CAN BENGAL INDUSTRIALIZE?

[Bengal was India's most industrialized state still the 1950s. Then its industries got into trouble, their workers were unionized by communists. They won elections in 1977, and have been in power ever since. Industrialists have withdrawn from the state and set themselves up in more friendly states in the west and south. Recently, however, the communist government has tried to attract private industry. Its most conspicuous success in persuading the Tatas to make a small car in India has run into trouble over land acquisition, which has been strongly resisted by people who would lose their land and their jobs. I wrote this critique of West Bengal government's attempts to attract industry in the Calcutta Telegraph of 3 January 2007.]

CAN BENGAL INDUSTRIALIZE?

Being a west Indian, I never met a Bengali till I was through my teens. My image of Bengal was shaped by Rabindra Nath Tagore, Bipin Chandra Pal, and Satyajit Ray. I used to think that the Bengalis were the most talented Indians. When I went abroad, I met my first Bengalis, and the awe in which I held them depreciated; especially after I went to Germany and found even children speaking German, I came to think that Germans were more intelligent than Bengalis.
But then I made some good Bengali friends. So I was pained when West Bengal began after 1965 to make news for all the wrong reasons: strikes, bandhs, gheraos, processions, and economic paralysis. My Bengali friends were, of course, overjoyed that revolution was round the corner. Slowly, though, these disruptions passed out of the news although they continued: West Bengal ceased to matter to the rest of India.
Today, I find West Bengal again in the news – not for the bandhs and processions which continue, but for Singur. The lineup is, however, different. Whereas the communists were the villains of the 1970s and 1980s, angels are on their side today; so also are capitalist devils. Everyone takes it for granted that Ratan Tata’s plan to make people’s cars in Singur is a Good Thing, that it is heroic of Buddhadev Bhattacharya to vanquish all opposition to it, and that Mamata Banerjee is a crazy Luddite.
Ratan Tata is one of the most respected men of my generation. But I find some of his recent actions uncharacteristic. Throughout independent India’s history, the Tatas kept a distance from the government. In the licence-permit raj, the right to expand or diversify became a favour from the government for which businessmen had to fight and bribe. Most of them did both. But the Tatas stuck to their knitting, and did what they could without courting politicians, begging for favours and oiling political wheels. They dominated the truck and bus industry, made TISCO the least-cost steel producer, and built up TCS outside the control net. They did not bend their knee to anyone – not to Indira Gandhi, nor to Rajiv, nor to George Fernandes. When I joined government in the 1990s, controls were still in place. Many industrialists came to pay court or nudge files along; never anyone from the Tatas. For that I respected them – and so did many of my fellow-Indians.
Singur is the first project on which the Tatas have relied on a government – this time the government of West Bengal – and sought its favours. This is not necessarily improper – not unless they raise their contributions to CPI(M) immoderately – but it is unusual; this is precisely the sort of thing they eschewed when it was so much more common and so necessary for success.
