Thursday, December 18, 2008

Mr Tata's unpaid bills

Ratan Tata, his puppy Buddhadev
Bhattacharjee on a leash, wonders,
"What happens to it nowadays when it
sees poor people?"

Please Pay Your Bill Before You Leave, Mr Tata!

by D. Bandyopadhyay

Published in Mainstream, Vol XLVI, No 51, 12 December 2008


On October 3, 2008, at a press conference at Kolkata, Ratan Tata formally announced his decision to move out the Nano Project from West Bengal squarely blaming the agitation led by the Trinamul Congress for his decision to relocate the plant. This statement clearly reflected some of the discussions that he had with the Chief Minister of West Bengal with whom he was closeted for two hours before the press conference. He spoke persuasively with unwarranted venom.

One cannot blame Tata for his lack of knowledge of the character, trait and heritage of the popular upsurges in West Bengal. Singur was one of the epicentres of the Tebhaga movement in the late forties of the last century led by the old and unsullied Communist Party of India. There is a famous story by Manik Bandyopadhyay called "Chhoto Bakul Purer Yatri" on that episode. Its locale was Bara-Kamalapur in Singur. A blue-blooded bourgeois totally alienated from the common people cannot have any perception about any popular movement against gross violation of their basic right to life and livelihood. He cannot be faulted for it.

After all, the Tatas made their primary accumulation of capital through opium trade in China in the nineteenth century. Use of opium was prohibited under law in China. The East India Company and its minor trading partners, among which the Tatas were one, started illegal importation of opium into China from India. The Chinese
Government strongly objected to this. The British waged the first Opium War (1839-42) in which China lost resulting in the Treaty of Nanjing, 1842. It imposed insulting and highly unfavourable conditions against China and in favour of the British. Then there was a second Opium War in 1856-60 wherein the British triumphed again and forcibly legalised contraband trade in opium in China. The Tatas and a few other Indian traders made enormous profit from this trade in a contraband commodity in China. Wealth creates hauteur. Hence we may excuse Tata for his slightly less than civilised behaviour in slandering Ms Mamata Banerjee at the press conference. He did not show any concern for or kindness to the land losers of Singur but it is reported that he donated US$ 50 million to Cornell University only recently.

But what about the Communist Party of India-Marxist? Did it not take a Royal Charter of monopoly for representing the "oppressed" who stood in constant opposition to the "oppressor" and who are in a constant fight, "a fight that each time ended, either in a revolutionary reconstitution of society at large, or in the common ruin of the
contending classes"? The Chief Minister of West Bengal, Buddhadeb Bhattacharjee, while opening a SEZ project at the New Town Rajarhat on October 5, 2008, declared that he had "lost a battle, but not the war". A question naturally arises: for whom is he waging this war? While commenting on the adverse economic effects of SEZs, Professor Amit Bhaduri observed: "The devil in angel's guise would soon appear when large populations in rural areas would be rendered landless, jobless, homeless, incomeless, rootless and displaced making way for SEZs, the so-called epitomes of economic development." Bravo Mr Chief Minister, for so transparently exposing the class affiliation of yourself and your party! You have openly promised to wage a war in favour of the oppressors and against the oppressed. It is only to be hoped that it ends in the reconstitution of the society in favour of monopoly capital. In ensuring this objective, the CPI-M would fulfil its historic mission of total subjugation and annihilation of workers and peasants making the world safe for the bourgeoisie. It perhaps validates the saying "Money Speaks"!

The Government of West Bengal (GOWB) published 13 notifications under Section 4 of the Land Acquisition Act 1894 in July 2006 declaring its intentions to acquire roughly 1000 acres of land in five mauzas of Singur abutting the Durgapur Express Highway. All the 13 notifications had the same common clause. It stated that land mentioned in the Schedule below is likely to be needed to be taken by Government/Government Undertaking/Development Authorities, at public expense for a public purpose (emphasis ours), viz., employment generation and socio-economic development of the area by setting up of Tata Small Car Project, etc., etc.

