Agrarian Distress and Land Acquisition

The recent agitation by farmers in Uttar Pradesh against cropland acquisition for non-agricultural purposes is only the latest in a long series of protests by farmers and rural communities, which started a decade ago in different parts of the country and which gathered momentum over the past five years and coalesced in some areas into larger movements.

The issues involved are many-dimensional and complex, raising questions that require all-round analysis to arrive at answers.  Why are there such bitter protests against cropland acquisition now, whereas in the early decades after Independence such acquisition for development projects faced little opposition?  Is the protest related to the nature of the use to which acquired land is being put?  What is the impact on agricultural production?  How do displaced farmers and labourers fare once they lose their land?  Is displacement to be regarded as a necessary cost of development as many argue, citing the historical experience of today’s advanced countries, which saw massive eviction of peasants preceding their industrialisation?  Or, is the situation in India too different to warrant such superficial analogies?

Let us begin with the bigger question, the particular view which says that historically capitalist industrialisation has meant reduction in the proportion of peasants and rural workers in the population and that this process always involved forcible evictions, a process of ‘primitive accumulation’, apart from displacement through market processes.  Though such evictions and displacement caused immediate distress, eventually the landless labour force so created was absorbed into productive employment, mainly in the growing manufacturing and services sectors, or so the argument goes.  So there is nothing very surprising about ‘primitive accumulation’ taking place under capitalism and it is all to the future good.  The official view today is that it is just as well if people move out of low-productivity rural occupations into other better paying jobs.

The view sketched above, which conflates the history of capitalism with present events, is deeply flawed for two reasons.  First, historically, in the core capitalist countries many millions more were displaced than were ever absorbed in non-agricultural activities within the boundaries of these countries.  Only large-scale out-migration prevented revolutionary political turmoil.  But those being displaced today in this country owing to land acquisition find that they have nowhere to go, unlike the historically displaced who had emigrated in vast numbers to lands they had seized from indigenous peoples in the Americas, South Africa and Australia.

Second, the core capitalist countries saw manufacturing employment growing at double the rate permitted by the growth of their domestic markets because they could dump their products on captive colonial markets, which were kept completely open while the core markets were protected heavily.  But our displaced peasants find that ‘other jobs’ are hardly growing, particularly in this era of neoliberal cutbacks in public spending actuated by the hegemonic rise of the long-discredited theories of finance capital, which advocate balanced budgets no matter how high involuntary unemployment might be.

As regards the first point, permanent outmigration as a solution to labour displacement from agriculture, consider Britain, the first industrial nation.  Small farmers evicted in the course of enclosures and artisans thrown out of jobs as machinery was first introduced became vagrants of whom only a fraction found employment in the growing factory sector.  Even though the machines two centuries ago were very simple, they displaced labour on a massive scale — a single spinning ‘jenny’ could have 80 spindles, needed only one worker to operate and threw 79 traditional spinners in Europe out of work.  The effects of a much higher level of technology and of automation today in this country is to produce jobless growth, indeed many sectors see job-loss growth.

In Britain the unemployed and the poorly paid employed workers alike rose in insurrection against the state in the 1840s — only the safety valve of emigration prevented a revolution.  Britain’s population was small, only 12 million in 1821, but 16 million Britons emigrated between 1821 and 1915, making up for nearly two-fifths of all Europeans who emigrated to lands they had seized from indigenous peoples, mainly in the Americas.  On average, half of the entire annual increment to its population left Britain every year for a century.  For India to be able to export its displaced peasants and unemployed on a similar scale, 10 million unskilled persons will have to emigrate permanently each year.  Needless to say, even one-tenth of this is an impossibility.  Unlike the populations of European colonising countries, which grabbed global land resources on an unprecedented scale, displaced peasants and workers in developing countries today have nowhere to go.

Further, to think complacently that displaced peasants will automatically find livelihoods elsewhere within the economy is a chimera.  As the rich grow richer in India, we find that commercial and residential construction and tourism are the only labour-absorbing activities that are booming and that elsewhere the employment scenario is dismal.  This dismal situation is the result of a combination of expenditure-contracting fiscal policies in the neoliberal era and technological change.