What made them change? My guess is that after the passing of central controls, competition has intensified, corruption has seeped from the centre to the states, and in the dirty new world that has arrived, the Tatas have decided that the West Bengal government is the lesser evil. With the opening up of the economy, it has become easy to import automobile components. And for the smaller manufacturers, accessing the export market has become essential if they are to reach the necessary minimum scale. So the entire automobile industry is rushing to the coast. Tamil Nadu and Gujarat are the favoured locations. Tamil politicians are reputed to be economically rational; and the BJP, of which Narendra Modi is the satrap in Gujarat, is equally realistic about the relationship between power and political prosperity. Ratan Tata has publicly rued that the Tatas were kept out of the aviation industry while sundry upstarts approached politicians and obtained licences. It must hurt because both JRD and Ratan have been amateur flyers and because Air India, the Tatas’ pioneer airline, was snatched away by the government. Ratan Tata presumably found Tata Motors losing out because it would not bribe the politicians of the coastal states; he made a bargain with the government of West Bengal that he found acceptable. I would like to know, though, what the bargain is.
I wondered, earlier, about the Tatas’ bid for Corus. The Birlas were the first to go international; today, every Tom, Dick and Harry is buying companies abroad. But the Tatas stuck to their domestic base through the worst years of controls; why are they trying to acquire a foreign company three times the size of Tata Steel? I attributed the decision to the forthcoming consolidation of the world steel industry, of the emergence of big players like Mittal-Arcelor and their likely entry into the Indian market space. But then I realized that the Tatas were not far behind in acquisitions abroad; their companies too have been spreading out since it was allowed. So I now wonder if it has something to do with the competitive corruption emerging between Indian states – whether the Tatas are winning beachheads in markets abroad where industry is freer and governments cleaner.
Coming to West Bengal, it has always struck me how top-down development in this state is. If you look at India’s most developed states – Tamil Nadu, Maharashtra, Gujarat – most industry there is indigenous and small-scale. All the businessmen whom the West Bengal government favours are big and non-Bengali. In the 1980s and 1990s, they were foreign; Indian industrialists were not welcome. Even now they are generally foreign, like the Salims. The Tatas are the first Indian group to have found favour; and they are different. They treat their workers well, and are friendly to trade unions. They are more congenial to communists.
In particular, I have been struck by Buddhadev’s studied neglect of Mukesh. He is sitting on huge reserves of gas of the Krishna-Godavari coast, and is looking for somewhere to land it and sell it. He tried UP, but the split with Anil wrecked that plan. He has been courting Tamil Nadu, so far without success. All that gas would transform the industrial future of West Bengal. What makes Buddhadev hesitate? The spectre of CITU descending on Calcutta with hundreds of thousands of coal miners?
So I am tempted to formulate the following laws of development under communism. The communist state is a slave of its trade unions. It is forced to rely on big industrialists because small industry cannot survive organized, militant trade unions. Amongst big industrialists it prefers foreign ones who would have no constituency in this country. If it cannot get them, it will settle for Indian ones, but only if they accept CITU. And competition in product markets weakens the bargaining power of trade unions; so it would prefer firms that have a monopoly or a niche market.
These are stringent requirements; if the West Bengal government sticks to them, it may attract Tata Motors, but it will achieve little overall industrialization of the state. If I am right, Buddhadev will face increasingly obstinate opposition within the CPM family, will win ever greater admiration from the bourgeoisie, and will be largely ineffective. It is not his fault; it is the party he belongs to. He should bend it to his will, or split it.