Since the government cannot acquire any land for a private company except through the procedure laid down in the Chapter-VII of the Land Acquisition Act, the GOWB openly committed a fraud on the law and on the public by acquiring the land in the name of the West Bengal Industries Development Corporation (WBIDC-a government company) for leasing out the land to Tata Motors Ltd (TML). This chicanery on the part of the GOWB enabled the Tatas to get hold of 643 acres of land on lease without paying a paisa. But under this procedure land could be acquired only for a "public purpose". Section 3(f) of the LA Act defines "public purpose". There are eight items under it. But the caveat to this definition is very significant. It says "but does not include acquisition of land for companies". Thus the acquisition of land for the TML was totally illegal. The issue is now pending before the Apex Court. For the exercise of the doctrine of eminent domain a "public purpose" is essential. Hence the GOWB deceitfully tried to make out a case by stating that the small car factory would generate employment and result in socio-economic development in the area. There is no basis for this assertion. Firstly, it did not disclose how many direct jobs would be created in the factory. Secondly, it did not specify how many land losers would get direct employment. Thirdly, the promise of the process of economic development and the resultant prosperity was a rehash of the discredited and discarded "trickle-down theory". Hence it was an exercise in falsehood. Though not conceding the point, let us accept these contentions for the sake of argument. The whole thesis is predicated by the fact that the TML would set up a small car factory. Now that they have decided to move out and are relocating the factory outside West Bengal, the whole thesis vanishes into thin air. There is no small car factory. There would be no employment generation. There would be no socio-economic development of the area. Therefore, there would be no "public purpose". Thus the expenditure of public funds for this non-existing project was a total waste and, therefore, fully unjustified. It calls for criminal action.

This has very grave and serious consequences. The whole exercise of acquisition of 1000 acres of land through the use of force, building up of infrastructure for the project which does not exist, supply of free electricity and water, round the clock police protection for two years, construction of an 18.75 km of eight feet high boundary wall with watch tower at regular intervals, were done for nothing. Who would bear this cost? Even with a contrived and convoluted argument of "public purpose", there could have been a fig-leaf of justification of such enormous public expenditure. With the withdrawal of the Tatas all these expenses lose all validity. Some heads should roll.

The Tatas withdrew from Singur on their own volition. Therefore, they would have to pay for the cost. That is the logic. That is also the ethics. In fact, the Comptroller and Auditor-General (CAG) of India should conduct a due diligence audit of the WBIDC, Commerce and Industries Department, West Bengal Housing Infrastructure Development Corporation (HIDCO), Bhangore-Rajarhat Area Development Authority (BRADA) and the Police Directorate to compute exactly the loss to the public exchequer due to this abrupt decision of the Tatas to move out from Singur. The CAG should also fix responsibility for this wanton waste of public funds. It would be a slightly time-consuming process but it has to be done for the sake of public accountability, transparency and good governance.

Meanwhile to present a provisional bill to the Tatas an attempt is being made here to compute a figure based on the facts and figures as published in the print media about this issue. The Tatas caused enormous loss of public funds for their misadventure in Singur. This provisional figure would be altered once the CAG's report is made available. But it is fair that the Tatas should have an indication of how much they would have to pay back.

In the first place, but for the fraud perpetuated by the GOWB the Tatas would have to pay upfront the estimated cost of land acquisition under Chapter VII of the LA Act 1894. Now that there is not even a fig-leaf of public purpose, they would have to reimburse to the State Government a sum of Rs 200 crores, the paid out cost of compensation for the acquisition with some visible overheads.

Secondly, the WBIDC or some other State agency constructed an 18.75 km long boundary wall along the outer periphery of the acquired property. We do not know its specifications. It is locally said that the wall is eight feet high with a two-feet foundation underground. Estimates made by a couple of A-class CPWD contractors indicated that it would cost Rs 275 per running metre for a wall of this type with supporting pillars at regular intervals. Thus the estimated cost of construction of this wall would not be less than Rs 51,56,250, that is, roughly Rs 51.56 lakhs. With this one has to add the cost of five big gates. At a conservative estimate that would cost not less than Rs 25 lakhs. Thus the wall with gates would cost not less than 76.56 lakhs.