In the first four decades after Independence, however, growth was spurred by large-scale public spending under the Plans and was much more socially broad based.  The state followed expansionary fiscal policies, spending a great deal on rural development projects and on building up a manufacturing base in the public sector.  The data from the National Sample Survey show that employment was growing much faster than the population participating in work.  Even in manufacturing, a 10 per cent rise in output produced a 3 per cent rise in numbers employed at that time, whereas the latter figure is near-zero now.  This is the main reason — the availability of alternative employment — which explains, in my view, why land acquisition for development did not face the bitter resistance it does today.

This is not to say that there were no problems — there was distress, in particular where the displaced were tribal persons and rehabilitation was not worked out.  But those whose land was acquired could, on the whole, be absorbed into other jobs, mainly as wage-paid labour.  Work in the organised sector and the public sector was much prized — doctoral research this author supervised in the 1980s (carried out by Professor B.R. Shyamala Devi, now at Kakatiya University) showed that members of the Lambada tribal communities in Andhra Pradesh actually sold land to raise money to bribe middlemen to get gangmen’s jobs in the Railways because, according to them, they ensured living quarters, health facilities and education for their children and were preferred to an uncertain agricultural livelihood.

Since the start of economic reforms two decades ago the general job situation has become much worse.  Retrenchment of employees in the public utilities, computerisation and privatisation all contributed to job loss.  The Indian state cut back sharply on development spending, especially in rural areas, and the results are there to see from successive National Sample Survey studies — a sharp rise in daily and weekly status unemployment for male and female workers, both rural and urban, and a rise in the numbers of the usual status openly unemployed.  The net change in employment between 1993 and 2005 has been adverse.

In such a situation of disappearing job alternatives, the rural producer with a bit of land will naturally cling to it and resist any attempt at dispossession.  That bit of land is security against unemployment and destitution.  No matter if the neoliberal attack on agriculture, combined with exposure to global price volatility, has caused acute agrarian distress and made farming so unviable, especially in the case of many export crops, that lakhs of farmers have been driven to suicide owing to indebtedness.  Suicide is a passive form of protest.

But the farmers’ lack of viability was not because they did not work hard or because their land suddenly became less fertile; it was the result of totally misguided neoliberal policies, which reduced public investment drastically, withdrew extension services, made credit expensive or not available at all, and exposed small producers to the violent ups and downs of global prices by doing away with protection while dismantling at the same time price-stabilisation systems (purchase at support prices by the commodity boards was abolished).  One wishes that the policymakers, who have been attacking farmer and worker livelihoods, could themselves face 80 per cent salary cuts to get a small taste of what they have inflicted.

It is highly significant that farmers and rural communities are struggling against land acquisition because it means that from passive forms of protest — suicide — they have turned at last to active forms of resistance.  A decade ago, this author, when drawing attention to the agrarian crisis long brewing in the countryside, was told that if things were actually that bad then peasants themselves would be protesting, which they were not.  No one can put forward such an argument for ignoring agrarian distress now.  Peasants are slow to move, but when they do start moving no force can hold them back.

We have to understand that land has a special characteristic in that it is not a product of human labour.  Though it is the cradle of all human activity, the extent of land cannot be increased beyond a point, once the limits of reclamation have been reached, while further deforestation would be highly detrimental.  In this sense, land is a primary resource that is fixed in supply.

As Karl Marx had put in striking terms, since it is not a product of human labour the ‘price of land is an irrational category’.  What was meant by this is that commodities, which are all the product of labour, have prices anchored to values, namely, the amount of direct and indirect labour used for making the commodity.  Land price, however, is different since land cannot be produced.  The price of land is based on the market capitalisation of the income the land will yield.  And the income the land will yield can vary enormously, depending on the specific use to which it is put.  This is an important reason for the discontent that land acquisition has unleashed among farmers even when, initially, some of them may have acquiesced in it.