INDIAN AND EUROPEAN DEMOCRACY

[January 2007, when I went to Luxemburg, was a time when West Bengal government was facing strong resistance from people it had displaced from land it had handed over to the Tatas for a car factory. This column, published in the Calcutta Telegraph of 13 March 2007, reflects my thoughts about how the Indian democracy differed from - was less constructive than - the European.]


THE POINT OF DEMOCRACY

A couple of months ago I spent some time in Luxemburg. I could not meet the Prime Minister because he was away in Brussels conferring with his fellow European Prime Ministers. But I conferred with four ministers including the foreign minister and the minister of the economy.
I went to Luxemburg with considerable skepticism about the EU experiment. Continuing to maintain the paraphernalia of parliaments and ministries in every member country after they had all joined the EU seemed extravagant to me. The numerous EU institutions housed in vast buildings looked like bureaucracy run riot. Sprinkling the institutions all over Europe seemed designed to waste people’s time and transport facilities. And the innumerable committees holding meetings, tying up so many ministers and bureaucrats, and taking years to come to the most modest decisions, seemed an extraordinarily inefficient way of running a government to me.
One of the things I discussed with the Luxemburg ministers was their reaction to Lakshmi Mittal’s takeover of Arcelor. One of them had reacted adversely. The Indian press had gone to town over this, reading in his hostility parochialism, racism, xenophobia, Indophobia and every other sin. I asked the ministers the reasons for the hostility. They denied every emotion that we Indians had attributed to them; and upon reflection, I realized that the emotions had been attributed without any evidence at all, and certainly without talking to anyone in the Luxemburg government. The Indian press had embroidered an explosive, emotional story around a single statement that supported none of the pyrotechnics, and avoided all on-the-ground investigation.
The ministers’ responses could be summarized to say that Mittal had surprised them: that he had not talked to any of them. This response sounded strange to the liberal in me. After all, enterprises should be freely transferable, and Mittal had a perfect right to take over Arcelor if he could marshall the money and persuade enough of Arcelor’s shareholders to sell their shares. The US government would not have expected Mittal to talk to it if he wanted to take over a similar steel company in the US; nor probably the British government. So while I was in Luxemburg, I was a bit mystified by this insistence on talking.
Then, the reason slowly dawned on me as I watched the proceedings over Singur sitting in Calcutta. There were a number of parties involved: the West Bengal government, the residents of Singur who were going to be replaced, their political leaders, Mamata Banerjee, and the Tatas. It struck me that throughout the Singur affair, these parties talked to everyone except one another. They were aggrieved, agitated or in conflict; they could have sorted out their differences only by talking. But they never talked to one another. Instead, they held public meetings and talked to people who thought like themselves; they organized processions and shouted slogans at a random selection of people who happened to be within shouting distance; they talked to the press, which converted their differences into banner headlines. They did everything within their power to magnify their differences; they never sat down together and look to bridge their differences. After Mamata had gone on hunger strike, Buddhadev offered to talk with her. But she was not interested in talking; she only wanted the Singur takeover to be nullified. Ratan Tata too offered to talk at a very late stage in the proceedings; but he sounded choosy about whom he would talk to, so no one took up his offer. The entire Singur affair was settled by the muscle power of the government; although West Bengal is a democracy, its method of resolution of differences was no different from that of the British government that preceded it, or indeed of a pure dictatorship.
Why did it never occur to the elected government to settle differences by talking to the affected and to political opponents? Evidently because its concept of democracy does not involve peaceful resolution of political problems. The way the communists look at it, the role of democracy is simply to decide who is to rule West Bengal for five years. Once elections have answered that question, the electors are taken to have given the government power to decide such questions as compulsory transfer of land from some farmers to some industrialists.
This view of democracy is not peculiar to West Bengal or to the communists. It is impossible to watch the proceedings of the West Bengal assembly. But I often watch the proceedings of Parliament when I feel my level of cheerfulness is dangerously high; Parliament is a wonderful antidote for cheer. I watched Lalu Yadav present the railway budget. I only watched, because I could hardly hear him. He was made inaudible by half a dozen members of Samajwadi Party, who stood in the well of Parliament and went on shouting the same monotonous slogan again and again, protesting against the threat that the central government might throw out the Samajwadi Party government in Uttar Pradesh and impose President’s rule. SP may be considered a party of hooligans. But I have seen members of the Bharatiya Janata Party similarly sabotage proceedings with slogans about Bofors. This is a relatively mild form of sabotage; some weeks earlier, members of the Trinamool Congress Party went about wrecking furniture in the West Bengal assembly. Clearly, these venerable vandals must think that they are doing something useful – that they are exercising their democratic right of protest, or carrying out their duty of protesting against injustice. Just as the West Bengal government believes that an electoral victory gives them the right to compulsory acquisition of anyone’s land, the protesting MPs think that their own election to Parliament gives them a right to stop Parliament from working.
If that is what they think, then what of democratic dialogue? Parliaments are debating societies above anything else; their entire procedure is designed to facilitate orderly discussion. They have formulated elaborate rules about how debate is to be conducted; and they have a speaker who uses those rules to lead an orderly debate. Speakers have extraordinary authority in other Parliaments. Long ago, when I lived in Canada, I used to watch the Canadian Parliament on television. Whatever pandemonium was going on in that Parliament, the speaker had only to stand up, and everyone fell silent.
So I am no longer sure that those European politicians are wasting their time. Arcelor is a big employer in Luxemburg; its steelworkers were liable to be worried and upset by a hostile takeover. The Luxemburg ministers instinctively felt it to be their duty to manage the takeover – a major event in their polity – peacefully and smoothly. They took it as their job to find solutions to public problems that were the most acceptable to those involved and affected; and they found the solutions by talking, negotiating, cajoling. This is what European democracy is about. I think we, the world’s greatest democracy, have missed out on something somewhere. We may be the world’s greatest talking shop. But we talk past one another, and not to one another. Democracy is a ritual for us, not the problem-solving instrument that it is for the Europeans.