VZCZCXRO0452
PP RUEHBI RUEHCI
DE RUEHCI #0041/01 0381217
ZNR UUUUU ZZH
P R 071217Z FEB 07
FM AMCONSUL KOLKATA
TO RUEHC/SECSTATE WASHDC PRIORITY 1384
INFO RUEHNE/AMEMBASSY NEW DELHI 1279
RUEHBI/AMCONSUL MUMBAI 0538
RUEHCG/AMCONSUL CHENNAI 0544
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHCI/AMCONSUL KOLKATA 1708

UNCLAS SECTION 01 OF 03 KOLKATA 000041 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT PLS PASS USTR 
 
E.O. 12958: N/A 
TAGS: EAGR ECON EIND EINV PGOV IN
SUBJECT: WEST BENGAL'S LAND BATTLE HIGHLIGHTS CHALLENGES OF 
TRANSITION FROM AGRICULTURE TO INDUSTRY 
 
REF: A) CALCUTTA 00011, B) 06 CALCUTTA 00578 
 
¶1.  (SBU) Summary:  During the past six months, the Government 
of West Bengal (GOWB) and Tata Motors have found themselves 
embroiled in a political battle over acquisition of agricultural 
land in Singur district.  The controversy has been fueled by a 
lack of transparency in the land acquisition process, political 
opportunism, and by substantial segments of the agriculture 
dependent population in Singur that were left out of the 
government compensation scheme.  The compensation package 
divided Singur's agriculture sector into clear winners and 
losers.  Construction of the car plant is going forward amid 
protests, and the political opposition has now shifted the 
battle over land acquisition to other locations in West Bengal, 
including another rural district of Nandigram. 
 
¶2.  (SBU) Land acquisition has taken on broader implications as 
India's major political parties weigh-in on the issue. In a 
recent event sponsored by the Federation of Indian Chambers of 
Commerce and Industry (FICCI) in Kolkata, party leaders appeared 
to present similar views on land policy.  A national consensus, 
however, remains elusive.  Until compensation packages take into 
account all those who stand to lose out on the shift from 
agriculture to industry, the GOI will find it extremely 
difficult to avoid violent incidents during future land 
acquisition projects.  Such a task may further prove impossible 
unless significant changes address corruption and a lack of 
transparency in the land acquisition process.  End Summary. 
 
------------------ 
The Legal Process 
------------------ 
¶3.  (U) In Singur, the West Bengal Industrial Development 
Corporation (WBIDC) acquired 997.11 acres of land needed for the 
Tata Motors car factory project.  WBIDC acquired the land under 
the Land Acquisition Act, drafted by the British in 1894.  The 
Tata motors site spans five precincts - Gopalnagar, Beraberi, 
Khaserbheri, Bajemelia and Singherbheri - with each precinct 
giving up between 10 and 78 percent of its land to accommodate 
the factory.  WBIDC claimed to have followed the proper legal 
process for land acquisition:  issue of the land acquisition 
notice, declaration of award (compensation) and payment of 
compensation.  In Singur, WBIDC provided notice of land 
acquisition on July 20, 2006, declared compensation on September 
23, 2006 and started payment immediately thereafter. 
 
¶4.  (U) Under the Indian Land Acquisition Act, the government 
land administrator (called the Collector) does not have to 
obtain the individual consent of landowners in order to acquire 
their land.  Landowners can object to the acquisition by filing 
an objection within 30 days of the notice.  The government is 
mandated by the law to hear these objections, although it has 
the final decision on the acquisition.  Alternatively, the ACT 
contains a provision whereby landowners can agree in writing to 
the compensation offered.  The consent to award is an indicator 
of the citizen's involvement in the compensation process. 
However, withholding consent does not prevent the Collector from 
declaring the award and acquiring the land. So far, the WBIDC 
has received consent for compensation of 958.84 acres. 
 
¶5.  (U) After announcing the compensation package in September, 
the Collector took over the entire 997.11 acre in Singur on 
October 4, 2006 and handed it over to the WBIDC.  A 
redesignation of the land usage from agriculture to industry was 
completed on November 6, 2006 in accordance with West Bengal 
law.  On December 27, 2006, WBIDC gave Tata Motors "permissive 
possession" of the land, allowing the company to carry out soil 
testing and a topographical survey. 
 
