While India ranks as the seventh largest country in terms of size — with over 3.25 million sq km of area — land has emerged as one of the most contentious issues today.

There are countless disputes over the ownership and transfer of land, resulting in major law and order problems across the country. While reforms have brought about considerable improvements in many sectors of the economy, land is one area that has seen the least of changes.

Virtually every deal relating to land — sale, transfer, lease, merger, division — gets embroiled in controversies and agitations, with allegations of favouritism, corruption and shady transactions flying thick and furiously. These are followed by ‘mass’ agitations, strikes, police firings, killings, imposition of curfew, and a relentless cycle of violence.

For an economy expanding at nine per cent per annum over the past five years, India has attracted billions of dollars in overseas investments. Similarly, domestic business groups are also on a massive expansion spree, investing large sums. All these furious expansion plans can materialise only when adequate land is made available for industries and service providers.

Land not in some remote corner lacking infrastructure — including physical, social, cultural and educational — but in proximity to the major cities, ports and transport hubs. Traditionally in India, most deals relating to land have been controlled by the government or its various agencies.

Entrepreneurs and business groups wanting to set up a factory, an airport, a special economic zone (SEZ) or a residential township prefer to acquire land from the government or its agencies, instead of dealing with a multiplicity of owners, most of who have marginal land. Most land deals are opaque and the genuineness of titles is also questionable.

Many Indian states have established industrial development corporations that acquire fragmented land holdings from farmers and other owners, add a little bit of infrastructure and then sell them to business groups. Growing competition for investments has resulted in states offering incentives by way of tax concessions and land at below-market prices.

In the past, when few such deals were signed, there were not many land-related controversies. But the steep increase in investments — both foreign and domestic — has resulted in massive hike in land prices around the country, especially near the metros.

Consequently, farmers who sell their land to the government — either voluntarily or under duress — get negligible prices, but find market rates soar several times in a matter of a year or two. This results in tremendous resentment against the government and the investor.

Worse, there is massive resistance to the selling of land to governments or even private investors, as land owners feel cheated by the low price they get. Hundreds of acres have been acquired in recent months for the development of SEZs, IT and bio-tech parks, airports, hospitals, colleges, factories, residential colonies, office complexes and entertainment centres.

But within months of the land being acquired, prices increase manifold. Unfortunately, in many instances, land owners squander away the money that they receive from the government, either buying expensive cars, luxury apartments or investing unwisely, or their children get hooked on to bad habits including imbibing liquor.

In a growing number of rural homes, sale of land is now being seen as auguring bad times, and there is genuine fear about disposing of ancestral land. Many political parties, especially those in the opposition, exploit the fears and encourage the poor not to give up their land, or demand unrealistic prices.

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OF course, it is not just opposition politicians — like Mamta Bannerjee of the Trinamool Congress in West Bengal — who cash in on the grievances. In Maharashtra, Narayan Rane, the revenue minister (who was thrown out of the Hindu nationalist party, the Shiv Sena, before joining the Congress) has levelled charges against Vilasrao Deshmukh, the chief minister, accusing him of favouring an industrialist in a land deal.

Mumbai, an island city, has some of the most expensive real estate in the world. In tiny localities of south Mumbai, apartments sell for as much as Rs100,000 (about $2,300) a sq ft. Consequently, investors and entrepreneurs are forced to look to the outskirts of the city for land for their projects.

The government has acquired vast tracts of land from poor farmers, paying them a pittance; some of the land is auctioned to developers and investors, others are sold cheaply to favoured industrialists.

Allegations of corruption and favouritism in land deals are common and residents are no longer shocked by the charges.

But in semi-urban and rural areas, there is a lot of alienation and farmers are reluctant to part with their land. The government insists that businesses putting up projects have to absorb at least one or two members from each of the families of the original land owners.

However, many companies do not want to invest in training the mostly uneducated youth. And most of the new plants are automatic, requiring very few workers.

CIDCO Ltd, a state government urban development body, has acquired thousands of acres of land to the north-east and south-east of Mumbai over the years. It is now auctioning or allocating the land to leading business groups for development of SEZs, an international airport, golf courses, hotels and resorts and IT parks.

But the local population is seething with anger and politicians are spreading ill-feeling towards ‘outsiders’.

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THE most contentious project involving a land deal is the one being promoted by Tata Motors in Singur in West Bengal, where the mercurial Mamta Bannerjee has pitched up camp and is giving sleepless nights to the Marxist government.

The Trinamool Congress chief, who has been carrying out a campaign against the Tata project ever since it was announced about two years ago, is now virtually forcing the much-respected business group to pull out of the state. Mamta wants the Tatas and the state government to return 400 acres — of a total of 1,000 acres — of land to the farmers.

Ratan Tata, the chairman of the group, plans to roll out the Nano, claimed to be the cheapest car in the world, from the Singur plant. However, the project is now getting derailed thanks to the agitation and Tata is considering moving the plant to other states. Uttarakhand, Maharashtra, Tamil Nadu, Haryana, Madhya Pradesh, Gujarat, Karnataka and other states have rushed in with offers, hoping to lure Tata to their states. If Tata Motors pulls out of West Bengal, it would be a debilitating blow for the state — once India’s most progressive industrial state — which is desperate for investments.

But other eastern states, including Orissa and Jharkhand, are also plagued by similar agitations that threaten to seriously impact their ambitious plans for industrialisation. All the three eastern states — including West Bengal — have succeeded in attracting tens of billions of dollars in investments from international and domestic majors in recent years.

However, opposition from political parties and vested interests have resulted in uncertainties about these investments, and even forced many potential investors to scale down their plans or withdraw fully. The world’s fifth-largest steelmaker, Posco from South Korea, had unveiled plans for mega investment of $10 billion in a steel plant in Orissa. The project has got stalled over a land acquisition row. Similarly, the fate of the ArcelorMittal and Tata Steel projects — also running into billions of dollars — in Jharkhand and Orissa are hanging fire.

The violent attacks on some of the new plants and their executives and workers, and the stubborn opposition by politicians are discouraging both international and Indian investors from promoting projects in some states.

But it is not just the ‘backward’ states that are suffering — even Maharashtra, Delhi and Haryana — among the most advanced states — are experiencing similar land-related rows that threaten to set back their development plans. When investors bring in the money and put up projects, it has a stunning spin-off effect, benefiting the local community at large. Thousands of new jobs — both direct and indirect — are created and the local governments and civic bodies get huge revenues by way of taxes.

But the dangerous new trend of politicians trying to exploit the sentiments of the poor and virtually driving away investments — there are any number of countries in the world that would eagerly welcome the mega-bucks flowing into India — will take a heavy toll on the economy. Sadly, the worst affected by these ill-directed agitations would be the poor, not the political parties that feed on them.