Thursday, January 18, 2007

Debate


In response to a post dated Jan 8, 2007, in naxalrevolution.blogspot.com, readers posted comments until Jan 14, which eventually took a shape of debate. This debate brought some important points, which in our view are quite relevant to the whole issue of ‘development’ and ‘industrialization’ in present Indian context. Therefore, after little editing, we are publishing 2 most relevant comments. We would like to request you to go through the original post and the article in Frontline, which is referred in one of the comments.

Comment 3

Please read this article published in Frontline magazine about the Tata SEZ in Singur and tell me how a common man supposed to believe that there is something wrong happening in Singur?

http://frontline.in/fl2325/stories/20061229002003300.htm

Comment 4
I have just read the article. Let me discuss major points. Before, I would like to point out that, TATA’s project in Singur would not be a SEZ.

  • "State government has declared the expansion of employment opportunities to be its prime objective for reform and industrialisation."
We have been listening for last couple of decades.


  • "The proposed plant is expected to generate employment for 2,000 people directly and 10,000 people indirectly."

Who confirmed the figure? Did anybody from TATA? These are all imaginary number. If anybody likes to guess the number of employment this proposed plat could generate, he has to look over the employment status of industries developed in last couple of years. You can consider TATA Metalics as an example. It acquired 200 acres of land. And now tell me how many people are working there? As far as I know, 18 permanent and approximately 190 contractual labours. The wages of contractual workers are used to be very low in West Bengal and all over the India. All sponge iron factory developed (in WB) in last couple of years are mostly running with contractual labours. The wages are approximately Rs 60 per day. And they have to work more than 8 hours a day.

Under the circumstance, it is difficult to believe that TATA will give 2000 people employment. It cannot be magic. It has to sale car at Rs 1 lakh and has to secure maximum profit. It is very easy to understand what would be the condition of workers there to ensure TATA’s maximum profit. They must be under tremendous exploitation. I simply don’t understand, how the supporters of TATA’s project in Singur can simply ignore this possibility and believe that it will result development.
What does ‘development’ mean? A car at 1 lakh?
  • "910.61 acres is mono-cropped and only 39.08 acres is under more than one crop. The rest of the land is non-agricultural."
These records were based on surveys dating back to 1990. During the last 15 years, in the proposed Tata Motors site, the peasants have got installed 35 shallow pumps, 28 of which with their own money. In addition, there are three deep-tube wells. The two rivulets, the Zulkia and the Kunti – flowing along the either sides provide a substantial irrigational facility. In the dry season these rivulets and the DVC (Damodar Valley Corporation’s dams) release irrigate the fields. How can such land be called single-cropped, barren or non-irrigated? (http://www.countercurrents.org/ind-kumar301206.htm)

  • "The compensation package for farmers is another bone of contention. The State government says that keeping in view similar compensation awarded under the Land Acquisition Act of 1894, it is generous……..
"In an article in the Bengali daily Ganashakti (December 6), he (Binoy Konar) furnished facts and figures to show that the compensation amount, if kept in fixed deposits in commercial banks, would earn for land-losers 10-15 times the earnings from their cultivation. Furthermore, he calculated that even if the entire project area was taken to be double-cropped, it could generate about 1.50 lakh of man-days of employment, that is, whole-time employment for 300 days in a year for 500 persons only. By contrast, the Tata Motors' unit, when completed, will provide jobs, directly or indirectly, to more than 10,000 people."


Fallacy of Biony Konar’s argument lies in his calculation. He simply ignored the rate of inflation. Where the annual rate of inflation is more than 5%, the annual interest (from bank) of 8% in reality means (8-5)% = 3% annual rate of interest. So Binoy Konar joked.

Consider the situation of aged people who run their livelihood with bank interest. It becomes more and more difficult for them. So they have to squeeze their need. The same will happen to those, who believed Binoy Konar.

Another important point is income from agriculture. Government implemented the instructions of WTO and opened the market to foreign producers. So the worst condition of agriculture is due to them. (We would like to include semi-feudal exploitation as well.--singur) When they signed GATT, they argued that it would make our life better. It didn’t happen. So now, they have started to sale the idea that agriculture is not profitable.

