Monday, April 30, 2007

The strange existence of Ram Charan - Fortune Magazine

FORTUNE 500 2007

The strange existence of Ram Charan

What he does is hard to describe. But the most powerful CEOs love it enough to keep him on the road 24/7 and make him the most influential consultant alive. Fortune's David Whitford reports.

I liked the incredible question:"Am I the master of this subject?"

David Whitford, Fortune writer

(Fortune Magazine) -- The Al Manzil Hotel in Dubai has been open for business all of 18 days on the Saturday night in January that I show up with Ram Charan. The lobby is strangely quiet; there doesn't seem to be anybody else staying here. The surrounding neighborhood is called Old Town, but in fact it's a construction site from which are rising what will one day be the world's tallest skyscraper and the world's biggest mall. Soulless and kind of creepy, I'm thinking, but Charan's thoughts are elsewhere.

Already he has claimed an overstuffed chair in the center of the lobby and is talking on the phone. After 12 hours of isolation on the flight from J.F.K., Charan is back in business, deep in private conversation with a client in New York City. He looks tired, and no wonder. He began his day with a 4 A.M. Friday wake-up call in Richmond (he did a Squawk Box live remote on CNBC), and he has a head cold. But he is in no hurry to go to bed. Charan doesn't care what time it is. He doesn't care what day of the week it is. And the last thing he cares about is where he is. As long as Charan is with a client - or can get one on the phone - he's home.

Charan at a Fortune roundtable in 1998.
Ram Charan has written or co-written 11 books since 1998.
Heading to another appointment in New York City.
Fortune's David Whitford talks with Ram Charan, who spends his life in hotels as he travels the world consulting for big companies.
Play video

Thirty years ago this month, Ram Charan (pronounced "Rahm Scha-RON") quit a tenured professorship at Boston University to devote himself full-time to consulting. Today he's alone at the top of his profession - not a consultant so much as a guru, a corporate sage, with unparalleled access to boardrooms across the globe and intimate, enduring relationships with an array of powerful CEOs.

Among them: Jack Welch, formerly of GE (Charts, Fortune 500), who says of Charan, "He has this rare ability to distill meaningful from meaningless and transfer it to others in a quiet, effective way without destroying confidences"; Dick Harrington of Thomson Corp. (Charts) ("He probably knows more about corporate America than anybody"); and Verizon's (Charts, Fortune 500) Ivan Seidenberg ("I love him. He's my secret weapon"). "He's like your conscience," says former Citicorp CEO John Reed. "Just when you sort of think you have everything done and you're feeling pretty good about yourself, he calls you up and says, 'Hey, Reed, did you do this and that and the other?'"

There's another aspect of Charan, not unrelated to his success, that sets him apart from his peers, if not the whole human race: what Jack Krol calls Charan's "strange existence." "When I was chairman and CEO of DuPont," says Krol, "he'd show up at the house Sunday morning at nine, and we might spend three or four hours, and all of a sudden he'd disappear. He would go anywhere at any time that you asked him to meet with you. Business is his whole life."

That sounds like an exaggeration, but it's not. Having uploaded himself into the global economy, Charan circulates, continuously, with something like the speed and efficiency of capital. Consider the itinerary he sketched at dinner one night a few months ago in New York. He had just agreed - for the first time in his career -to let a journalist travel with him and watch him work. "I should tell you where I've been the last few weeks," he began in heavily accented English. "I go to India on the Friday of the week before Thanksgiving. I am Sunday morning in Bombay. Monday morning I am in Delhi. Wednesday I'm in Bombay. Thursday I'm in Bangalore. Saturday I'm in Trivandrum. Wednesday I'm in Johannesburg. Friday morning, at seven, I am in New York. I have a two-hour meeting with a CEO who has flown in to see me. I have two more meetings and I fly out that night to Dubai. I am in Dubai on Sunday and Monday, then I come back here. On Thursday night I fly out to Jubail, Saudi Arabia. Then I come back here. Tuesday morning I have a whole-day schedule in New York. Tuesday night I go to Milwaukee. I came from Milwaukee last night. They diverted my plane so I had to stay in Pittsburgh. I had a meeting this morning in Philadelphia. I had three meetings here in the afternoon. And I'm here tomorrow, with GE. Then an hour-and-a-half phone call. Then I'm going out tomorrow night to West Palm Beach. Monday morning I have a breakfast meeting in New York. And then I'm flying out to Perth, Australia." At least he flies first-class.

Now consider what comes next: more of the same. Charan never stops. He sleeps in a hotel every night ("Professor Charan, welcome home," is how the doorman greets him at the Waldorf on Park Avenue), except when he's sleeping on a plane or, rarely, in someone's house, which can happen when a client takes pity on him. "I got in the habit of having him over for Christmas because he had no place to go," says Reed. "He was going to sit in a hotel room. That's hardly right."

Before he was a consultant, Charan lived in dormitories. Before he was a professor and a student, he lived in YMCAs. Now he doesn't live anywhere. Charan's one nod to a conventional rooted life is the office he rents on North Central Expressway in Dallas (that's the address on his passport - he is a U.S. citizen), but he can't tell you anything about it because he's never been there.

"I really thought the two ladies I interviewed with six years ago were just yanking my chain," says Cynthia Burr, who manages Charan's hideous schedule. "I said, 'Where does he keep his stuff? Everybody has stuff.' It's really hard to wrap your arms around something like that, but it's true."

Three days a week - on Monday, Wednesday, and Friday - Burr and a colleague pack a cardboard box with shirts, underwear, and socks, perhaps a clean suit (there is a tailor at Neiman Marcus who has Charan's measurements on file), and maybe a V-neck sweater or a pair of khaki pants. They toss in toothpaste, razors, shampoo, a shined pair of 9� EEEE shoes, whatever he needs ("He doesn't buy anything himself," says Burr), and send it by FedEx to Charan's hotel, wherever that may be. The box comes back two days later filled with dirty laundry.

Charan doesn't own a car because he never learned how to drive, and besides, where would he keep it? A plane, perhaps? With a day rate that clients say can top $20,000, he could afford one. "If I was Ram, the one thing I'd have is one hell of a nice plane," says his friend Bill Conaty, senior VP for human resources at GE. But Charan is not Conaty. "I use the time sitting in the terminal," he says. "I have never missed an appointment in my life. I don't want to get lost in this private-plane business." (He does regret, however, not accepting an offer from American Airlines in the 1970s to buy a lifetime first-class upgrade for $100,000.)

He trundles through airports pulling a mismatched pair of black canvas rollers, one held together with maroon duct tape. His watch is a Timex. Given all the hours he spends in transit and his lifelong passion for the Indian vocalist Lata Mangeshkar, I suggested once that he might enjoy an iPod. The idea seemed to upset him: "No, I don't do that, I couldn't do it. Would just distract me. Music can make you very sentimental. Couldn't do it."

Have I mentioned that Charan has never married? That he has no children? And still I haven't come to possibly the most peculiar aspect of his personality. I mean that which sets him apart from virtually every person he comes in contact with, none more so than his overachieving CEO clients: Charan has no goals. He never set out to become a globetrotting consultant, any more than he dreamed of attending Harvard Business School, or becoming a professor, or even so much as one day earning a living beyond the small city in India where he was born.

Charan's weird and wonderful life is an unintended byproduct of dedication, he insists. Dedication to learning and teaching and service, to the whole set of Hindu virtues embodied by one of Charan's favorite phrases, "Purpose before self." "People used to ask me, What is your ambition?" says Charan, who turned 67 this past Christmas. "I say I have none. My dedication is going to take me where I'm going to be."