Thirdly, the government provided round-the-clock police protection both during the process of acquisition and after the land was leased out to Tatas. Newspaper reports indicate that approximately 2000 policemen were deployed day and night for the last two years and several months for the protection of the property of the TML. The government did not come out with any fact about it. But the Police Directorate of West Bengal has a standard formula of cost for deployment of 1000 policemen (one battalion strength) including ASI and SI but excluding the salaries of officers of the ranks of Inspector and above. The salary cost per month comes to Rs 80,70,000 which is 83.01 per cent of the actual cost. To this one has to add the cost of uniform, boots and some other basic equipments which would come to Rs 16,51,100 constituting 16.99 per cent of the total monthly cost. Thus the total comes to Rs 97,21,800 per month. This figure does not include the expenses of vehicles, POL, and other heavy equipments without which a police force cannot function. Excluding these items the annual cost of deployment of a battalion of police men comes to Rs 11.67 crores. For two battalions deployed to protect the Tata property the cost would be Rs 23.33 crores. For two years it would be Rs 46.66 crores. This is basically the salary component. The actual cost is much higher.

Fourthly, the GOWB committed another act of deception to give financial benefit to the Tatas. The Principal Secretary, Commerce and Industry Department of the GOWB wrote a letter on 12.10.2006 to the Managing Director of the WB Housing Infrastructure Development Corporation (HIDCO) in which, inter alia, he mentioned:

"In order to bring investment (obviously NANO Unit) in West Bengal, we had to face competition from other States, in particular, Uttaranchal which enjoys zero excise duty benefit in a car proposed to be priced at Rs 1 lakh, the exemption of 16 per cent excise duty makes a major difference. Therefore, in order to make the investment attractive to the TML, the State Government has to offer significant support in the form of upfront infrastructured assistance."

So the Tata Housing Development (THDC) would enter into an agreement with the WBIDC to form a joint venture company. Five hundred acres of land belonging to Bhangore Rajarhat Development Authority (BRADA)would be given at a concessional rate to the THDC+WBIDC combine. And 50 acres of high-value land of New Town Rajarhat should also be given to that combine. The letter clearly mentioned 20 acres should be given for commercial purpose and 30 acres for residential purpose at rates which were half the prevailing rates. The letter went on to state that the profit generated by the WBIDC would be used by it "to meet its commitment of infrastructure assistance to the TML project without having resort to budgetary support". The term "infrastructural support" was deliberately used to hide the real intention of giving subsidy to the TML. This directive of the C and I Department violated several laws apart from being ethically unsupportable. But we are not going into it here.

In one stroke, HIDCO suffered a loss of Rs 60 crores for 20 acres of commercial land and a loss of Rs 75 crores for the residential land making a total loss of Rs 135 crores.

On the 500 acres of BRADA land, one could make some conjecture in the absence of hard facts. Assuming that price of land per cottah was Rs 1 lakh and that BRADA had to sell it at Rs 50,000 to ensure the profitability of the TML, BRADA lost Rs 150 crores straightway. (1 standard acre = 60 Cottah)

Two separate companies/authorities had been ordered to suffer loss to ensure profitability of the TML. The whole idea is preposterous apart from being totally illegal and unethical. A future Commission of Inquiry on "La Affaire Nano" would have to untangle the knots within knots of these totally unwholesome and messy transactions to assess the damage and fix responsibility. It was as well that the Tatas have left, otherwise most of these worthy gentlemen would have got themselves further entangled in illegality verging on corruption that they might have resulted in spending their residual tenure of life in some State Correctional Homes. Incidentally, with due diligence audit followed by a Commission of Inquiry, the possibility of their short-term stay in these Homes is not beyond the realm of possibility. It would be good if they improved the living conditions of these Homes when they were still in service. Now let us get back to the point.