  • "Community development work in the region has also started in earnest. Programmes undertaken include increasing drinking water facilities, repairing school buildings, improving roads, re-excavating the Jhulka canal to improve irrigation potential in the adjoining areas and digging tubewells to improve the cropping intensity in the surrounding region. All this work is being executed with local labour comprising land-losers and landless workers. More than 2,000 man-days have been generated as of the first week of December. The task of fencing the area was also given to the local people, which generated more than 5,500 man-days."

It is ridiculous. Whatever ‘development’ is going on in Singur, is run by the government till now. What is the connection of TATA’s plant with this ‘developmen’t? Government can run this sort of ‘development’ anywhere in West Bengal or India. But, they don’t usually. Interestingly they do where TATA or other big companies will invest. It simply means that with the hard earn money of common Indian people, government will build infrastructure for TATA’s profit. At the end of the day, using this infrastructure, TATA will unleash tremendous exploitation over the workers, as happens in TATA Metalics or sponge iron factories.


  • "Another argument that is often heard is the so-called availability of land of closed mills and factories. Nirupam Sen clarified (see interview) why it was near-impossibile to use these lands - on account of the legal tangles arising from the Sick Industrial Companies (Special Provisions) Act, 1985, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the West Bengal Estates Acquisition Act, 1953, and so on. Not only are these vacant lands scattered as relatively small plots, but quite often they are subject to proceedings of the Board for Industrial and Financial Reconstruction (BIFR), which may take up to 15 years for completion. Even otherwise, commercial banks have a lien on these lands."

Why government doesn’t bother to change these Acts? Government is going to change the land-selling act for Salim Group and big companies. Then what prohibits them to change these acts?

We should forget about changing the Acts. Within the existing Acts there is provision to arrest so called ‘industrialists’ who are defaulters in employees’ provident fund. In West Bengal Rs 400 crore is pending in employees’ provident fund. Did anybody hear that government took any serious step against the defaulters?

Now tell me whose interest government serves?

4 comments:

Anonymous said...

first of all, i beg pardon for posting through anonymous account ( though i should not be, as this is not out of courtesy)... see, in the absence of counter argument any argument looses its credibility.... so, i hope this comment would be accepted and be allowed on this thread to have a healthy discussion this topic....
i couldn't get the rational thinking behind moderating posts on this forum.... are not you suppressing the voice of people this way.... as in, what is the surity that you would accept even those posts that are criticizing your logics very hard and you would take that sportingly .... just a thought

i don't consider myself an expert into the issues of financial economics ... but i found some gaps in the logics u had put forward and that is disturbing me...

1 you said govt ( be it central or state govt) is spending hard earned money of general mass to invest into infrastructure projects for the benefit of Business Houses....

I fully agree to what you have said.... but why did you stop suddenly in the middle ???? i guess you are well aware of the full cyclical economic process.... isnt the basics of economics teach us that in an economy govt's role is to keep eyes on growth, inflation, and employement though fiscal and monetory policy.... it acts as a facilitator whereby it helps proper resource allocation to keep a balance in the economy.... that the govt is investing money to woo the businesses sectors is completely acceptable, considering the fact that, by the cyclical nature of economics, the fruit of profit would shared among the stakeholders... and here the stakeholders would comprise of the workers, and owners of the businesses.... and mind it, by means of holding shares, huge number of common people are also the owners of any big businesses .... so if business shines, that inturn helps the people only.... isnt that the objective of a govt...

for your reference, china spends 9% of its GDP in infra related projects as compared to India's mere 4%... and in absolute value terms the spending in India is 7 times lesser than that of China....


I had a lot more things to say..... but i guess it would be more interesting if i get to know your view point on the same....

have a good time
cheers!!

singur said...

Dear friend,

I do agree that comments should not be moderated. There was a problem in the settings; I just corrected. I was unaware of it. I apologize.

First of all, thanks for your comment, as it would help to enrich the ongoing debate.

When you talk about the economic cycle, you actually talk about the ongoing mode of production. If you already decide that this ‘mode of production’ is something above the question, then we will have nothing to say, as we would like to question the character of the ‘mode of production’.

Whatever is being produced in the existing system is for sale; almost everything is commodity as the sole intention of the production is to make profit. Now, what is the essence of ‘profit’?

Consider a simple example. A person (capitalist) bought a bundle of jute by Rs 1 and hired a labour to make rope out of it. When the whole bundle of jute became a bundle of rope, he went to market and sold at Rs 2. Then he paid the labour Rs 0.1. Therefore he made the profit of Rs 0.9. Interestingly a bundle of jute of Rs 1 became a bundle of rope of Rs 2. How this value got changed? By labour. But the labour got only Rs 0.1 and the person got Rs 0.9 as profit. This Rs 0.9 is the Surplus Value.