"Tell me his three God's gifts"

Charan follows his driver out the door of the hotel in Dubai on Sunday morning. "We'll see how it goes," he says, then sneezes. "The nose is not running." With that he's off to an all-day meeting at Emaar Properties, the Persian Gulf behemoth that's developing both the skyscraper and the mall. The limo zooms along on newly built freeways, past a string of galloping mounted camels at Dubai's Nad Al Sheba racetrack, through a dusty desert landscape cluttered with cranes, cement mixers, and rebar. ("Look at all that skyline," Charan murmurs.)

Once inside the gated Emaar compound, he is led upstairs to a conference room overlooking a vivid green golf course. Tom Bartridge, Emaar's American HR director (who thinks "Ram" rhymes with "bam"), is here waiting, and after a few moments V.K. Gomber, strategic advisor to the chairman, walks in. Charan shakes hands all around ("V.K., good morning, sir, how are you?"), says yes, thank you, he'll have tea, then heads to the whiteboard.

Ten-year-old Emaar is growing like crazy in the Persian Gulf, in South Asia, and with its recent acquisition of California builder John Laing Homes, in the U.S. Its top challenge now, in Gomber's view, is execution. Can Emaar capitalize on the marvelous opportunities before it? That's largely a people question, Gomber believes, and therefore people will be the focus of Charan's work with Emaar's management team in the months to come. (Charan is flying back to New York tonight but will return to Dubai for a total of 22 days in 2007.)

"Can we bring up the maximum number of people within the organization," says Gomber, "or can we go through the networking that [Charan] has and go outside the organization and identify people? If we can get such people, I think the money is well spent."

For the next five hours Charan walks his charges through a detailed analysis and discussion of Emaar's draft succession-planning template. "A leader who does not produce leaders is not a great leader," he says. "If you agree, I'd like to put that in." (Gomber nods.) Charan is trying to help Emaar construct a document that will help its managers discern in others what he calls "natural talents," or "God's gifts." "Each of us has to be the best calibrator of natural talent of the people who work with us," he says. "What are the three to five most crucial natural-talent items that each person has? It has to be specific" - he taps the white board for emphasis - "and very clear" - tap - "and repeatable" -tap!

"By the way," says Charan, "the last time I talked about Steve Jobs, remember? I've now verified from two directors of Apple, and they say it's right on the button." Gomber and Bartridge perk up their ears. "I asked, Well, tell me his three God's gifts. And they think about it, and they say first thing, this human being has a talent to figure out what the consumer really wants. This is a very valuable thing! No. 2, he has the will and the talent to find - no matter where it is! - the right technology that will deliver what they want. Nobody said he invented one! And third, he has the talent to create demand at the right time. I say, Where do you find those human beings? But he is one."

Throughout the afternoon Charan discreetly shares from his store of anecdotes. For example, the time he was sitting in Andy Grove's cubicle sometime in the late '70s when Grove got a call from a Tektronix (Charts) engineer who wanted to work at Intel (Charts, Fortune 500) and was willing to take a 10% pay cut. "And they were a $200 million company at the time," says Charan, "very small. Tektronix was $5 billion. That's brand!" GE has a similarly powerful brand, says Charan. So does P&G (Charts, Fortune 500). So can Emaar, is the idea.

I don't care if I flunk

Later that evening I meet Charan for dinner back at the hotel. Western music plays softly, disconcertingly, in the background. (Eric Clapton, John Lee Hooker, and a cover by someone I can't place of Lowell George's highway traveler's classic, "Willin'" - "I been from Tucson to Tucumcari, Tehachapi to Tonopah.") Charan has a plane to catch at 2 A.M. He has three appointments in New York starting at 9:30 Monday morning. Monday night he flies to Madrid, Tuesday night to Frankfurt, Wednesday morning to Miami. After that, he doesn't know.

Our waitress is a guest worker from India, one of many now in Dubai. "May I call you beti?" Charan asks politely. She nods, blushing at the portly gentleman seated before her, with his backswept gray-streaked hair, smooth round face, and sparkling eyes. "It's an Indian custom," Charan explains after she leaves. "I took her permission first. I may not in India. Even though she has never met me, and I address her as beti" - "daughter" in Hindi -"it's like I am telling her that you will be treated like my own daughter. All threats are out. You see the face changing right away."

Charan's roots are in a small city near Delhi in the north Indian state of Uttar Pradesh. (I can't say which city because Charan has relatives there and worries about kidnapping.) His family (he is the sixth of seven children) lived on the second floor of a two-story house they shared with his uncle's family. Together they were 17 people under one roof. "And then a portion to keep the cows," says Charan. "I personally took the cow dung and made patties out of that for burning in Mother's stove. We cut the fodder in the fodder machine for the cows. My brothers and my uncle did the milking." While they had everything they needed to survive, they had no more than that. No plumbing, no electricity, no luxuries of any kind. The children pumped water from a well. They did their nightly homework on the floor in a flickering circle of light from a mustard-oil lamp.

There was intense fighting between Hindus and Muslims in Charan's city during the struggle for Indian independence. He remembers when he was 7 years old in 1947, watching from the roof of his home as flames destroyed the cloth shop belonging to his father and uncle. After the fire the brothers started over with a shoe shop. Charan was in the shop every morning before school to help open and every afternoon after school until closing. He counted the rupees in the till at the end of the day, inspiring a lifelong appreciation for the "blood" of business. ("Any company I go to, the first thing I check is cash. How's your cash? Where's your cash flow? No blood, you got a problem right away.")

In the lulls between customers, Charan studied. Using a system of his own devising, he condensed onto a single unlined page the essence of what he had learned that day in each subject. (Today he provides similar one-page summaries for his CEO clients.) "Am I going to get good grades?" he would ask himself, knowing there was only one right answer. "Am I the master of this subject?" He knew from Sanskrit teachings that "fear, anger, laziness - these are the downfalls of human beings"; that peace of mind alone is worth striving for; that dedication and mastery are their own rewards.

One by one, most of the older children left school to work in the family business. Charan was an exception. His teachers visited the shop to beg his parents to let him continue his education. At 15, he enrolled as an engineering student at the elite Banaras University in Varanasi, a 250-mile train ride away. He was two years younger than his classmates, a humble member of the trading caste surrounded by "students whose fathers were big business people." He kept quiet because he was self-conscious about his "lousy English." He excelled, graduating third in his class. "Oh, incredible growth!" is how he describes those years. "Incredible learning!"

After college Charan was invited to participate in a work exchange program in Australia. His grandmother pawned her jewelry to buy him a plane ticket. (Charan recorded that debt, together with every cent his family spent on his education, and paid it back within a year. "This is a return of capital," he wrote on the note accompanying final payment.) Charan ran into a problem at the passport office. The application asked for his first and last names. Like most provincial Indians, Charan didn't use a family name. So he split his one name in two, and Ramcharan became Ram Charan.

It was winter when Charan arrived in Sydney. He had never been so cold in his life. A kind woman in the placement office at the University of New South Wales arranged some interviews, but job offers were hard to come by. You can always try gardening, she said. "I'll do that," Charan said. "But I can't go home because I don't have any money."

Finally he found a job as a draftsman at a utility company. He worked days and attended classes at night. Charan soon attracted the attention of his bosses, one of whom invited him one day to his office. Did Charan have any questions he wanted to ask? As a matter of fact, Charan did. He had been studying the financial statements in his spare time, attentive as always to cash flow, and had concluded that the company was borrowing money to pay its dividend. Was this true? Charan's boss was sure it was not. Until he checked with the CFO. Oops. The young Indian's standing rose accordingly.