The provisional exit bill of Tatas would be: (i) Rs 200 crores (LA cost) + (ii) Rs 76.56 lakhs (cost of wall) + (iii) Rs 46.66 crores(police protection) + (iv) Rs 135 + Rs 150 = Rs 285 crores (subsidised land transferred from HIDCO + BRADA) = Rs 532.18 crores (excluding all indirect and invisible costs) = Rs 532.18 crores (excluding all
indirect and invisible costs). The final bill would be computed only after the CAG's audit.


This episode cannot be ended unless some tit-bits of the parleys that took place on September 5-6, 2008 at the Council Chamber of Raj Bhavan, Kolkata, are recorded and made public. Since the GOWB unilaterally and unethically repudiated the agreement it entered into with the Opposition, the writer has no moral compunction now to mention some of the inner stories.

In the beginning the Facilitator set the ground rules. There should be no personal attacks. The attempt should be to find an amicable solution of the Singur impasse for the benefit of the "unwilling farmers", agriculture, industry and the general well-being of the people of West Bengal. It must be admitted that both sides adhered to the ground rules and carried on the discussions in a civilised and polite manner.

The discussion centred on the amount of land that could be made available within the project area for resettlement of the "unwilling land losers" on a land-for-land basis. Incidentally the "land-for-land" principle of R&R has been recognised in the National Rehabilitation and Resettlement Policy, October 2007. The Leader of the Opposition made it clear initially that, though debatable, his side would not discuss the merit or otherwise of letting out of 643 acres (approx.) for the mother plant of the TML. It was a major concession and it created immediately an amicable ambience for negotiations. Thus discussions centred on the residual 350 acres (approx.).

The government side pointed out that this area 294 acres has been set apart for ancillary units. After an hour of discussions it was found that the matter was not progressing. It was going round and round.

At this stage the Commerce and Industries Minister suddenly offered 40 acres of land in the project area for non-agricultural avocations on the basis of five per cent of the land cost per land losers. He also introduced the concept of R&R "in and around" the project area. With 40 acres already declared in favour of the land losers, there was an attempt to find out how much more land could be made available from the vacant but not yet utilised land in the project area, particularly, from the land earmarked for the ancillary units. Whatever proposal came from anywhere the stock reply of the Commerce and Industries Minister was: "The Tatas will not agree." It was like the repetitive refrain of a song in a cracked voice of a scratched HMV 78 RPM paraffin record. I counted this phrase 11 times before I gave up in disgust.

The Facilitator, a suave, charming and elegant gentleman, did not show any sign of displeasure, but very sweetly he asked the Commerce and Industries Minister "who had acquired the land". The reply was: it was the government. Then there was a further query that if the GOWB had acquired land under the LA Act forcibly, should not it have some view as to how the land should be utilised by the ancillary units? Did anyone ascertain the real requirement of each unit? To that the scratched record croaked: "The Tatas will not agree."

Then the Facilitator sought the permission of the Commerce and Industries Minister to ask a few questions to the MD of the WBIDC. The Minister promptly agreed. The Facilitator then asked the MD who had selected the ancillary units. The reply was -the Tatas. Then he enquired as to who had decided how much land one unit would require. The reply was - the Tatas. Thereafter, he wanted to know who decided where would that parcel of land be located. The answer was-the Tatas. Getting, perhaps, a bit perplexed, though not showing any sign of it, he politely asked to whom did the land belong. The reply was - the WBIDC. To this he further queried: "In that case should not the WBIDC have some say regarding areas to be allotted and their location" This time the Minister replied: "The Tatas will not agree." The MD supplemented the answer by adding that the WBIDC did not have the technical competence to assess the requirement and, therefore, it depended entirely on the Tatas.

Never in my service career of more than three-and-a-half decades both in the State and at the Centre had I seen such shameful subservience of a government to a business house. One felt ashamed to be in the same company.

