Friday, August 22, 2008

Singur: Where Do I stand?

Ratan Tata today expressed his dismay in Kolkata on the ongoing violence and agitation in Singur, the village outside Calcutta where Tata Motors is building a factory to make world's cheapest car - Nano. It is a big decision for Tata Motors, and I am sure they will consider all aspects and pull out only if the project is completely unworkable. This is a big moment for West Bengal too - the state of India I come from - as a pull-out will land a significant blow on the state's future prospects of inviting investment and development. It is a moment to decide, which side one's in, even if someone is as distant as I am. However, it isn't easy to take sides, considering the issues and personalities involved, and this is why so many Bengalis worldwide are in a state of confusion over this issue.

Let me explain. At about $2500, Tata Nano cars are bound to change the urban middle class of India - their consumption pattern, the way they shop and ultimately they think about their life. It was an interesting decision from Tata Motors to build this factory in West Bengal in the first place. West Bengal isn't known for its friendliness to industries, due to its leftist government who have actively sponsored industrial action and scared away most of the industries from the state in the past. But Tata's decision, partially facilitated by his excellent relationship with the state's Chief Minister, was an important step - a signal that West Bengal's industrial isolation was finally over, and spawned a new sense of optimism about the state and its prospects.

It is sad that it has to come to this. The state Government made a series of mistakes in implementing the deal. Out of their desperation to get Tatas to invest, they spread out a deal incredibly sweet - 900 acres of prime land near Calcutta [and on the main transport links] at a throwaway price. However, while part of this understandable and goes on to show the relative positions on the negotiation table [every state in India wanted the Tatas and this high profile factory; it was the prize project that could change West Bengal's perception as an industry friendly state], the government made a series of mistakes in communicating the details of the deal, underestimating the potential problems in acquiring land and the reaction of the media. All the Chief Minister, Budhdhadev Bhattacharya, the prime architect of the deal was concerned about was some prime time minutes for himself, projecting him as the turnaround artist for West Bengal, with the likes of Ramkrishna Hegde of Karnataka, among others. The way the communication exercise was handled goes on to show how complacent and inefficient the party in Government has become after thirty years of rule - they lost touch with people and their sense of accountability altogether.

Apart from the naivety of the Government, the other problem arose when the opposition leader, Ms Mamta Banerjee, a rable rousing loser, chose to make this deal an issue and wanted to fight for 'farmers' rights'. Ms Banerjee has proved herself to be an opportunist of the worst kind - she went in to launch a statewide agitation against this factory in Singur. Soon, the project was no longer the central issue at all - it became a referendum against the left rule and surely there are lots of people in the state who would love to see this government go. However, what Ms Banerjee did not realize, or did not want to realize, is that she was playing with fire - subverting this project will reinforce the industry-wary image of West Bengal and permanently damage its future. She did not care, precisely because she believed that she can not win an election anyway - all she wanted is some prime time minutes for herself and spoil Budhdhdev's party.

So, the state of West Bengal was caught between a Prime Time hungry Chief Minister and Prime Time hungry opposition leader. So were the Tatas, because the resulting violence and disorder is now threatening their project and will potentially delay the launch of the car. This car has now got world's attention - I have seen all big-name publications covering the news of the '$2500 car' - and such delay will be a huge embarrassment and cause competitive disadvantage, because many other companies have a budget car in their works.

It will indeed be very harmful for the state if Tatas have to pull out now. Mamta Banerjee's grasp over economic issues were always a suspect, but her comment that the Government should go ahead and allocate the 600 acres of land earmarked for the Tata factory, but return the other, 300 acres or so, earmarked for ancillary units, to the farmers, leaves me clueless. Does she think that ancillary units are not needed? Or does she think the job creation will happen in the main factory, and ancillary units have no impact on local jobs? And, who does she think will own and run the ancillary units? Tatas will have a choice of the states, but the ancillary units are owned by local entrepreneurs, who face potential ruin after investing in the units for last year or so. This will have a long term impact on the local economy, more harmful than just the loss of investor confidence and will result in real ruination of real lives, and I am sure Ms Banerjee does not care about this at all.

So, I am on state government's side, wants the Tata factory to happen, right? Only partially, in the fact that I want the Tata factory to happen. It is too big a cost for the state to back-paddle. But the State Government has messed up big time, and will only be saved by Mamta's foolishness. The true issues with this deal are not whether the factory should stay. The true issues are whether this is the right model of development - will such big name factories solve the state's employment problem? Hardly. The state government is as much biased against small industry as Mamta Banerjee. Their model of development is completely off the mark - in fact, they don't have any model except some cheap mimicry of the other pioneering Indian state chief ministers. They lack the vision and the perspective, and an intent to secure the future. As enterprise isn't something they care for, so is environment. Millions of small cars on the street and heavy industry around the city suburbs will not be a model of development in near future. Cities will have to compete with their environment and energy efficacy. Left parties voted against the nuclear deal recently shows us how much they remain tied to the past; their big industry model of development exemplifies how they continue to suffer from their failure of imagination.

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