Encouraged by his bosses, Charan left Australia after four years to attend Harvard Business School. MBA students in the early 1960s had to read and be prepared to discuss as many as three case studies a day, six days a week. One of Charan's more practical section mates suggested they divide the cases, then get together every night to share notes. "I'm not going to do that," Charan said. "I'm spending my own money. I don't care if I flunk. If I learn something, I'll succeed." Charan did not flunk. He completed all the reading and, as was his habit, summarized the notes for each case on a single sheet of paper, which he brought to class for reference during the discussion.

His roommate, Boston real estate developer John Joyce, remembers seeing Charan's grades at the end of the first trimester second year, when Charan took advanced statistics, a class normally reserved for doctoral candidates. "They were all distinction-pluses," says Joyce. "Kind of a stunning achievement."

While at Harvard, Charan worked summers for a gas company in Honolulu. Again, he took it upon himself to study the books, and again he discovered a looming problem with the dividend. This time his boss asked him to solve it. Charan came back six weeks later. "The pressures in the pipes between 10 P.M. and 4 A.M. are too high," he reported. "You take them down, and your gas leakage will go down, and you will make the dividend."

Charan knew this because he had been down to the plant in the middle of the night and read the gauges. He had also noticed that the man in charge of production was not talking to the man in charge of distribution; hence the leakage. In other words, he combined financial acuity with engineering know-how and an eye for the role played by interpersonal relationships to solve a vexing problem. Charan says now, "That's where this whole consulting thing really began."

Charan graduated in the top 3% of his class, a Baker Scholar with high distinction. He stayed to earn a doctoral degree, then joined the faculty. His students nominated him for a best-teacher award, an award he later won at Northwestern. But Charan never excelled at the academic research that leads to tenure at a top-tier school. He was interested more in cause and effect than statistical correlation. His aims were practical: How can I solve this problem? How can I help this person? This company? He began taking on more and more consulting gigs. Most B-school professors consult on the side; in Charan's case, it was his calling. Within a year of arriving at BU, having finally achieved tenure, he concluded, "This is not for me," and stepped into the void. He rented an office in Dallas, in part, he says, because the climate reminded him of India, but really for its central location. Not that he's ever there.

"Don't you ever, ever do that again"

What does Charan really deliver? Some people wonder about that. He is very good at unpacking complexity, at paring business challenges down to their essential elements, often with reference to lessons he learned years ago in the family shoe store. "I've been around Mike Porter and Gary Hamel and every strategy guy in the world," says University of Michigan business professor and Charan friend Noel Tichy. "Many of them get into this look-how-smart-I-am mode. You will never see that with Charan." If you're V.K. Gomber ("I am a strong believer that the businesses are simple"), you value that quality.

But there is a line between simple and simplistic, and some have questioned which side Charan stands on. Skeptics liken him to Chauncey Gardiner, the simple-minded hero of the 1979 film classic Being There, who gets a lot of mileage out of utterances such as "First comes spring and summer, but then we have fall and winter. And then we get spring and summer again."

If Charan is a fake he is an amazingly successful one. What defines his career, even more than the quality of his client roster, is its stability. This is his 37th year working for GE, his 33rd for DuPont. He worked with John Snow for 15 years before Snow left CSX (Charts, Fortune 500) for the Treasury Department; he has been with Ivan Seidenberg at least 20 years, and with former West Virginia Governor Gaston Caperton more than 30 years. Caperton met Charan at a Young Presidents' Organization (YPO) function in the mid-1970s and has been huddling with him ever since.

That is, through the sale of Caperton's once-tiny insurance company in the early 1990s after it had grown to become the tenth-largest privately held brokerage in the country; through Caperton's two terms as governor, during which Charan led talks with business, government, and union leaders on developing an economic strategy for the state; and now in his job as CEO of the College Board. "He's helped me in business, in government, and in the nonprofit," says Caperton.

One of the reasons people keep coming back is Charan's extraordinary devotion to his work. Years ago Charan was leading a workshop at Crotonville, GE's training center in Ossining, N.Y. It was after the merger with RCA in 1987. The employees were mixing for the first time, and things were a little tense. One of the GE guys found out that it was the birthday of one of the RCA guys and hired a belly dancer to mark the occasion. "The dance was just before lunch," says Jim Noel, formerly of GE, now a consultant. "She came in, did her little thing, and left. As we were walking to lunch, Charan came up to me and said, 'Jim,' and he was really serious--at first I thought he was joking. He said, 'Don't you ever, ever, ever do anything like that again.' And these were his exact words: 'Don't you ever defile the classroom in that way.'"

He's like a monk, suggests Caperton. Or a missionary, says John Mahaney, his editor at Crown Business (Charan has written 11 books on management; see "Charan in Print"). GE's Conaty jokes that while his company has extremely high expectations of its employees, "we do allow people to get married. We do allow them to have kids. We actually allow them to live in homes - even multiple homes, once they make some money with us - and we do allow them vacations and most of their weekends off."

Charan, however, has no discernible personal life. One longtime collaborator has dinner with him whenever Charan is in town. Charan's friend's wife used to join them but stopped. "My wife got to the point where she couldn't stand it anymore, because Charan could not get out of talking about business." Does Charan ever laugh? "Probably," says someone who has spent hundreds of hours with him, "but I can't remember. I pull back from my own appreciation of irony in his presence."

Charan had triple-bypass heart surgery in 1999. After the operation he took it easy for 11 days, then went back to work. He couldn't fly for a while but that was fine - he loves trains. Most of his clients never knew he was sick. Welch, who has had his own bypass surgery, did know, and worried. "Ram, what the hell are you doing here?" he said when he saw him soon afterward. Charan, though pale, was dismissive. By then he had already been to Europe and back once.

"He isn't doing anything"

Generalizing about what Charan does for his clients is tricky, but that lack of definition paradoxically is at the heart of his success. His method is no method. He is wary of abstraction and belongs to no school of management theory. "Converting highfalutin ideas to the specifics of the company and the leader - that's the trick," he once confided to me in an elevator. "The other part is working backward to define what the need is, and then searching for what helps. Then you bring it to common sense, and common sense is very uncommon."

That means no ready-made solutions. Instead, Charan brings observation, curiosity, and care. He lets his clients decide how to use him. Sometimes all he does is ask the right question. "I remember the first time he came to see me," says Caperton. "We were driving to the airport in Charleston, W.Va., and he said to me, 'Why are you trying to grow this thing so fast?' I was sort of shocked by the question. Three weeks later my financial guy came to me and said, 'We don't have money to meet payroll.' Charan realized we were growing too fast, that's why he asked me that question. That was a much better way to teach me, wasn't it?"

Or he might teach others which questions to ask themselves. Nick Taubman and Garnett Smith heard Charan speak at a YPO event in 1978. Advance Auto Parts (Charts, Fortune 500) was not a big company at the time - fewer than 200 outlets, less than $200 million in sales - but Taubman, the president, and Smith, his operations guy, had big plans. As the company grew, Charan was always reminding them not to lose touch with the stores. ("You just can't allow this to happen!")

At Charan's suggestion they began hosting regular Tuesday meetings at headquarters in Greensboro, N.C. They'd fly in a handful of store managers from all over the country, put them in a room with the leaders from corporate, and run down a three-item agenda following a script devised by Charan: What unique thing happened in your store last week? What issues did you face that kept you from serving your customers better? How can we fix those issues right now? Says Smith: "He made sure as we grew that we didn't lose sight of what was really important."

