Tata Motors has been awarded nearly Rs 766 crore as compensation for being forced to exit Singur in Bengal’s Hooghly district where it had invested over Rs 1,400 crore for setting up an automobile plant to roll out its ‘Nano’ cars.
An arbitral tribunal has also asked West Bengal Industrial Development Corporation (WBIDC) to pay Tata Motors an annual interest of 11 per cent from September 2016, as well as Rs 1 crore as cost of proceedings.
The total amount that the WBIDC owes to Tata Motors right now is a whopping Rs 1,589.88 crore (the compensation + interest at compounded rates) or Rs 1,355.43 crore (compensation + interest at simple rate). This will go up if the WBIDC delays payment.
But the award of this compensation is not really a gain for Tata Motors. In fact, Singur personifies a loss for all — Tata Motors, the state government, Bengal, and the people of Singur whose farmlands were taken for setting up the plant.
Tata Motors, while exiting Singur on 3 October 2008, said it had invested Rs 1,400 crore in Singur. That amount, at an annual interest rate of a very moderate 6 per cent (compounded annually) would stand at Rs 3,355 crore today.
Tata Motors had to shift the plant to Sanand in Gujarat. That incurred huge costs and the automobile major had to make additional investments there to set up the Nano plant. The compensation awarded by the arbitral tribunal does not cover even half the total loss suffered by Tata Motors.
A cash-strapped Bengal, whose accumulated debt is estimated to reach an astronomical Rs 647,825.52 crore by the end of this financial year (March 2024), will face a huge financial blow when it pays out the compensation to Tata Motors.
The exit of Tata Motors from Singur has dealt a permanent blow to Bengal’s reputation as an investment destination. Bengal has, since 2008, been given a wide berth by major investors and has not been able to secure any big-ticket investment since then.
The forced exit of Tata Motors has become a permanent black mark for Bengal and has often been cited as the primary reason for Bengal being an investment-unfriendly state.
Had the Tata Motors plant come up at Singur as planned, it would have attracted not only a huge number of ancillary industries, but also other automobile manufacturers and the entire Howrah-Hooghly belt would have become a thriving industrial hub by now.
The state’s economy would have received a boost and instead of being in debt, Bengal could well have become a revenue surplus state.
Right now, Bengal’s sole solace is that it has a vibrant micro, small and medium enterprises (MSMEs) sector. But that sector yields little revenue, and most units in that sector earn subsistence incomes. That’s because even roadside tea stalls and shops selling fritters are enlisted as MSME units in Bengal.
But the biggest losers are the farmers of Singur who gave up their lands for the Tata Motors project willingly or unwillingly.
A total of 13,200 farmers — landowners and sharecroppers — were affected by the acquisition of 996 acres of land for the Tata Motors project. Of them, 11,000 gave up their lands willingly and received compensation.
Only 2,200 farmers and sharecroppers objected to what was forcible acquisition of their land by the then Left Front government.
Mamata Banerjee, then in the Opposition, launched a sustained movement for returning the 996 acres of land to the land-losers, both willing and unwilling.
Banerjee rode to power in 2011 on the anti-land acquisition wave that was buoyed by acute anti-incumbency against the Left Front that had (mis)ruled Bengal for 34 long years.
At her first cabinet meeting, she passed a law to return the land to the farmers. In 2016, the Supreme Court struck down the acquisition of land for the Tata Motors plant as ‘illegal’ and ruled that the land should be returned to the landowners.
All the 996 acres have since been returned to their original owners. But the farmers cannot do anything with the land.
That’s because very little of the 996 acres is suitable for farming now. Almost 80 per cent of the land had been covered by industrial sheds, buildings and roads. The remaining had also been developed for the plant.
Land on which buildings have been constructed or roads built is no longer suitable for agriculture. To make such land suitable for farming requires huge investment of at least Rs 15 lakh to Rs 18 lakh an acre (read this).
Dismantling the buildings, removing all concrete and debris and digging the land to uproot the foundations, clearing every concrete particle and stone, and then laying a thick layer of fertile soil on that land is a time-consuming and expensive process that the farmers of Singur could ill-afford.
And thus, Singur is today an industrial graveyard where hundreds of acres of land lie fallow, overgrown with shrubs and trees. Most farmers and sharecroppers there have become migrant labourers, and the remaining ones survive of meagre government handouts.
How Banerjee Torpedoed An Amicable And Fair Settlement
Singur could have been a win-win for all had the then governor Gopalkrishna Gandhi’s formula to offer hefty compensation to farmers been accepted by Banerjee.
Gandhi had got then chief minister Buddhadeb Bhattacharya on board. His formula — hiking the compensation for land-losers to much higher than market rates, offering vocational training to families of the land-losers, guaranteeing livelihood opportunities at the Tata Motors plant and elsewhere to them, provision of lifelong family pensions to the families etc — was a win-win for everyone.
But Banerjee, who remained adamant on her demand to return all the land to the farmers, rejected the deal. Her intransigence led to Tata Motors exiting Singur very inauspiciously (for Bengal) just before the Durga Puja in October 2008.
Banerjee claimed victory, but it was a pyrrhic one for Bengal and its people, especially the land-losers of Singur.
The farmers of Singur are today saddled with land they cannot cultivate, nor can they sell their plots to anyone because there are no takers for that land — Singur is a ‘no-go zone’ for industrialists and investors.
Thus, the only one who gained from the Singur imbroglio was Banerjee and her Trinamool Congress.
State’s Appeal Against Tribunal Order May Not Stand
Though state Finance Minister Chandrima Bhattacharya said that the state government will appeal against the tribunal’s order, the chances of the appeal being turned down are high.
The state’s contention is that the Supreme Court had ruled that the land acquisition in Singur was illegal. “If the Supreme Court has issued that ruling, how can compensation be paid to an entity that was in occupation of the illegally acquired land?” reasoned the minister.
But the lease deed between Tata Motors and WBIDC may scupper the state’s appeal. Section V of the deed signed in March 2007 expressly states: “If a court or any other authority holds/declares that the land acquisition has not been in accordance with the provisions of law or gives any adverse order which prevents the development/use if the said land by the lessee, then the lessor (WBIDC) shall indemnify and compensate the lessee (Tata Motors) for any losses as may be suffered”.
This clause in the deed will be used to challenge the state’s appeal. And going by past rulings, say legal experts, deeds where a government entity is a signatory are sacrosanct.
Thus, not only has Bengal and its people suffered from the exit of Tata Motors from Singur, the state exchequer is set to suffer another huge blow.
Also read: Singur Verdict: No Real Cause For Cheer
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