You can argue in different ways to justify this appropriation of surplus value by capitalist. But, if Rs 0.1 were not sufficient to survive the family of labour then we should have right to question the existing mode of production.

When you say “the fruit of profit would shared among the stakeholders .. and here the stakeholders would comprise of the workers, and owners of the businesses” you actually hide the fact that profit is being centralized among the few although it is the fruit of so many labours.

Labours are working with a daily wage of Rs 60-70 in contractual basis and the MNCs and comprador capitalists make crores as profit. It is the reality (right now I don’t go through the semi-feudal relations not to make it complex).

If the profit were being distributed among the people then nobody wouldn’t starve. The theory, which you are proposing, is the theory of “trickle down”----the fruit of profit will trickle down the lowest level of the society. It actually denies the basis of the profit, which is nothing but the exploitation. With exploitation, a capitalist could shine, but in return it makes people more exploited. And that is what we see.

The government subsidizes the big companies---MNCs and comprador capitalists. But, it denies subsidizing poor people for food, education and health. What does it mean?

It simply shows that the government, in essence the ‘STATE’ has a class character.

You brought the example of China. Nowadays it is fashionable. But, it is the fact that workers in China under extensive exploitation. And the reason MNCs invest so much in China lies here. It secures their maximum profit. So the ‘Chinese model’ is very good for MNCs and comprador capitalists, but, not for the people.

To us ‘Development’ doesn’t mean shopping moll, but at least minimum calorie to every Indian.

Best regards.

Ranjit said...

thanks for changing the settings...

i would like to share my opinion this way - "Is Business House synonymous to Monster " ? to my mind it is not and i wld give my reasoning subsequently.

You are concerened about the "Mode of Production", wherein you argue that the sole interest of Business is to "Exploit" people. though i don't subscribe to this view fully, for the sake of exploring the merit or the absence of it in your Example i agree to that for the time being.
To make my point clearer, I would cite an example from my own experience. Once, while packing my goods for transfer of location I was in need of Packing Cartons and I planned to buy them from market. however, fortunately the sweeper new the trend that at that time of the year there is a need of this Cartons from many people around that place and supplied Cartons @ Rs 20 per Carton. after enquiring him i got to know it cost him Rs.7 per carton. So what in your opinion i should pay him for this ??? I am asking you because by charging Rs 20 for the same he would make a
profit of around 150% .

Well, let me share what I did. I paid him Rs 20. The rational being that the price of the same Cartons in the market is Rs. 20, and had i not bought the same from the sweeper I had to pay Rs 20 in any case, and over and above that i had to pay the travel cost to-from the market.

My point is one should not be concerned about how much "Profit" the other person is making out of efforts/contribution/product that I have sold to him/her. One's concern should be whether one is getting one's "opportunity price" or not. that the other person is getting huge profit is only because of his/her network, knowledge, and an willingness to provide value addition

Now, how is this opportunity price gets determined ? to me, it is the market force that helps to discover this in the process of dynamic demand-supply interplay. The way u are painting MNCs as some evil, I guess you are of the opinion that in the ideal situation there should not be any entity called Business Houses (or for that matter MNCs) and this would ensure that people are not exploited.
but, won't that create a vicious circle, wherein there wont be any facilitator that would marry the supply side with demand side. and it seems to me, and rightly so, if this happens there wont really be any big exploitation of people's earning as they won't have earning in the very first place. so, it's clear that Business is a very integral part of an economy to make it sustainable. and if the bone-of-contention is what if the people get less payment in the process that they can't even live their own life, then it is the regulatory authority ( and not the govt) that has to ensure the fair play of the game. however, thsi can be short term solution only, in the long term the regulator has to ensure that there are enough players in the market and their competitive behavior would determine "opportunity price" that people deserve.

coming to your second point on China, it is great to see that you have pointed that China is not a good place as far as the compensation of workers is concerned. in the same line you would argue that MNCs are coming down to India as they find cheap labor. now, should that be a concern to Indians a present ? I guess not, and I draw my argument from the example that i have already stated. look with an open eye and you would see what impact they have brought on the "opportunity price" of indian knowledge workers, be it in IT, BPO, Call Centre, Pharmaceutical, High-end research. It has gone many fold over the years as far as Indian standard goes (in terms of PPP). we should not be bothered about what benefit the Businesses are generating for themselves, as long as people are getting their fair share.