When Bill Conaty moved to GE headquarters as senior VP for corporate human resources in 1993, he picked Charan to lead his new-leader assimilation program. Charan brought two dozen of Conaty's new reports to GE's guesthouse for six hours, asking them, What do you know about Bill? What do you want him to know about you? What advice do you have for him? Charan summarized the feedback for Conaty, then offered some of his own, then followed up repeatedly. "Charan really pushed me on the whole business-partnership piece," Conaty recalls, meaning no more HR initiatives for HR's sake, "and the function as a result is much more credible and visible in GE today than it was."

Ivan Seidenberg says he goes through cycles of change at Verizon, and so engages Charan in different ways. "For a while we were trying to figure out how to reengineer work," he says. "Another time we were looking to design new management programs to have people focus on a different way of thinking about running the business: How do you forge a growth culture, as opposed to one that's been focused on productivity for many years? New-product introduction - I talked to him about that. He always whips out this nice little pen he uses, real thin ink, and he starts drawing diagrams. He constantly is helping to provide depth to issues, not only answers. All of it is useful."

John Reed started working with Charan in 1990, before Citi's merger with Travelers. The stock was languishing, the company was struggling. "I knew what I wanted to do," says Reed, "but I wasn't 100% sure how to get it done. That's a big distinction if you're in business. A lot of consultants come in to tell you what you should be doing. This was not that. This was a question of how best to get it done."

Reed says, "Ram is a catalyst in the real sense of that word. He facilitates things happening but doesn't take part in them himself. And he is an immense source of energy. When you're trying to get large organizations to do things, energy is extremely important. He forces you to tell him what it is you want to do, and he forces you to really be clear in your own mind what those things are and what steps have to be taken. Often it's getting the wrong guy out of a job. But the point is, he starts out by basically forcing you to think with him and be very clear. Then, okay, you notice that he isn't doing anything, he's just forcing you to do it. Then once you've agreed on everything you want to do, he calls you up every ten minutes and asks why haven't you done it yet."

"I am allowed to do what I love to do!"

Feb. 19, President's Day. Not much of a holiday for most Americans; certainly it means nothing to Charan. He spent the day with a client in Hartford, then flew to Cleveland on a connecting flight through Dulles. The planes were late. Charan never complained. When the airline club closed and the tired employees went home, Charan relocated to the gate and dozed in a chair until his flight was called. Now he is standing at the check-in desk at a hotel on a highway somewhere far outside town, waiting patiently for his key. The clock behind the desk reads 1:48 A.M. He asks for a 5:00 A.M. wake-up call.

"I'm a lucky man!" Charan likes to say. "I am allowed to do what I love to do!" While I still don't really understand him, I am beginning to believe him. Surely there are many ways to live fully and be happy on this earth; probably, he has found his own. Of course he knows he can't keep this up forever. One day he'll start slowing down, and then he'll begin to dispose of his money. He has long financed the aspirations of his extended family in India, by paying for their schooling and helping some of them get settled overseas. But that's it, he says. No more money for the family. ("My people are not rich, but they have enough to go on their own.") "It's going to be in India" is all he'll say about his coming serious philanthropy. "It goes a long way, a little amount there. To enable people to accomplish things."

But Charan's not there yet; he's not even thinking about slowing down. Even though - and this is breaking news - he is no longer homeless. "I now have an apartment in Texas," he tells me matter-of-factly. To say I am dumbfounded is an understatement. Why now? "I just thought I'd get one," he says. "I was in Istanbul, they're all telling me I got to cut this out. They think it's a big deal for me to have never bought a place. I said hell with it. I got tired of people talking about it." So I ask him when he is moving in. "Maybe never," he says, staring hard. Staring back, I catch a glimmer of something, a ripple that crosses his face. It may have been a smile. Top of page

Development and Displacement -Abhirup Sircar -

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Some hard-hitting facts and figures about Special Economic Zones (SEZs)

Gmail - [focusorissa] Some hard-hitting facts and figures about Special Economic Zones (SEZs)

Some hard-hitting facts and figures about Special Economic Zones (SEZs) that rarely make it to the headlines

What is an SEZ?
A Special Economic Zone (SEZ) is a specially demarcated area of land, owned and operated by a private company, which is deemed to be foreign territory for the purpose of trade, duties and tariffs. SEZs will enjoy exemptions from customs duties, income tax, sales tax, service tax. After the passing of the SEZ Act by Parliament in June 2005, the law came into effect in February 2006, though some states like Gujarat had passed provincial SEZ legislation in 2004.
Why SEZs?
The stated purpose of creating SEZs across India is “the promotion of exports”. Commerce and Industries Minister Kamal Nath claims that exports will ultimately grow five times, GDP will increase by 2%, and 30 lakh jobs will be generated by SEZs across India. The government also claims that SEZs will attract global manufacturing through Foreign Direct Investment (FDI), enable the transfer of modern technology and create incentives for infrastructure.
How many SEZs will there be?
  • The central government has approves 237 SEZs in 19 states (occupying 86,107 hectares).
  • 63 of these SEZs have already been notified.
  • 23 SEZs are operational, 18 in the IT sector.
  • Ultimately there will be 500 SEZs.
  • Total amount of land to be acquired across India:150,000 hectares (the area of the national capital region). This land -– predominantly agricultural and typically multi-cropped -- is capable of producing close to 1 million tonnes of foodgrain. If SEZs are seen to be successful in the future and more cultivated land is acquired, they will endanger the country’s food security.
What has the experience with SEZs been so far?
There are less than 400 SEZs around the world at the moment. In India, the government is planning that many in one country alone.

Ultimately 400-500
When started
Mostly after 1991
Democratic decision?
A lot of discussion and debate
preceded the setting up of SEZs
No discussion. Parliament passed
the law easily
Very large
(Shenzhen: 32,700 hectares)
(3,000-14,000 hectares)
Private corporations
On what kind of land
Mostly coastal wasteland
Mostly fertile cultivated land
Very good
(Shenzhen: Net exports in 2006, $ 35 billion)
Poor so far
(in 1998 a waiver of $ 1.67 billion
on customs duties was given to
earn $ 1.04 billion in foreign
Substantial number of low-paid jobs
Very limited so far: 100,650 in all
SEZs, till March 2005
Tax revenue collections
Only selective tax incentives provided
Across-the-board tax holiday
given to companies
Overall economic success
Shenzhen very successful, but at least two
SEZs have failed
Largely unsuccessful so far
Ease of land acquisition
Land battles in some areas
Bloody, bitter resistance

