Forced errors

WHEN Tata Motors wanted to build a factory for the Nano, a cheap “people’s car”, the Indian state of West Bengal seized 1,000 acres (400 hectares) of farmland on its behalf at Singur, just up the motorway from Kolkata. The state government invoked a colonial-era law to forcibly acquire the plot in 2006 from 13,000 landholders, many of them unwilling sellers. Protests against the purchase continued even as the factory was being built. Tata eventually fled. Narendra Modi, then the chief minister of Gujarat, offered it a way out by providing it a factory-ready plot there.

The Singur protests have come back to haunt Mr Modi, who is now India’s prime minister. They led to a new law in 2013 which set arduous terms for coercive land purchases. Mr Modi is trying to relax these rules for certain categories of project, such as rural infrastructure, industrial parks and low-cost housing. It is now his government that faces protests from farmers. Yet if India is to become richer, it needs to be able to build roads and factories.

The economic case for allowing the state to acquire property by coercion starts with...

via The Economist: Finance and economics Business Feeds

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