THE eternal problem of development economics has been how to have rapid growth without increasing inequality and aggravating poverty. The problem is specially serious in countries with a large agricultural sector and high proportion of people living in rural areas.

Rapid industrialisation has been considered almost the universal panacea for raising the living standards in such countries. The East Asian economies generally followed this path.

However, when they embarked on that path, they were already blessed with certain favourable factors which others, especially in South Asia, lack even now. Among these was the undertaking of land reforms and the availability of labour-intensive industrialisation opportunities, especially for export.

While Pakistan¹s progress in land reforms has been abysmal, it did succeed in the first two decades of its existence to substantially enlarge its insignificant industrial base, although it still remains largely undiversified. India, in contrast, took more radical land reforms and continued its industrialisation, at a steady if slow pace in the first two decades but in a more balanced manner.

Among the states which undertook radical land reforms, especially in the last three decades, is West Bengal where the Communist-led Left Front came to power three decades ago. Its success was based on the decentralised enforcement of land reforms and the reinvigoration of the ‘panchayat’ system. The continued rise in the incomes of the peasantry and the landless labour in West Bengal has assured its electoral success over the years. However, the state has been lagging in industrial growth and its per capita is below all-India average.

After the liberalisation policies introduced in India a decade ago, the main engine of industrial growth has been the private sector. The West Bengal government, eschewing its ideological bias had to reverse its policy of state-led industrialisation and started looking for opportunities to attract the private sector, both from at home and abroad. It had to compete with other dynamic states such as Andhra Pradesh, Karnataka, Gujrat and Maharashtra, which were giving liberal concessions to industrialists in terms of infrastructure, tax exemptions and above all subsidised land through state acquisition.

The political stability in West Bengal and the ability of the government to deliver had increased its credibility in the eyes of the investors. The Chief Minister, Buddhadeb Bhattacharya, who succeeded the ageing and more charismatic Jyoti Basu, on his retirement less than a decade ago, wanted to build his reputation on making his state an industrial hub. He wanted Kolkata to vie with Mumbai, Chennai, Bangalore and Hyderabad, in attracting both software and hardware industries. He managed to attract India’s world-renowned IT powerhouses, Infosys, Wipro and Satyam to establish their facilities.

Although West Bengal was a resource rich State, investors negative perceptions about its work culture, infrastructure, inefficient bureaucracy and radical labour unions had hindered investment inflows.

With its pro-active policies, the Buddhadeb government wanted to turn around West Bengal’s image into an industrialising economy. Buddhadeb’s ambition was to put West Bengal on India’s industrial map by disciplining its large workforce, shaking up the labour unions, ushering in tax reforms, changing labour rules, evolving various codes and so on. It pushed the Kolkata Municipal Corporation to cut the property tax across the board to speed up modernisation of the city to serve as a cue for other district municipalities.

Most of all, he was keen to erase the impression that his Communist state encouraged labour unions to stage wildcat strikes, gheraos and demonstrations. It went so far as to assure the High Court that it would enact a law that would impose “reasonable” curbs on freedom to hold rallies in the city. While he earned the wrath of political activists, his pro-active stance towards investment paid rich dividends. A steady stream of investor interest and actual investment from countries such as the US, the EU, as well as Indonesia and Malaysia, in a wide range of sectors have followed in the past three years. The Kolkata skyline, which bore an austere Victorian look, is now dotted with flyovers, malls, multiplexes, huge departmental stores, glitzy restaurants, auditoriums, etc., as testimony to his modernisation programme.

The model of industrialisation that West Bengal adopted was the undifferentiated version of that adopted in India and other developing countries since the early 1990s and intensified by the globalisation process in the first decade of the new century. In this model, the private sector led by domestic and multinational corporations has the key role, with the government, in effect, playing the role of a promoter and an agent of private corporations, instead of acting as a regulator of the latter’s activities in the public interest.

A major characteristic of this model of industrialisation is the asymmetric way in which costs and benefits are shared. The sacrifices must be borne by those who are least capable of bearing it, the poor and the most marginalised citizens, while the fruits are shared mainly among the more affluent sections of the population and as corporate profits.

Although some new employment is created, it does not compensate those whose jobs and livelihoods are directly or indirectly affected. The inconveniences that the corporations or their risk-taking executives inevitably undergo are overcompensated through higher profits and hefty dislocation packages.

A major inducement given to the investors in such an industrialisation strategy is in the form of low cost land acquired from poor peasant farmers, either for individual projects or in the form of Special Economic Zones (SEZs) with infrastructure provided by the government. A significant factor in this regard is that the decision whether to acquire or not acquire land, along with the degree of coercion needed to implement it, is largely the prerogative of the state, rather than the central government.

However, in a competitive race to win the favour of the corporations, state governments have resorted to undertaking measures regardless of their impact on the people whose land is being acquired.

This is the crux of the recent disturbances in Nandigram, a rural sub-district in West Bengal where its Communist government announced plans early this year for acquiring land for the setting up of a chemical hub by the Salim Group of Indonesia, which immediately provoked protests from the affected people, most of whom were CPM members. As a result, Chief Minister Buddhadeb retracted by publicly admitting that the unilateral acquisition of land was a mistake and promised to return the land of those that had not consented. Yet, out of vindictiveness against dissenters, terror was unleashed in Nandigram on March 14 this year.

While the proposal to establish a SEZ in Nandigram was aimed at providing his state with increased opportunities of employment outside agriculture and preventing it from lagging behind other rapidly industrialising states in India, it ignored the predicament of the evicted peasants, who lost their livelihood and access to food, since most were subsistence farmers. The eviction also caused ‘collateral damage’ since the SEZ displaced the entire population of 27 villages and envisaged the destruction of residential and other public and private buildings in the area.

These factors alienated not only the evicted peasants but also the entire rural community and outraged the civil society at what Amit Bhaduri has aptly termed as ‘development terrorism’.

Nandigram epitomises the dilemma faced by many developing countries, including Pakistan, on the industrial strategy which would be consistent with the pro-poor bias of development necessary to significantly alleviate poverty. While it is generally recognised that rapid industrial growth is a sine qua non for poverty alleviation, there is a need to ask if the particular type of industrialisation being pursued currently is compatible with pro-poor development.

A key issue highlighted by the Nandigram episode is that of land acquisition by the state for ostensibly public and development purposes. In this regard the doctrine of ‘eminent domain’, which derives its legitimacy from a colonial legislation, Land Acquisition Act of 1894, which continues to be used with minor modification in both India and Pakistan. In Pakistan, land scams and forcible land acquisitions have been a major source of transfer of resources from the poor or common property assets to affluent classes for developing luxury real estate and industrial and infrastructure projects.

Among these are the various defence housing and urban development authority projects in major urban centres, the Gwadar development project, the granting of land to favoured industrial projects, such as the Black Taxi project which was allocated 1000 acres of land in Sindh at concessionary prices, as well as the compulsory acquisition of land for the construction of dams.

Land is not the only source of bias against the poor in policy making, which is embedded in the disproportionately low plan allocation for agriculture, most of which is destined to benefit the more affluent farmers. Even more significant are the indirect effects that operate through imitative consumption patterns and mega-project investments which the state promotes consciously and whose benefits flow largely to the affluent and rent-seeking elites.

The emergence of glitzy malls, multiplexes and ultra modern housing complexes in various parts of South Asia along with the springing up of shanty towns and ‘kachchi abadis’ in urban centres is evidence of the un-sustainability of the industrial development that is being peddled in the name of globalisation and global competitiveness. There is a need for rethinking the current strategy and for evolving a more sustainable and inclusive approach to industrialisation in the current context.