Will there be displacement and loss of livelihoods?
Estimates show that close to 114,000 farming households (each household on an average comprising five members) and an additional 82,000 farm worker families that are dependent on these farms for their livelihoods will be displaced. In other words, at least 10 lakh (1,000,000) people who primarily depend on agriculture for their survival will face eviction. Experts calculate that the total loss of income to farming and farm worker families is at least Rs 212 crore a year. This does not include other income lost (for instance, of artisans) due to the demise of local rural economies.
The government promises “humane” displacement followed by relief and rehabilitation. However, historical records do not offer much hope on this count: an estimated 40 million people (of whom nearly 40% are adivasis and 25% dalits) have lost their land since 1950 on account of displacement due to large development projects. At least 75% of them still await rehabilitation.
Almost 80% of the agricultural population owns only about 17% of the total agricultural land, making them near landless farmers. Far more families and communities depend on a piece of land (for work, grazing) than those who simply own it. However, compensation is being discussed only for those who hold titles to land. No compensation has been planned for those who don’t.
Will SEZs create jobs?
The growth of employment in the entire organised sector since the inception of the reforms in 1991 has been negligible. Total employment in the organised sector is still less than 3 crore. Even in IT and ITES, boom areas of the economy, employment is less than 0.15 crore (60% of SEZs are for IT). The Indian labour force is estimated to be 45-55 crore. Thanks to growing automation, modern manufacturing grows joblessly around the world (in India, automobile production has grown rapidly, while employing less labour than before). With more automation, organised services also require limited supplies of labour. SEZs will attract modern industry and services in order to succeed. To that extent they are unlikely to generate too many jobs. Moreover, the few jobs that will be generated will be for highly skilled labour, usually not available in the countryside -- from where working people are being displaced to make room for SEZs. Kamal Nath’s claim that SEZs will create 30 lakh jobs within a few years is a fantasy: those many jobs have not been created in total since the inception of the reforms in 1991! The government does not provide information on jobs lost, only on jobs created.
Further, if the experience of existing SEZs in places like Noida (or Shenzhen, China) is anything to go by, the working conditions -- poor wages, non-existent benefits, long working hours, occupational hazards, discrimination, etc -- under which people will be employed will inevitably violate human rights, apart from keeping the benefits of growth away from the poor.
Are we moving towards new corporate city-states?
Many SEZs, like the Mahamumbai SEZ (to be built by Reliance Industries), will be like mid-sized cities, over 100 sq km in area (the size of Chandigarh). There will be no elected local government. A government-appointed development commissioner will govern the SEZ with the main aim of facilitating economic growth. SEZs have been declared “public utilities” under the Industrial Disputes Act, making collective bargaining and strikes illegal. Infrastructure like power, roads and water supply is guaranteed to investors and developers, not to the people of the region. Several lakh people may be living/working inside the SEZ. In some cases, the developer may have the right to tax the population in order to provide essential services. The constitutional tenability of private monopolies running local governments (for a sizeable cluster of the urban population) without being elected is questionable. All the non-economic laws of the land under the IPC and the CrPC would be applicable to SEZs. However, internal security will be the responsibility of the developer. Will SEZs turn ultimately into sovereign states -- treasure islands of prosperity in a sea of poverty and misery -- unaccountable to the vast majority of citizens in the neighbourhood?
Will there be loss of public revenue?
Thanks to exemptions from customs duties, income tax, sales tax, excise duties and service tax (even on luxury hotel facilities, shopping malls, health clubs and recreation centres) given to SEZs, the finance ministry estimates a loss of Rs 160,000 crore in revenue till 2010 (the ministry has also asked for capping the number of SEZs at 100. Finance Minister P Chidambaram wrote to Cabinet colleagues saying: “SEZs per se will distort land, capital and labour costs, which will encourage relocation or shifting of industries in clever ways that can’t be stopped. This will be further aggravated by the proliferation of a large number of SEZs in and around metros.”). The foregone tax revenue every year is five times the annual allocation for the National Rural Employment Guarantee Scheme and is enough to feed 55 million people each year who go to bed hungry every day.
Furthermore, given the concessions on import duties (not merely for the investors who will produce exportable items, but also for the developer who will not), there are likely to be foreign exchange losses (rather than gains). For the five-year period ending 1996-97 the foreign exchange outgo on imports made by units in SEZs and the customs duty forgone amounted to Rs 16,461.58 crore against which exports of only Rs 13,563.87 crore were reported.
Moreover, these zones are exempt from sales tax, octroi, mandi tax etc on the supply of goods from the domestic tariff area (rest of India).
SEZs or REZs (Real Estate Zones)?
What are SEZs likely to become in a few years’ time? According to a clause in the SEZ Act (Section 5(2)), as much as 75% of the area under large SEZs (above 1,000 hectares) can be used for non-industrial purposes.
This lacuna in the law is likely to become a loophole for the accumulation of land banks by private developers and property dealers for the purpose of real estate speculation (this explains why so many of them have been buying areas for SEZs). In fact, it may well be the case that the rationale for the above clause in the SEZ Act is the uncertainty surrounding the economic attractiveness (and ultimate viability) of SEZs. If adequate productive investment is not forthcoming, the SEZ developer can at least cash in on the land value. Conglomerates like Reliance already own upwards of 100,000 acres of land in the countryside.
Furthermore, the government has enabled Foreign Direct Investment (FDI) in real estate as of January 2007, leaving the door wide open for massive amounts of international speculative investment in property. Far from giving “land to the tiller,” as the original idea of land reform had promised, the present tendency of the Indian government is to remove all ceilings on the ownership and use of land, thereby serving the interests of big business. It is noteworthy that there is no legal upper limit on the size of land area under an SEZ.
Are there legal violations involved?
The following are the main legal violations arising out of the SEZ Act, 2005:
  • Violates the letter and spirit of the Indian Constitution.
  • Infringes on the fundamental rights of citizens guaranteed in Part III of the Constitution.
  • Relaxation/inapplicability of a number of labour laws (including those under the Industrial Disputes Act, Contract Labour Act, Factories Act, Minimum Wages Act, Trade Union Act).
  • Environment (Protection) Act is inapplicable to SEZs. No environmental clearance needed.
  • Violates Panchayati Raj Act (1996) for local self-government.
  • Violates laws granting rights and control to adivasi communities over their land.
  • Violates many international conventions on human rights.
Are there resistance movements in defence of rural lives and livelihoods?
The political landscape of India in the last 20 years presents ‘a million mutinies’. In every region and state, small and large people’s movements have emerged to fight the appropriation of natural resources, livelihood and survival by government and large national and international corporations. Brief snapshots of these rebellions follow:
In the south
  • Struggle against Coca-Cola in Plachimada, Kerala. Coca-Cola is held accountable for water shortages and pollution in the area. The community forced the Coca-Cola bottling plant to shut down in March 2004. Spearheaded by the Coca-Cola Virudha Samara Samiti.
  • Muthanga forest land struggle, Wayanad, Kerala, led by the Adivasi Gothra Sabha(AGS) and its leader C K Janu for tribal land rights.
  • Farmers protest against land acquisition for the Bangalore-Mysore highway in Karnataka.
  • People’s struggle against mining of the Krishna river by the Reliance Group.
In central and western India
  • Dalit struggle for gairan (grazing) land in the Marathwada region of Maharashtra, under the Jameen Adhikar Andolan.
  • Struggle against Reliance gas lines in Sindhudurg district, Maharashtra.
  • Farmers protest against SEZ in Raigad, against land acquisition by Reliance in Greater Mumbai.
  • Farmers (26 gaon bachao sangharsh samitis) protest against SEZ in Raigad, against land acquisition by Indiabulls.
  • Fishermen’s struggle against the proposed gigantic port at Umbergaon.
  • Anti-Coca-Cola agitation in Kaladera, Rajasthan, by the Jan Sangharsh Samiti.
  • For over 20 years, the Narmada Bachao Andolan(NBA)has opposed big dams and displacement of people and has brought the issue of rehabilitation, justice and the ills of mega projects into the mainstream.
  • Against privatisation of the Sheonath river in Chhattisgarh, the National Alliance of People’s Movements, the All-India Youth Federation, the Nadi Ghati Sangharsha Samiti and the Chhattisgarh Mukti Morcha have been uniting people living along the river to oppose the move. Around 23.6 km of the Sheonath river had been sold to the Radius Water Company.
In the east
  • Protests in Kashipur, Gopalpur, Kalinganagar (Orissa) against displacement.
  • Protests in Singur and Nandigram (West Bengal) against SEZs and displacement.
  • Adivasi struggle in Jadugoda against uranium mining and displacement.
  • People’s movement against the construction of the Koel-Karo Hydro Power Project (80 km from Ranchi) under the Koel-Karo Jan Sanghathana that has stalled implementation of the project for over three decades.
In the northeast
  • Struggle against the Pahladia dam in Assam and privatisation of water resources.
  • People’s movement in Doyang and Tongani, Assam, against forced evictions from forests.
  • Struggle against the Tipiamukh Multipurpose Hydel Project in Manipur.
In the north
  • Anti-Coca–Cola struggle in Mehdiganj, near Varanasi, in Uttar Pradesh.
  • Struggle against privatisation of water, Delhi.
  • Farmers protest against Reliance SEZ in Jhajjar, Haryana.
  • Farmers’ struggle against land acquisition for Trident SEZ in Barnala, Punjab.
Prepared by Citizens’ Research Collective, March 2007