------------------------------------------ 
The Compensation Package - Winners and Losers 
------------------------------------------ 
 
¶6.  (U) The compensation offered in Singur had four components: 
1) a basic price; 2) a premium of 30 percent over basic price; 
3) interest at the rate of 12 percent for the period between the 
date of notification and the date of award declaration; and 4) 
crop compensation as assessed by the Collector.  In addition, 10 
percent of the basic land price was paid to those who submitted 
their consent letter within the stipulated time frame.  There 
were two types of award based on the type of land given over: 
one for single-crop land (USD $19,500 per acre) and the other 
for multi-crop land (USD $28,000 per acre).  The GOWB will end 
up paying approximately USD $27 million as compensation to 
Singur landowners.  It has already disbursed USD $18 million to 
 
KOLKATA 00000041  002 OF 003 
 
 
9,839 people and this accounts for 658 acres (out of a total 
997.11 acres).  Compensation remains to be paid to 2,400 more 
landowners.  Contacts told post that while this may not be the 
most generous compensation package, it compares favorably to 
what other Indian states are offering to acquire agricultural 
land. 
 
¶7.  (U) Those that accepted the compensation package fall into 
three broad categories:  1) land owners (who are most often 
absentee), 2) registered bargadars (sharecroppers), and 3) 
landowners who stood to lose only part of their land.  Those who 
opposed the GOWB scheme were principally unregistered 
sharecroppers, landowners who stood to lose their entire tract 
of land and therefore their livelihood, and daily-wage laborers 
such as rickshaw pullers, mechanics, and plumbers who provided 
services to the bargadars.  (Note:  Many of the unregistered 
sharecroppers have valid claim to parcels of land, but the W. 
Bengal State Land Reforms Department has been painfully slow in 
registering their titles.  End Note.)  These opponents of the 
land acquisition were courted by opposition politicians. 
 
--------------------------- 
Taking the Battle Elsewhere 
--------------------------- 
 
¶8.  (U) Trinamul Congress chief Mamata Banerjee, recently 
recovered from her 25-day hunger strike in December (Reftel B), 
is now agitating for Singur's "losers" in other parts of W. 
Bengal.  Rallying her supporters at Nandigram, where violence 
erupted last month over another GOWB proposal for land 
acquisition (Reftels), Banerjee promised continued action 
against the GOWB's efforts to obtain land for industry projects. 
 Opponents of land acquisition have torn up roads in the 
Nandigram area and fought small battles with CPM party loyalists 
- resulting in 2 deaths.   In response, the GOWB has emphasized 
that all stakeholders will be taken into account before any 
project goes forward. 
 
--------------------------- 
National Politicians Speak 
--------------------------- 
 
¶9.  (U) On January 13, the Federation of Indian Chambers of 
Commerce and Industry (FICCI) organized a panel discussion in 
Kolkata entitled, "India in the Emerging Global Order: 
Opportunities and Pitfalls."  The discussion centered mainly on 
land acquisition and offered intriguing perspectives from the 
India's major political parties, the Congress, BJP, and CPM. 
 
¶10.  (U) GOWB Finance Minister Asim Dasgupta outlined the CPM 
position on land acquisition policy as follows:  If the land is 
single crop or government owned, land acquisition is not a 
problem.  The land at Singur, however, is multi-crop fertile 
land.  The GOWB paid land owners the market price of the land 
plus a 30% markup, he said.  Sharecroppers were paid 25% of the 
market price of the land.  (Note: When asked how land 
acquisition would affect Special Economic Zone (SEZ) policy, 
Dasgupta indicated that a comprehensive land plan is forthcoming 
that will delineate SEZs in the following manner:  50% of the 
SEZ land should be used for processes, 25% for process-related 
uses, and 25% for other uses, such as housing.  End Note.) 
 
¶11.  (U) BJP national spokesperson Prakash Javadekar, 
rhetorically asking the W. Bengal Chief Minister to "come to 
Delhi and say the same thing [as Dasgupta]," argued that the BJP 
policy would shape up along similar lines.  Fallow or waste land 
would be permitted for land acquisition, but multi-use or 
multi-crop land would be prohibited.  Compensation, however, 
centered on the unanswered question for BJP leaders about what 
constituted "adequate" compensation.  Javadekar, arguing that 
depriving a landowner of his land was an action that "none of us 
here would easily accept if it was our home," stated that 
adequate compensation meant at least 300% of market value.  He 
also indicated that the land losers had to be made stakeholders 
in the industrialization process, but did not clarify on how 
this could be achieved. 
 