I agree when you say Trickle Down theory is not seen in its ideal form in economy, but so is true for any theory. my point is could you suggest some other mechanism that would give sustainable growth of a Nation (and a Nation is comprised of its people) ? and let me make it clear, i also subscribe to your view when you say that " ‘Development’ doesn’t mean shopping moll, but at least minimum calorie to every Indian. "

But the big question is how to bring that into reality ??? where would govt get resources in this effort ?? is it possible to move forward ignoring the business community that acts as a facilitator ??

Cheers!!

[trivia: i'm putting my name in this post :) ]

singur said...

Dear Ranjit,

Thanks for your comment.

Let me discuss the case of Cartons you mentioned.

I don’t know how the cartons were produced. It could be any of the three ways. I am going to consider all of them separately.

1.The cartons were made by the person who sold you. If it were the case, then he purchased raw materials at Rs 7 and with his own labour he made them and sold at Rs 20. In this case he got Rs (20-7) =Rs 13 as his wages. He didn’t appropriate anybody’s labour.
2. The cartons were made by hired labours and then the person sold you. If it were the case, then he purchased the raw materials, hired labours and made the cartons. He paid labours their wages and the spent Rs 7 total as the cost of raw materials and wages. In this case he appropriated other’s labour and made a profit of Rs 13.

3. The cartons were made by the person along with hired labours. In this case this person participated in the production but, not solely. It is a situation in between the two above-mentioned cases. Here he appropriated other’s labour although he put his own labour.

At this stage we must support small-scale production.

Now, this small-scale production and imperialist production (MNCs) are absolutely different. As I just mentioned, in most of the cases, the owner (of small-scale production) himself is involved in the production process in contrast to MNCs, where owner is almost alien to the production process. And although owner (of small-scale production) sometimes appropriates other’s labour, its magnitude is not that high as compared to the big companies (MNCs and comprador capitalists). Here I would like to request you not to mix up this small-scale production with other so-called small-scale productions, which are run in semi-feudal mode. We are not discussing them right now although they are very commonplace nowadays (apparently seems like case 2) and constitute the foundation of imperialist plunders.

You said that the ‘opportunity price’ would be determined by the demand and supply and market forces. According to you, it is important to ensure presence of enough players in the market.

In reality, the market has never been ‘free’. During the development of capitalism (~150 years before), the market was little bit free. Then capitalism entered the stage of imperialism whose one of the most important character is emergence of monopoly. At this stage, nowadays when in the market MNCs dominate, there is no scope to have a ‘fair play’ for the small producers. Small producers are marginalized by big companies---even common salt is being marketed by them. Just think how much you and your family are spending in each month for livelihood, which goes to MNCs and big companies; how much goes to small producers. From that we can have an idea how much they dominate. And they are aggressive too. Small-scale production is about to extinct by imperialist onslaught. There is no way other than demolishing imperialism to protect small-scale production.

You suggested a regulatory authority, apart from government. I don’t know what kind of regulations you thought; now we see governments are taking every possible steps to give advantages to the big companies.
You didn’t like when I described “Exploitation”. Just check the “Automotive mission plan 2006-16” by government of India (we discussed it recently in this blog). You suggest a better word to describe it; they like to have regulations where workers will work 11 hours a day, will be recruited on contractual basis and will have flexibility to close the plant.

You mentioned about IT, BPO etc. First of all, a little number of workers is working there compared to whole Indian population. So it cannot be the index of prosperity. Secondly, outsourcing itself is nothing but to moving some jobs from one county to another for cheap labour (as it will ensure maximum profit). So it cannot be a solution. It generates jobs in one country in expense of jobs at other country and therefore it is volatile. And people are not getting better share, in terms of their (MNCs) profit, people are getting lower fraction.

You doubt whether government have resources to secure minimum calorie to every Indian. I am just wondering; if it doesn’t have resources then how it dares to subsidize big companies? You agreed that ‘trickle down’ does not work; actually siphoning of resources is taking place from people to big companies.
You asked for a mechanism that would give sustainable growth of a nation. I think, here is the answer.

Best regards.