Saturday, April 28, 2007

Aseem Shrivastava: Behind the Curtain of SEZs

Aseem Shrivastava: Behind the Curtain of SEZs

Weekend Edition
April 21 / 22, 2007

The Indian Predicament

SEZS: Behind the Curtain


"Few cities anywhere have created wealth faster than Shenzhen, but the costs of its phenomenal success stare out from every corner: environmental destruction, soaring crime rates and the disillusionment and degradation of its vast force of migrant workers"

--"Chinese Success Story Chokes on Its Own Growth"

The New York Times, December 19, 2006.

Within the short span of a few decades China has become the envy of the world. Corporate managers across the globe lose sleep worrying about "the China price". Real wages and working conditions rivaling those of industrializing, pauperizing Britain two centuries ago have enabled the country to leave far behind any global competitor who has to worry about such inconvenient matters as labor laws and environmental regulations. Thus has accelerated the inter-national race to the bottom that has generated fear since the early days of this phase of corporate globalization. The labor force in the global economy doubled overnight in the early 1990s (from 1400 to 2900 million) when China, India and the Eastern Bloc nations joined it after the fall of the Berlin Wall, under Bush I's "New World Order." If real wages and the share of wages in national income have fallen sharply in recent times, and if inequalities have risen dramatically at the same time, the answer to the riddle lies in this quiet accretion, cashed in on by China-based corporations who have set the pace. The logic of capital has inveigled the entire world into a race of totalitarianisms--which inevitably enrich the few and pauperize the many in every country.

Democracy is a nuisance for capitalism. The success of China should demonstrate even to the most ardent of liberals that capitalism works most efficiently under despotic conditions. If capitalism coexisted with democracy in the Western world for some decades, the rise of China shows it up for what it was: a coincidence of history brought into relief by the fight for freedom and human rights by large sections of the working population of the West since the early days of 19th century British Chartism. The gains of working classes were consolidated by the institutionalization of the welfare state since Bismarck's Germany first brought in social legislation in the 1880s. They took a big step forward with the implementation of Roosevelt's New Deal in the US in the 1940s. Much of this was made possible, needless to say, by the spoils of war and imperialism, which enabled Western elites to maintain labor aristocracies within their own geographical boundaries. A prosperous domestic social peace was arranged on the ample backs of Third World super-exploitation of labor--and maintained internationally through arm-twisting "multi-lateral" agencies like the IMF, the World Bank, GATT and the WTO. And when they failed to work covert or military operations were always on the cards to ensure the desired outcome for Western elites (a practice that continues unabated).

One of the big historical gains of working classes in the West was universal adult suffrage--the cornerstone of modern democracies. By 1964--thanks mainly to the heroic efforts of the Civil Rights Movement under Martin Luther King--even the United States had it. After a while it became all but natural for commentators across the political spectrum to associate capitalism, in some umbilical way, with democracy and freedom. "History suggests that capitalism is a necessary condition for political freedom," the anointed public intellectual of the day, conservative economist Milton Friedman declared in 1962.

What history is revealing now is something altogether different: that far from being the precondition for political freedom, capitalism may be the growing thorn in the flesh of democracy, a thorn that democracy nourishes in the very core of its body-politic, a juggernaut of tyranny, remorselessly hungry for power both within and outside the country, without which its appetite for profits, growth and expansion cannot be met. As capital has had to bare its fangs, the dove of freedom and democracy has flown out of the window.

The Indian predicament

It is in this global context that India is having to chart its economic course.

In order to stand any chance of success in a global field where China sets the bottom-line and the long-understood practices of ruthless capitalist competition hold sway, Indian policy-makers have no option but to fall in line with the heartless rules of the game. It is vain to expect our leaders to then champion democracy--except when they are in the opposition just before elections. To subscribe exclusively to the growth imperative is to be necessarily forced to sideline all other social or political goals and sign on to the charter of (global) corporate tyranny. The private interest--the hunt for ever higher profits, justified by the promise to grow, invest and employ--is the public interest. No need to distinguish between the two any more. Thus, unsurprisingly, as the unfolding logic of capital has revealed its despotic character, even liberalism has lurched feebly towards a quiet grave.

The situation is further worsened by the fact that India's policy-making elite since 1991 has all but willingly had its hands tied by its acquiescence in the plans of global capital. Policy-making has been conducted under the close scrutiny of the IMF, the World Bank and the WTO. This involves many things. To please the IMF, social spending has had to be slashed and the government openly expresses guilt in performing economic functions which it is constitutionally bound to carry out. To keep the World Bank happy the government has to open the door to "development" projects of doubtful social value and destructive environmental effects. To find the ear of the WTO it has had to sell the rural poor down the river, allow subsidized Western imports of foodgrains, remove price supports for farmers and dismantle the public distribution system, thus (especially given the collapse of rural public investment in infrastructure, one of the consequences of IMF-diktat) making it ever more likely that more and more people will find agriculture an unviable option over a period of time--and will be willing to sell their land to corporations or the government.

This has meant that the government has effectively receded from any promise of economic welfare or development, indeed from any economic participation, which does not place corporate interests at the very centre of the public agenda. According to The Times of India there is public money to help Tata in its purchase of Corus, but none to expand the employment guarantee scheme.

The meaning of the Indian SEZ phenomenon

"When I expand, it is always in a capital-intensive, and not in a labor-intensive direction."

- Dinesh Hinduja, to Edward Luce of The Financial Times.

It takes only a little imagination to sense the despair among Indian policy-makers today. They have had to actually believe their own rhetoric--meant otherwise exclusively for public consumption. Thus, despite mounting facts to the contrary, it has become a virtual article of faith--with them as much as with the politicians and the media--that trickle-down economics actually works: that the only way to achieve economic development is via corporate-led industrial growth which will generate employment. Never mind that the modern sectors of the economy are destroying jobs.

That employment in India was growing more rapidly in the 1980s, when the economy was growing much more slowly than it is today, is of little account. That the entire private organized sector of the economy has generated fewer than a million jobs during the past 16 years (and still employs less than 9 million people), when over 12 million people are getting added to the Indian workforce every year should make our policy-makers worried whether we will be a sustainable society at all in the future--whether we will not dissipate ourselves in a welter of frustrated social violence, the kind that Star TV had the misfortune of experiencing in Mumbai the other day. None of this seems to alarm them.

And yet, how could it not? 22-year-olds fed on the dreams of unabashed consumerism are not going to sit idly and watch the rich race past in their speeding cars. Thus, it was not surprising when an ex-Union Minister was so taken by a 2000 visit to Shenzhen, China, where a Special Economic Zone has generated huge amounts of unprecedented wealth during the past generation. 20-30% has been the annual rate of growth, sustained over a quarter century. Over 10 million people have found employment in an area the size of Jaipur. The city has generated 14% of China's exports. Who wouldn't want to be like it?

