Land Acquisition in West Bengal and its impact on the Indian Economy

The left front Government that came to power in West Bengal in 1977 after defeating the Congress was the Government for the people. They relieved the people of West Bengal from the dreadful Nexalite movement that kept people of the state awake for nights in terror. They called themselves to be the friends of the poor farmers and landless laborers and started “Operation Barga” in 1977 itself. Not only this, they implemented land reforms in West Bengal to transfer landholdings from big farmers who hold large areas of land to poor farmers so as to remove disparity in income and employment. In this way agricultural development in West Bengal took a firm base and the state became one of the leading agricultural producers in India.

However, circumstances changed with time. Slowly with the Globalization of the Indian Economy, the left front Government in West Bengal also started Globalizing themselves. The seventh Left front Government that came to power in West Bengal under Chief Minister Buddhadev Bhattacharya in 2007, became aware of the fact that without Industrialization employment generation in West Bengal will not have a firm ground. The Government started inviting International investments like the Salem Group of Indonesia to set up a Chemical Hub at Nandigram to convert it into a special economic zone. Moreover, the Government also acquired land from the farmers of Singur, for Tata small car project (Tata Nano).

The initiative of the government to acquire land for industrialization is no doubt a brilliant idea. But the sad part of the thing is that the Government acquired agricultural lands capable of multiple cropping. Had the Government acquired barren land for industrialization, it would not be an issue. But the Government, instead of acquiring barren lands acquired highly productive lands without thinking about its future impact on the Indian Economy.

The impact of acquiring agricultural land for industrialization is very dangerous and may even lead to Economic recession and this is in fact true if we analyze it carefully from the simple economic point of view. It is widely accepted in Economics that agriculture and Industry are interrelated, each supporting the other. Agriculture provides raw materials to industry and food to the people who work there, while Industry provides a large number of machine made consumer durables and even fertilizers to agriculture. Now acquiring of agricultural land would mean reduction in agricultural production. At the same time with Industrialization disposable income in the hand of individuals increases and people demand more food. At the same time with acquisition of agricultural land for industrialization, production decreases. This results in an increase in the price of agricultural commodities such as rice, wheat, sugar and edible oil which is in fact is now noticeable from the present market scenario. Now as price of food grains rises, price of other goods also increases, leading to an increase in general price level. This results in inflation.

Now foreign investments occur only because labor is cheap in India. With inflation, cost of labor will rise and International investors will prefer to shift to a country with low labor cost. This process will again lead to de-industrialization in the Indian Economy and hence recession of the economy.

So why prefer such a process of industrialization which will take us back again to de-industrialization and recession in the long run.