Tuesday, December 23, 2008

Tatas and Singur: who will pick up the tabs?

The Tatas have exited from Singur and made a soft landing in Gujarat. Between Sanand and Pantnagar in Uttaranchal, Tata Motors will be able to roll out the Nano car even if somewhat behind schedule. So the Tatas are taken care of. What happens to Singur and the state of West Bengal? D Bandyopadhyay dissects the issue in an article in EPW. He makes several important points:

  • The government of West Bengal can acquire land for a private company only through a procedure laid down in the Land Acquisition Act. It perpetrated a fraud by acquiring 1000 acres of land through WBIDC ostensibly for public purpose and then leasing out 643 acres to Tata Motors.
  • Now that the "public purpose" for which land was acquired will not materialise (since Tata Motors has exited), the expenditure on the project incurred by the government has gone waste.
  • The author makes an estimate of the cost on various counts: land acquisition, cost of construction of 18.75 km boundary wall, provision of police protection for two years, cost of subsidised land transferred from government agencies. The cost adds up to Rs 532 crore. He says this cost should be recovered from Tatas after the CAG has carried out a more careful estimate.
  • The leases given to TML and ancillary units should be cancelled. About 400-450 acres of land should kept for the development of an automobile factory for which a global tender for expression of interest should be floated. The rest of the land acquired must be returned to those from whom it was acquired or to the local Panchayat.
None of these nuances have been captured in the mainstream media. There is only scorn for the West Bengal government and Mamata Banerjee and a sense of triumph at Tatas managing to find an alternative site in Gujarat.

1 comment:

Krishnan said...

Toyota had just about finished a automobile plant in Mississippi, recently they decided NOT to start production. The state/city had "invested" millions of dollars to attract Toyota (like so many other states, like Alabama, Kentucky, Ohio). Mississippi had bad luck, the others have plants humming in their backyard. The taxpayers of these states ultimately land up paying the tab for "attracting" jobs - often at several hundred thousand dollars per job. If the plants keep producing cars and remain profitable, the state makes money (directly AND indirectly) - taxes on income, collateral income from suppliers etc etc ...

I can imagine the TATAs got a sweet deal that no other state was willing to offer - when it soured, they walked away. If there was a contract to build and can be enforced in court, I suppose the politicians will take that route. But I imagine that will not happen.

If on the other hand, the TATAs had built the plant (and the economy did not sour) AND the state/people made money, I cannot imagine anyone complaining.

Stuff happens. No risk, no reward (as someone once said). Someone took a risk expecting HUGE rewards, it just did not happen. I am sure someone will be blamed, question is who will or who will take the fall.