It is time to relate an anecdote about Dr B.C. Roy. In 1951 he received a proposal from Morris Motor Co. of England for technical collaboration with an Indian entrepreneur for the manufacture of Morris cars in India. After studying the proposal, one day he told his personal staff: "Call him (Oke dako)." Totally confused his personal staff left his chamber not knowing whom to call. Then it occurred to someone that it could be G.D.Birla who had sought an appointment earlier. So they rang up Birla and fixed the appointment at 3 pm on the same day. Birla arrived at the appointed hour. Dr Roy was informed. He told his staff "Request him wait for a while (Oke boshte balo)." After a while Birla went in and stayed with Dr Roy for almost an hour. That was the beginning of the Hindustan Motors at Konnagar, the first motor car factory in Asia after the WW-II. The Chief Minister of Bengal did not kow-tow to any business tycoon to locate an industrial unit in the State.


Now what happens after the exit of Ratan Tata from West Bengal? Firstly, to the best of our knowledge on October 4, 2008, the earth went round its own axis at its usual speed of 24 hours per round. Further, the sun rose on that day in East and went down in the west as usual. There was no media report of heaven having fallen or the earth cracking up. The general populace went on their business in the usual manner, so much so that the "bandh" called by the CPI-M collapsed much before time. Life continues in West Bengal in its normal pace and stride since October 03, 2008.

Second, since an area of more or less 643 acres was let out to the TML for setting up a car factory, now that they have decided to go, a notice has to be given for the cancellation of the lease. Similar notices have to be given to all the ancillary units because they were captive to the TML

Third, it appeared from the media reports that about 200 to 250 acres of land where heavy construction had already taken place, agriculture would not be possible without enormous capital cost to restore its original fertility. Hence that area could be kept reserved for a future motor car factory. In fact advice of a reputed consultant should be obtained to ascertain how much land would be required to set up a manufacturing facility of 500,000 small and medium cars per year. On the basis of his assessment an area of, say, 350 or 400 or 450 acres of land could be set apart for the future factory. This should include the built up area of the TML.

Fourth, instead of any sweet-heart agreement with any crony capitalist there should be world-wide advertisement for Global Expression of Interest for setting up of small/medium car factory in Singur. The government should openly advertise what benefits and/or facilities it would offer. Respondents should be requested to indicate what terms and conditions they would offer for the well being of the land losers and for the State in general. After appropriate technical and financial assessement the party whose offer would be best should be selected to set up the manufacturing unit. The agreement should be open and transparent and there should be no secret annexures as in the case with the TML.

Fifth, the rest of land should be returned to the land losers. The Commerce and Industries Minister had been repeating like an untrained parrot that land once acquired cannot be returned. This is not correct. There are various processes of restoring the land. There is Section 21 of the General Clauses Act 1897. Its heading reads as follows: "Power to issue includes power to add, to amend, vary, or rescind notification, order, rules or bye-laws." Under this section lands to be returned could be denotified.

If one wanted to stay within the four corners of the Supreme Court judgement in the Bhaskaran Pillai case (1997- 5 SCC.432), the surplus land should be handed over to the Singur Panchayat Samity for "planned development or improvement of existing village sites". Five mauzas have been devastated by reckless land acquisition proceedings. These villages should be developed in a planned manner as provided for under section 3(f)(I) and (v) of the LA Act, 1894. Land losers should be initially given a 999-year lease.

In due course, a local amendment should be made in the LA Act, on the lines of the Tamil Nadu Amendment to return land to the original owners. It may have to wait for the change of government.

The CPI-M requires to be cautioned that it would be totally illegal to go on a fishing expedition to find out a project which could fit into the definition of "public purpose" to utilise this land. The acquired land has to be used primarily for the purpose for which it was initially acquired.

It is said that "there comes a time in the history of any State when its hypocrisy must be exposed and its crimes against God and man must be proclaimed and denounced". It was time we did it in West Bengal.


It is a polite submission to Mr Tata. Please do not misunderstand us. We are not begging you to foot the bill. We are not putting pressure on you to pay the bill either. We would only like to remind you of a common saying: "A gentleman always settles his bill before he leaves."


The author was the Secretary to the Government of India, Ministries
of Finance (Revenue) and Rural Development, and the Executive
Director, Asian Development Bank, Manila.

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