¶12.  (U) Representing the Congress party view, Congress Party 
National Spokesperson Dr. Abhishek Singhvi argued that the CPM 
position was perfectly acceptable, if only the CPM itself 
consistently applied its policy.  Saying that the CPM continues 
to play politics with the land issue, Singhvi accused the CPM of 
supporting different land acquisition policies in different 
states, and suggested that the CPM come up with a consistent, 
 
KOLKATA 00000041  003 OF 003 
 
 
national paradigm for land acquisition.  Singhvi's explanation 
of the Congress approach, perhaps reflecting his legal training, 
was methodical.  First, no fertile land should be acquired.  If 
that proved impossible, then the government should "minimally 
acquire" land through consensual, voluntary purchases from 
willing landowners.  Market price should be the purchase price, 
but applied in a humane, logical manner. 
 
---------------------------------- 
Comment - India Not Poised On Land 
---------------------------------- 
 
¶13.  (U) Surprisingly, at the FICCI discussion there seemed to 
be a great amount of agreement across party lines on land 
policy.  So much so, in fact, that more than a few audience 
members angrily asked the panel why everyone couldn't seem to 
agree in New Delhi if they were all agreeing now.  Yet, the 
controversy over land acquisition in West Bengal does highlight 
at least two fundamental challenges for West Bengal and the rest 
of India on land issues that are certain to arise in the future. 
 
¶14.  (SBU) First, who should be included in compensation schemes 
for land, and what is the best way to rehabilitate the 
individual sharecropper, landowner, and related service 
providers who have lost their livelihoods?  As shown in Singur, 
legal title and registration of land ownership does not exist 
for a significant segment of the population working in the 
agricultural sector in India.  These people are entirely cut out 
of the potential benefits of land purchases and will receive no 
compensation, nor will they fall within potential rehabilitation 
schemes.  These "losers" of the land game inevitably will be 
courted by opposition politicians seeking an increased vote 
bank, and who have the capacity to organize resistance to 
industrialization.  In addition, it is far from certain that any 
government scheme could actually retrain or re-equip this sector 
with the skills needed to retain their livelihoods.  As a 
result, state governments will face resistance and violence as 
land acquisition occurs. 
 
¶15.  (SBU) The second challenge is the need to improve and 
manage public perception of corruption and transparency in the 
land acquisition process.  Due to the ease with which 
information (and rumors) spread, it is incumbent upon 
governments to provide easily accessible information early in 
the process.  One of the GOWB's mistakes at Singur was trying to 
fast-track the sale of land behind closed doors.  It is telling 
that the public's awareness and outcry over Singur only arose 
after deals for more than 900 acres of the land were already 
completed.  As well, there was little accurate data available. 
Poloff had to ask numerous GOWB officials for hard numbers and 
specifics about the GOWB acquisition of land at Singur - and 
even then the "facts" provided were often inconsistent.  One 
chief complaint by the Opposition was that no actual map showing 
land ownership and purchases in Singur was ever provided by the 
GOWB, for example.  As a result, distortions and speculation 
about the compensation packages fed into anti-Singur sentiment. 
 
¶16.  (SBU) Last month's violence at Nandigram typified the poor 
information flow, even within the same political party (Reftel 
A).  In that case, the lack of coordination between CPM leaders 
at the state level and their party loyalists at the village 
level, led to local party strongmen stoking and encouraging 
violence against land acquisition opponents in a bid to preempt 
another Singur.  Without increased control over the policy and 
message at the top, the tendency of local political strongmen to 
vigorously enforce party dictates will probably remain 
undiminished and violence will increase as political opponents 
take advantage of underlying resentment against land acquisition. 
 
¶17.  (SBU) In the big picture, Indian policymakers must figure 
out what to do about the losers from India's shift from 
agriculture to industry.  These will come from India's enormous 
lower class of more than 600,000 million people.  The most 
striking aspect of the FICCI debate was that all three 
panelists, who had vowed to avoid politics at the outset of the 
discussion, fell back on the excuse of the difficulty in 
building a consensus in New Delhi.  This may be seen as simply a 
demonstration of India's vibrant democracy.  However, the time 
required for consensus-building will likely result in a slowing 
of industrial and infrastructure development as already 
evidenced by the GOI's delay in implementing its new SEZ policy. 
JARDINE