Or is it? Listen to The New York Times correspondent after he returned from a field visit:

"among Chinese economic planners, Shenzhen's recipe is increasingly seen as all but irrelevant: too harsh, too wasteful, too polluted, too dependent on the churning, ceaseless turnover of migrant labor. "This path is now a dead end," said Zhao Xiao, an economist and former adviser to the Chinese State CouncilAfter cataloguing the city's problems, he said, "Governments can't count on the beauty of investment covering up 100 other kinds of ugliness." As the limits of the Shenzhen model have grown more and more apparent, other cities in China's relatively developed east are increasingly trying to differentiate themselves, emphasizing better working and living conditions for factory workers or paying more attention to the environment. "Some inland cities have started to provide migrants social security, including pension and other insurance," said Wang Chunguang, an expert in class mobility at the Chinese Academy of Social Sciences in Beijing. "In Chengdu, in Sichuan Province, residency controls are loosening up and education for migrant children is getting more attention.""

The province of Guangdong, where Shenzhen is located, recorded 10,000 protests last year--in what is known to the world as a totalitarian society. It appears that in China at least, SEZ is an idea whose time has lapsed. So why is it that in India it is an idea whose time has arrived?

The answers are to be found in the peculiarities of the Indian situation and the utterly odd world in which our corporate and policy-making elites find themselves today. The economy has been growing at a internationally impressive 8-9% for about 5 years now. Indian corporations have become globally mobile units, locating themselves in Eastern Europe and China, Bolivia and Equatorial Guinea, acquiring companies in Europe and North America, mines and oilfields in Africa, Latin America and Australia.

However, there is immense corporate frustration--still--right here at home in India. Some of the cheapest labor in the world is at their command. And yet, because of the inconvenience of democracy they can't be hired and fired in sync with the impulses of the business cycle, as it happens in China. Some of the most readily accessible natural resources are at their disposal. Except that there is the nuisance of bureaucracy in the shape of clearance of industrial projects by pollution control boards and the Union Ministry of Environment and Forests. They have firm control over the hearts and minds of politicians. But, from their point of view, there are still too many taxes to be paid. There is infrastructure in the country, but it is either in the city and already burdened or it is near fertile agricultural land (and must be somehow acquired: the reason that the conflict between agriculture and industry is arising in SEZ land acquisition in the first place). And so on.

SEZs offer a relief from this entire nettle of hurdles. All that can't be attempted in the civilized world outside will be the norm in SEZs. American corporations routinely abuse labor and the environment in Shenzhen in ways unacceptable to the Western world (though no one seems to mind the cheap shoes and clothing). In India, SEZs will provide a profitable refuge from the Indian Constitution, an effective waiver from democracy. The Development Commissioner and the SEZ Authority will have overwhelming powers, making local, provincial, national and international laws all but irrelevant. "Little Chinas" and Shenzhens can be developed. Soon, after their nominal success (inevitable, given the enormous range of concessions) is visible to all, the clamor for more such spots would be heard. And will be heeded. Unlike in China. Nandigrams and Kalinganagars will happen from time to time, but so long as they don't all happen simultaneously, and too close to an election, one could "move forward" in a stop-go pattern to accommodate the formal requirements of an electoral democracy.

This is the plan.

What else does it mean? Recent concessions (like the liberalization of foreign direct investment in real estate), the rush of builders and developers to acquire SEZ land, the fact that only 50% of the area under an SEZ has to be dedicated to processing (whose definition is stretched liberally to include everything from mining to agriculture), the fact that industrialists are all too often being granted land well in excess of their production requirements (whether Tata in Singur or Reliance in Dadri) all point in the direction of an engineered real estate boom through SEZ growth. Huge amounts of capital are pouring into the real estate market, both from within India and abroad. Returns of 30, 40, even 100 per cent in many segments of the market are becoming common--making Indian real estate markets one of the most attractive places anywhere to invest for global finance capital.

And the political implications of SEZs? Far-reaching and monstrous. A real-time pilot experiment in corporate totalitarianism is being launched through the high offices of the nation-state which, if successful, will reduce the latter to a mere clearance window between the corporate superstate in Washington and the emerging archipelago of fiscally autonomous post-modern city-states strewn across the country. As flags are raise once again in rajwadas and princely states, the long-slumbering glories of Indian feudalism may once again rise from the ashes under newly coined corporate brands, fitting snugly into the needs and imperatives of global finance, shoring up what would otherwise appear nakedly as capitalist stagnation worldwide.

With private airports, luxury housing, super-deluxe hotels, world-class shopping malls and multiplex plazas, SEZs offer us a window into the world of corporate consumer dreams. They also portend the end of effective democracy in this country.

The surrounding sea of human misery and squalor is bound to give rise to repeated and violent rebellions. Which is why the private armies of security guards are being trained and readied for approaching inevitabilities.

There are a thousand alternatives to this impasse. But to discover them and forge the collective imagination and will to develop them in practice will require a thriving public culture of democracy--precisely that which SEZs are being created to undermine. Globalization, far from bringing freedom to the world, is taking it away--in the name of freedom.

Aseem Shrivastava is an independent writer. He can be reached at

Thursday, April 26, 2007

� Ban on hiring regular faculty in Orissa Universities is lifted

� Ban on hiring regular faculty in Orissa Universities is lifted
April 8th, 2007

After a long time and with the Orissa financial situation improving the government of Orissa has lifted the ban on hiring regular faculty in Orissa Universities. For a long time, universities could not hire regular faculty and were hiring faculty on short-term contracts. This had resulted in the lack of quality faculty in the universities and as a result the Orissa universities suffered a lot. The lifting of this ban is an welcome step.

This news is reported in various newspapers. (Sambada, New indian Express)
In the first phase the Orissa government has sanctioned hiring of 70 regular faculty at the four universities of Sambalpur University (47 positions), Sri Jagannath Sanskrit University (4 positions), North Orissa University (Baripada-13 positions) and Fakirmohan University (6 positions). The 6 positions in Fakirmohan University is to start a new program in Applied Physics and Ballistics in collaboration with DRDO. 12 of the positions in the North Orissa University are for 3 newly introduced self-financing courses in biotechnology, business administration and computer science. 1 position in the North Orissa University is for a new department in tribal studies.

Entry Filed under: Fakirmohan University, Balasore, North Orissa University, Baripada, Sri Jagannath University, Puri, Sambalpur University

Wednesday, April 25, 2007

Infochange India News Features Analysis Adjust kar lenge: The new SEZ policy?

Infochange India News Features Analysis Adjust kar lenge: The new SEZ policy?

Adjust kar lenge: The new SEZ policy?

By Aseem Shrivastava

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What do the latest changes in the Special Economic Zones policy mean?

The cataclysmic events at Nandigram on March 14 – in which no one still knows how many people were killed, how many raped, how many are still missing – led to the scrapping of the 10,000-acre SEZ for the Indonesian Selim Group and the CPM’s hasty retreat from the area.

Most importantly, the central government was forced back to the drawing board. It came out with some not insignificant changes in policy.

What are they? There is a ceiling of 5,000 hectares (12,500 acres) put on an SEZ. There was no cap earlier. Much more significantly, state governments can no longer acquire land for an SEZ on behalf of private developers. In other words, though the government stopped short of spelling this out in so many words, no recourse is going to be taken to the Land Acquisition Act of 1894. It is also left unspecified whether SEZs are to be treated as a “public utility” nonetheless, exempting them from the full operation of the Industrial Disputes Act (which gives workers various bargaining rights).

