I'm guessing that not everybody out there has read my paper on Employment Sprawl . Our paper did not discuss employment sprawl in developing nations and this would appear to be a good topic for future research. The New York Times today reports on the awkward land use transition taking place in India's rural areas. Farm land is being reallocated by the market for industrial purposes. The less educated farm workers are worried about their future because they don't have the skills to compete in the "new economy". This clash between rural interests and urban interests is likely to play out over and over around the urbanizing world.
It would interest me whether the children of the displaced farmers are able to get a good education to join the "urban elite" or whether this is not a Horatio Alger "Rags to Riches" story that the poor today will have children who will be poor tomorrow. Where is the Coase Theorem when you need it?
One obvious solution here would be for the new factories to signal that they will hire low skill workers for jobs ranging from driving vehicles to cleaning up. For example, eco-tourism resorts have created jobs for local residents. I'm surprised that the industrial interests have not thought about ways to productively co-opt the displaced farmers.
September 17, 2008
India Grapples With How to Convert Its Farmland Into Factories
By SOMINI SENGUPTA
SINGUR, India — Barely a month before Tata, one of India’s most powerful conglomerates, was due to roll out the world’s cheapest car from a new factory on these former potato and rice fields, a peasant uprising has forced the company to suspend work on the plant and consider pulling out altogether.
The standoff is just the most prominent example of a dark cloud looming over India’s economic transition: How to divert scarce fertile farmland to industry in a country where more than half the people still live off the land.
At the heart of the challenge, one of the most important facing the Indian government, is not only how to compensate peasants who make way for India’s industrial future, but also how to prepare them — in great numbers — for the new economy India wants to enter.
In recent years, clashes over land have dogged several major industrial projects in virtually every corner of this crowded democracy of 1.1 billion people, most of them rural and poor.
In eastern Orissa State, betel leaf farmers have held up a $12 billion project by Posco, the South Korean steel maker, occasionally kidnapping company officials. In western Goa, several proposed Chinese-style special economic zones were scrapped after sustained public protests. And outside Mumbai, India’s commercial capital, village councils insist on a referendum this month on an economic zone proposed by Mukesh D. Ambani, the nation’s richest man.
In nearly all these cases, the peasants who resist most intensely are often those who know they are qualified to do little beyond eke out a living off the land.
If that fundamental anxiety feeds their protests, farmers and farmhands, often egged on by the politicians who seek their support, also stage protests to ratchet up the price of the land or to renegotiate deals.
The target of their ire is often the government, which in most cases acquires the land and turns it over to industrial developers. The central government has yet to release a long-awaited national policy on how to compensate those who lose their land.
“If the price is right, people will sacrifice the emotional attachment, but if you no longer have the guarantee of living off the land, then what do you do?” asked Subir Gokarn, chief economist for Standard & Poor’s in India. “The people who are being displaced are not the people who see themselves as benefiting immediately from the employment opportunities.”
Medha Patkar, one of India’s best-known opponents of large industrial projects, said, “Land is livelihood, it’s not just property.”
Last month in this rich farm belt in West Bengal State, protesters laid siege to the new Tata Motors plant, on one occasion preventing workers there from leaving.
The protesters now want the government to return roughly a third of the 997 acres that the state acquired for the Tata factory. Some of the land was taken by force from farmers.
Their demands have since forced the state government, controlled of all things by an elected Communist administration, to sweeten the deal without taking apart the factory site.
On Sunday, in an effort to assuage the protesters, the government announced a new, more generous compensation package for those who had been evicted. It included a 50 percent increase in the price paid for the property and job training for one member of each displaced family. The ruling party and its opponents have been staging competing protests this week.
That new deal only revealed the deep wedge of anxiety that the factory has driven through this cluster of villages.
“We are farmers,” said Tayab Ali Mandal, 52, of Joymolla village. “We know only farm work; we don’t know any paper-pencil work.” He gave up his land last year, but bitterly. Now, he wants it back, and he rejected the government’s latest offer of a job in the plant.
He said he would rather that his 16-year-old son continue to work in a small factory embroidering clothes, a traditional craft in his community. “I won’t go inside that place even to urinate,” he said. “We are disgusted by that place.”
Gopal Santra and his clan, who refused to accept money for the land they lost, said they hoped the renewed agitation would prompt the state to raise its offer even more.
The Santras also had land across the street from the Tata plant, which they sold to a private party a month ago for more than four times the price the state is now offering.
Still others, like Sheik Muhammad Ali, who welcomed the Nano, Tata’s flat-faced, pint-size car, to his fields, threatened to put the naysayers in their place.
Mr. Ali, 50, had readily given up his land, and through his contacts with Communist Party workers, started a business supplying cement to the factory developer.
On Sunday, he was seething at the protesters who had halted work on the plant for the last two weeks and, in turn, his business.
“There’s a limit to our patience,” he barked. “If you take my plate of rice, will I just let you go off with it?”
Bidyut Kumar Santra, 30, a rare high school graduate in Joymolla, was among the lucky few to get jobs on the assembly line and, in turn, he realized how poorly equipped he was to keep up with events on the factory floor. The engineers all spoke English, to him an alien tongue.
“I feel ashamed, like what kind of education did I get?” Mr. Santra said the other day and vowed to make certain that his son, who is in first grade, learns to speak English.
The villages of Singur, where the Nano was to be produced, stand at the crossroads of the two Indias.
For Tata, it is ideally located along a new national highway that heads north to New Delhi, the capital, and intersects an important east-west artery.
For farmers, it is ideally located on the fertile delta plains of the Ganges River and fed by irrigation canals, making the earth so rich and red that it yields two rice harvests a year, in addition to potatoes, cucumbers and squash.
West Bengal lured Tata here with heavy incentives, including a generous land lease and tax breaks from the state’s industrial development agency.
Some of these details of the company’s hitherto secret contract with the government have emerged in recent days, prompting the company to go to court, where a ruling blocked further disclosures. If Tata were required to give back 300 acres of land from the factory site, as the opposition demands, it would have to evict auto-parts makers who are setting up shop next to the main Nano plant. Their proximity allows Tata to save on the cost of production. Those savings and the generous land and tax deal allow Tata to offer the Nano at an astonishing price of less than $2,500. The plant’s fate is uncertain. Tata, while welcoming the government’s proposed compensation package, has remained silent on its plans.
The company has several other plants where it could produce the Nano in time for the Hindu festival season next month, traditionally a time of big spending. It has dangled the possibility of making the Nano elsewhere if the cost of production and the price of the world’s cheapest car rise too high.