INDIA: India Grapples With How to Convert Its Farmland Into Factories

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

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.

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