Nor can state governments form joint ventures with private developers if they do not already have land in hand to offer the project. States can also acquire land to develop SEZs on their own, provided they stick to the new relief and rehabilitation package to be announced soon.

Moreover, at least 50% of the total area in an SEZ is to be earmarked for processing units. Earlier, the norm was 35% for multi-product SEZs. SEZs will also have tougher export norms to meet—instead of being merely net foreign exchange earners, they will have to have export earnings at least equal to their purchases from the domestic tariff area.
These were the major changes announced.

If actually implemented, the changes are significant. For instance, the new policy implies that private developers will have to deal directly with farmers and landowners to acquire SEZ land. There will be a free market in land for once, without interference from the state. In a country like India, where the acquisition of large chunks of contiguous land in a farmed area is complicated by the number of different owners the acquiring company has to deal with, the transaction costs for the company are substantial. (Of course no such problem would arise if government invited the private sector to purchase degraded land, but who wants to spend any money on building infrastructure when it is already there to piggyback on?) There is also the risk that the company may fall short of the minimum land required for the industry in question due to the unwillingness of one or a few owners to sell their property.

This was the very reason that the Land Acquisition Act of 1894 was invoked to accumulate land for SEZs. The state would then effectively act as a broker for private companies, hardly a role behoving a democratically elected set of people’s representatives. The conflicts and protests during the last several months in West Bengal, Maharashtra, Punjab and elsewhere, have revealed the moral folly of such an approach. (In contrast to their Communist counterparts in West Bengal, the Gujarat government has skilfully minimised such conflicts by staying out of land deals in the first place. It has also avoided some problems by keeping agricultural lands out of the reckoning.)

“This is not the Gita or the Bible. No?”

That is how Union Minister for Commerce and Industries Kamal Nath responded to the media when queried about the new policy ruling on land ceilings for SEZs. Not surprisingly, just the previous day the Reliance spokesman on SEZs, Anand Jain, had told NDTV: “I am sure this is not a final no. There is much more to come. We will go to the government, we will place our ideas with them, and we are sure they will change their mind.” A good sample of how policies are made, unmade and remade in this fascinating democracy. Policies are made in the shadows. The government implements them by stealth. People protest. Government appears to budge. Money whispers. The media feels sorry for the megacorps. Politicians nod. They wait for people to get tired. Soon everything goes back to where it started.

Kamal Nath was visiting China when he made that remark. Perhaps the perspective of distance made him feel secure in making the statement, within two weeks of the meeting of the Empowered Group of Ministers on SEZs. The echoes of Nandigram might have faded in the din of Beijing.

Being the biggest accumulator of SEZ land in the country, Reliance was “hardest hit” by the policy ruling of April 5. It had the sympathies of the media. Reliance has been in the process of acquiring, among other properties, two huge areas of over 25,000 acres each near Gurgaon in Haryana and near Mumbai. Evidently, their confidence is unshaken by the new policy ruling. They are not giving up: “The cap on the size of SEZs does not exist in any other country. This is one of the vital issues that will be taken up with the government,” Anand Jain told PTI the other day. (SEZs do not exist in most countries, the reason why caps on their size do not exist either.) Reacting to the government’s decision to distance itself from acquiring land for SEZs, he said: “The government cannot have it both ways. They cannot insist on the SEZ being on contiguous land and then refuse to get involved...” It becomes clearer how the government is being cornered to play the role of land broker once again.

When asked how Reliance would acquire land in the face of protests by farmers and activists, Jain told NDTV that the compensation package to farmers will be like a lottery. So much for fair compensation.

Exactly who calls the shots when it comes to economic policymaking ultimately becomes clear when you listen to Kamal Nath after his return to New Delhi: “Should a proposal for an SEZ be for an area larger than 5,000 hectares, after examining its impact on the economy overall, the government could consider it…Once the rehabilitation policy is in place the government will look into it. It (the ceiling) is not part of the SEZ Act, but part of the rules.”

So why all the song and dance about the government changing SEZ policy?

It wastes a lot of the public’s time.

Movers and shakers

According to The Times of India, having learnt from the events at Nandigram, the newly elected government of Prakash Singh Badal in Punjab may reverse its predecessor’s decision to acquire 485 acres of land for the giant builder-developer DLF across seven villages near Amritsar. This despite clearance from the central government for the SEZ projects in the state.

Yogesh Verma, head of the SEZ division of DLF told the newspaper: “We had decided to go to Punjab following an assurance by the state government to provide us land. How can it go back on its promise? Land acquisition for our project should be considered retrospectively.”
Given that DLF is planning investments of Rs 1,800 crore at an SEZ near Ludhiana, in addition to the Rs 453 crore planned for the Amritsar SEZ, it remains to be seen whether the Badal government is strong enough to stick to its word.

The new Punjab government will do well to remember that the Amarinder Singh government had suffered a bitter defeat in the recent assembly elections in Punjab thanks to its pro-corporate, anti-farmer policies. There is no barren land in Punjab, only some of the most fertile arable land in the world. The anger and resentment of farmers against state policies runs high.

Besides DLF in Punjab there are investors in other parts of the country who are looking for a reinstatement of the original SEZ policy of the government. There is, for instance, the South Korean steel transnational POSCO, slated to bring the largest-ever foreign investment into India ($12 billion or Rs 52,000 crore, in order to access cheaply some of the best and largest iron ore deposits in the world) and waiting for the Orissa government to complete acquisition of the 4,000-odd acres of land in Jagatsinghpur district. The acquisition has been stalled not merely by the central government’s recent policy of suspending the clearance of SEZs (before April 5) but also by the fierce resistance the state has faced from three local tribal villages who are defending their heritage in a way no less zealous than the peasants of Nandigram fought for theirs.

POSCO has applied pressure from the top, by getting the mayor of Seoul to approach the Indian Prime Minister himself. A dozen platoons of the Orissa police have surrounded the three villages, waiting for orders to strike. The villagers are ready for them. But Nandigram is too haunting a recent memory to allow either the Prime Minister or the Chief Minister (Naveen Patnaik) to take recourse so readily to force yet again. Besides, it would be a direct contradiction of the stated change in government policy (on April 5) if the government still found it within reason to use the Land Acquisition Act to take over the land from the tribal communities.

And yet, an Orissa government release to The Times of India on April 20 has the temerity to claim that “the government of India requested government of Orissa to expedite land allotment to POSCO…POSCO may negotiate with land users for acquisition of private land if they want SEZ status, in which case the state government can facilitate the process.”

So there we go: the state as land broker yet again.

The alternative

It is clear that the State must stay out of land acquisition (for SEZs or indeed, for any other purpose). That is the message of Nandigram and Singur. Wouldn’t the farming community then be vulnerable to local land mafias, who can be deployed by private builders and developers to seize the land of farmers?

The State has a Constitutional responsibility to defend the private property of farmers and peasants. It is legally obliged to use its coercive policing powers to ensure that the land mafia does not use threat or force to seize the land from vulnerable peasants. This must be the demand made of governments across the nation as regards the policy of land acquisition.

If governments can’t learn that lesson from Nandigram and Singur, they should at least draw it from the string of recent electoral defeats for incumbent parties throughout India. People have had enough of their needs being trampled upon by a State all too cosy with corporate India – in cruel disregard of pre-existing rights of the underprivileged.

nfoChange News & Features, April 2007

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Arise Awake Stop not till the goal is reached. - Swami Vivekananda Swami ji is my inspiration, not as a monk but as a social reformer and for his universal-ism.