How not to Displace People

Industrialisation has displaced millions of people and spawned terrible rehabilitation failures. Fresh in public memory is the death of 13 tribals at Kalinganagar, Orissa, resisting displacement by Tata Steel.

The problem will worsen as industrialisation deepens. Recently 150 Special Economic Zones have been approved, and the number may soon double. Maybe one million people will be displaced. We need a new displacement strategy for justice and equity.

What are the key issues? First, government acquisition is at the supposed market price as reflected in recorded sales. But recorded sales often understate the real price to evade stamp duty, so the “market price” can be a great underestimate. Besides, if a private developer tried to acquire lots of land, he would have to pay several times the recorded price of recent transactions. Forced acquisition at the historical price is partial confiscation.

Second, land records are woefully inadequate, and fail to list people who have cultivated land for decades. So, many villagers get no compensation at all.

Third, callous and corrupt officials refuse to disburse compensation without bribes. Payments can be incomplete and highly delayed.

Fourth, when entire villages are displaced, villagers lose access to local forests, streams and grazing land. They get no compensation for this. The makeshift settlements into which they are herded often lack basic amenities, or job opportunities within walking distance

Fifth, even when compensation is paid, the sum is often frittered away by families that have never handled large sums. They have no steady income stream, and lose their livelihood and dignity. They are transformed from owners to refugees.

Sixth, the land acquired cheaply by the government is often resold at stratospheric prices to industrialists. At Kalinganagar, land was acquired from tribals at around Rs 30,000/acre, but sold to Tata Steel at Rs 3.35 lakh/acre. Outrageous!

Ideally, all acquisition should be voluntary. If industries buy land from willing sellers, displacement will cease to be a major human or economic issue. However, big projects —for housing, infrastructure or industry–require contiguous land, and this is not available if some villagers refuse to sell at any price. Hence governments the world over have acquisition laws. This violates property rights, but is deemed to be in the public interest.

How can acquisition policy be made tolerable, even advantageous? I offer two suggestions. One, if at all possible, the residential area in a village should not be acquired even if the surrounding land is. If homesteads are left intact within projects, acquisition will not displace people physically. From their homesteads, they can supply labour, vegetables, eggs and so on to the project staff.

Is it possible to leave villages intact as islands within a sea of development? Not in some cases like dams. But it is entirely possible in most cases. Many cities have proved this.

Consider Delhi. As it expands, it has swallowed up dozens of villages. The agricultural land in every case has been acquired by the government, but the residential zone—called the Lal Dora—remains with villagers. Normal zoning rules do not apply to the Lal Dora, making such land especially valuable. Roads, parks, drinking water, electricity, schools and other city facilities come up around each Lal Dora, greatly benefiting the villagers. Their homesteads may be small, but since they are in the heart of Delhi, they are worth crores.

In similar fashion, villages can remain intact within steel plants and Special Economic Zones. The boundary walls of security zones can twist and turn to avoid villages. Homesteads occupy just a few acres, a tiny fraction of a typical project area.

My second suggestion is that affected villagers should be made equity holders in the new projects. For instance, instead of compulsorily acquiring land from villagers, industries can be asked to compulsorily lease the land.

This approach will make the tribals at Kalinganagar landlords, and Tata Steel their tenant. The villagers should get a lump-sum payment upfront plus a monthly rent, adjusted annually to the cost of living. The annual rent can be fixed initially as 8% (the interest rate for government small savings schemes) of the price the government has demanded from Tata Steel. The lease can be for 50 years, after which it can be renegotiated.

This will give the villagers status and dignity. Instead of becoming refugees, they will become equity holders in the new project by virtue of their landlord status. They will have an assured rental income, plus livelihood prospects from the plant.

Will corporations resist this approach? I don’t think so. In its 35,000-acre SEZ at Navi Mumbai, Reliance proposes to leave all village homesteads intact. After developing the SEZ, it proposes to give back to each household 12.5% of the land initially acquired. The returned land will be fully developed and extremely valuable. The villagers will be equity holders benefiting from the project, not displaced refugees.

Will Reliance live up fully to its promises? Only time will tell. But the approach is surely correct.

What do you think?