The former chief economist at the World Bank expressed his views on government role in land acquisition after delivering a keynote address on Learning for a New Economy: Insights for the Developing World at the Indian Statistical Institute (ISI). The address was part of a three-day workshop on Economic Growth in West Bengal: Challenges and Priorities at the institute that has brought prominent economists from across the world to the Baranagar campus.
"Purchase of land becomes very difficult for those who want to acquire a large amount of land. There can be a problem of hold-up in such cases as someone may say that I will not sell my land," said Stiglitz.
According to him, Columbia University faced the same problem while acquiring land for expansion of its campus as some landowners wanted a huge amount of compensation.
"The government used the right of eminent domain and helped the university in the acquisition process," said Stiglitz, suggesting government role in land acquisition.
Using the eminent domain principle, governments can seize property with due monetary compensation even without the owner's consent. The Left Front government in Bengal had used this principle to acquire land in Singur for the Tata Nano factory.
After coming to power, Mamata Banerjee, who had led the Singur protest, advocated a hands-off land policy under which industry would have to buy land directly from the owners.
In his address that focused on broader issues in development strategy, Stiglitz explained that markets on their own cannot result in efficient outcomes and laid stress on the role of government.
However, at the inaugural session of the workshop, industries minister Partha Chatterjee iterated the Mamata government's stand. "Private entrepreneurs will have to acquire land themselves. We don't want to get involved in the process of land acquisition," Chatterjee said.
The hands-off land policy became the theme at a session on land acquisition for industry that followed the inaugural one.
Bhaskar Dutta, a professor of economics at the University of Warwick, said government role in land acquisition for industry would ensure a better deal for farmers. "A humane government can extract a better deal for farmers from an entrepreneur," said Dutta, who is also a columnist of The Telegraph.
Although he said that there could be an element of coercion if the state exercised the public purpose or eminent domain clause, he added that there was no justification in assuming that every instance of state intervention would lead to use of force.
He cited the example of the role played by the Kerala government during land acquisition for an airport near Kochi. According to him, a negotiation committee set up by the government managed to sweeten the deal for over 900 small farmers, who not only got cash compensation but also one job for each family and permits to run taxis from the airport.
"Bengal cannot afford to act on its own at a time there is a race among states to attract investment. If the government in Bengal is not facilitating land acquisition, but others are, why will industry come here?" he asked.
Some of the other speakers, including Partha Chatterjee of Centre for Studies in Social Sciences, Calcutta, and Columbia University, said the government would have to think of alternatives to find a solution to the problem of land for industry.
Trinamul MP Debabrata Bandyopadhyay and one of the architects of the government's hands-off land policy was the only government representative at the discussion. The other speakers included Sanjoy Chakravorty, Temple University, US; Parikshit Ghosh, Delhi School of Economics; and Dilip Mookherjee, Boston University, US.
Bandyopadhyay said industry should play "fair" in the market to scoop up land. He suggested that industry should steer clear of fertile land and focus on non-arable land in West Midnapore, Bankura, Purulia and parts of western Burdwan. "The problem is everyone wants to be near Calcutta.... All these places are well connected," he said.
FDI in retail: Mamata's opposition to FDI in retail found some support from Stiglitz but for different reasons. The Nobel laureate said he agreed that the retail sector needed investment, but not necessarily foreign investment. He also criticised WalMart for garnering comparative advantage through bad labour practices.