To understand this let us consider a simple example.  The price of a kilogram of rice of a given quality cannot possibly vary from Rs.20 to Rs.2,000.  But the price of a given hectare of land can vary from Rs.2 lakh to Rs.2 crore, depending on the purpose for which it is used.  If a farmer tills a hectare of land, which produces crops from which he gets an annual net income of Rs.10,000, he will find it apparently lucrative to be offered a price of Rs.2 lakh for it if the going market rate of interest is above 5 per cent.  Once he has sold it to a developer, however, he finds that the land is parcelled out in small lots to a hundred urban buyers for residential or commercial purposes and the developer thereby makes an income of Rs.2 crore, a hundred times higher.  The farmer then feels thoroughly cheated out of a resource whose value, he feels, he did not know when induced to part with it for what now appears to be a mere pittance.

Since habits of investing money and living on interest are unknown to rural producers, and the state, though it takes their asset with alacrity, does not manage their cash compensation for them, the Rs.2 lakh becomes indeed a pittance, which soon disappears once a two-wheeler and a television set have been bought and living expenses met, leaving the farmer without any productive asset or source of income.

Our farmers have at last become alive to the trickery being perpetrated through the market.  They are infuriated at the idea of their precious land being taken away forcibly for a pittance in the name of development, especially when most of such ‘development’ does not create industry or provide jobs for them.  Special economic zones (SEZs) and most smaller-scale land-acquisition projects involve nothing but land speculation for commercial and residential building, affordable only by the corporate sector or the rich minority of households.

Farmers see the ‘developers’ and the corporates making profits running into several hundred times the price at which they had sold the land.  Even worse is the complicity of the state whenever it uses its power to acquire land to hand over to the corporate sector, often with a subsidy element to the latter, and beyond making vague promises takes no steps to ensure that the livelihoods of the displaced are safeguarded.  Worst of all is acquisition of good cropland to facilitate the setting up of ports so that foreign companies can export mineral resources, as in the Korean POSCO case, for then two types of non-replaceable resources, minerals and cropland, are being looted.

The impact of indiscriminate cropland acquisition on agricultural production will be clearly adverse.  By the early 1990s, the total cropped area in the country had become stagnant.  In the following two decades, as public investment and development spending were cut back, the growth rate of crop production slowed down drastically, leading to falling per capita output of many crops, including the key crop, foodgrains.  Further diversion of area to non-agricultural uses will aggravate the supply problem.  It is the longer-run neglect of output which already underlies the current food-price inflation, which is high despite the substantial order of demand contraction that has been brought about at the same time through public spending being cut, inducing higher unemployment and demand deflation.

On the other hand, it is also true that some forms of labour-intensive industry requiring land have to be promoted.  There cannot be a permanent moratorium on land acquisition for non-agricultural purposes, nor do farmers themselves want every child of theirs to engage in farming alone.  The solution lies in creating land-banks in every state by identifying land not suitable for agricultural purposes and locating manufacturing enterprises on such land.

In cases, which should be rare, where some cropland acquisition is unavoidable, farmers have to be treated as cooperative partners in the proposed venture and be given directly a share in the enterprise concerned over and above the cash compensation for the loss of land rights.  Such arrangements are common in urban areas, where landowners feel benefited from allowing developers to build on their land since in return they get not only cash compensation but ownership of up to one third of the total built-up area, which appreciates in value over time.

The plan of the previous Left Democratic Front (LDF) government in Kerala with regard to the tribal Chengara agitators demanding land in a plantation area is worth mentioning.  Under a project named after the late K.R. Narayanan, land has been identified in Kasaragod to set up a cooperative residential-cum-activity complex in which houses for the families concerned will be constructed at state expense and alternative employment activities developed.  The cooperative element is crucial as it ensures that individual households cannot be pressured to part with their new assets and will maintain productive activities, leading to a flow of income.  It is to be hoped that the new United Democratic Front (UDF) government will carry the scheme forward.

There is no reason why the Kerala solution cannot be replicated elsewhere by being made a part of explicit policy.  The basic principle is that acquisition of productive farmland, which is a valuable asset, has to be avoided.  Where it is unavoidable, the owners, whether they have written titles or customary occupation rights, have to be given not just money but a share in the new assets either at the same site or elsewhere.

Utsa Patnaik is a Marxist economist in India.  This article was first published in Frontline 28.12 (4-17 June 2011); it is reproduced here for non-profit educational purposes.

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