes on the countries in which humanity’s fate in the 21st century will be hammered out. Land policy in India is a bigger deal than sectarian politics in Syria; we need to keep our eyes on the big picture.[Manmohan Singh photo courtesy of Shutterstock]