This robbery is sponsored by government

Warning: Written by a novice

Ila Patnaik recently wrote an interesting article providing rationale for takeover of agricultural land by government. Setting up of industries or any infrastructure project requires a considerable amount of land. However the nature of land holdings in India means for anyone intending to buy land for executing a project has to deal with a large number of sellers which has practical constraint primarily of co-ordination, it is given that few people will keep holding back even after a majority has sold for the reason in expectation of greater price.

It is a very valid and real world concern, however in order to resolve this vesting state with power of appropriating private property is a serious violation of rights (as they should be) on two counts.

One is right to property, although Ila Patnaik defends eminent domain by enumerating the benefits arising out of it to a larger group of people, I am not sure " greatest good of the greatest number" should be allowed to overrule individual's right which should be paramount if a equitable and a just society is to be established.

Another is this practice strikes at the very core of economic freedom by undermining the seller's right to determine the price of commodity.

The markets work because of freedom that sellers and buyers have for determining the price they wish to sell or buy, I see what is wrong if farmer wants a higher price from developer.

Granted that this may not a perfect case of free market (is it some specific case of monopoly or prisoner's dilemma, I don't know), but I do not think that eminent domain should be the only way of resolving this. Instead there may be some process devised which does not undermine the basis of free market.
Sadly I am hardly knowledgeable in these matters, may be some sort of Dutch auction will work or some sort of collective coercions (not force ofcourse mostly boycott and such). The bottom line is that rights of citizens are not to be trifled with.

And the above arguments are not merely of academic value, farmers do not sell their lands not necessarily because of family attachment but because it is their profession and ensures their earnings. Even as India has made half hearted progress, our population which is engaged in agriculture or related activities is willfully neglected due to a combination of romantic delusions of Gandhism and half baked central planning.
For all our new found love for free trade, the fact remains that we do not allow free trade of agricultural products even between the states. Any solution to this problem will involve not only easing of archaic restrictions but also migration of such percentage of population to urban areas. So instead of flogging dead horses, we should encourage industrialization, (which essentially means that hindrances to this should be curtailed with even more urgency).

Coming back to the point, if the farmer doesn't sell its land it is because he doesn't have any avenue available. By and large the farmer is not savvy enough to invest the money in a business neither in absence of proficiency able to change profession easily.

Therefore from practical as well as more fundamental considerations, eminent domain doesn't seem to be a good idea.
Amit Varma has written on this subject [Link 1, 2 ] as has Nitin [ Link] (I disagree with the thrust as far as eminent domain is concerned).

In theory however I am not sure how it stands, the reason for this is that usually there is a time frame for intellectual property rights [ Link].

If that be the case either a distinction must be made between land and IP, or otherwise even the restriction of IP must be opposed.

Related Articles:
Pratap Bhanu Mehta has tangentially touched on this point.
Swaminathan Aiyar had an article on dangers of real estate bubble.
 

 

Category : India, Economics, Society, Politics