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Mr. Hyde of Business

The Indian government and Indian companies need to stop exploiting India's poor and vulnerable!

Recently, Tata Motors announced plans to build a new factory in West Bengal. The factory is to be built on farmland. The company purchased farmland from farmers for an agreed upon amount. The poor, and mostly uneducated, farmers now believe they were cheated in the transaction (i.e., not given a fair price for their land) and rightly want more compensation.

The company responded by saying the price paid was fair and the government responded by beating up the protesting farmers.

I do not understand the mentality of the government and companies like Tata Motors. They don't mind paying a huge premium when purchasing foreign owned companies. However, when dealing with its own poor and therefore, most vulnerable people, they don't have any problems cheating them out of what they deserve. After all, business is business, right?

A few months ago, Tata Steel - controlled by the same Tata family who control Tata Motors - purchased Anglo-Dutch steelmaker Corus for 6.2 billion Euros or 12.2 billion Dollars. The final price paid represented a premium of 64 percent to Corus's pre-bid share price! The deal made Tata Steel the world's fifth largest steelmaker. The company had to take on a huge debt load for the purchase and most analysts concluded the deal was expensive.

This is a very typical and sad example of robbing from the poor to pay the rich. Tata Motors would not have to pay, what would have amounted to a few thousand dollars more, to fairly compensate the farmers for their land (forget about premium!).

The government is doing similar things by acquiring thousands of acres of valuable farmland at less than fair value for it's "Special Economic Zones" or SEZs. And what will happen to the millions and millions of self-employed shopkeepers if American retail giant, WalMart, enters the Indian market?

WalMart has already blocked space in Mumbai. It is currently "lobbying" (bribing) the government to open up foreign direct investment (FDI) in retail. I have little doubt that FDI regulations will be lifted soon.

Mountain trekking has taken me to many small, remote, isolated, self-sufficient and truly beautiful villages in India. The villagers are some of the most gentlest, kindest and helpful people I have ever met. They have little material things and face many hardships, yet they are happy. City dwellers can learn something from them. I would never even dream of cheating or exploiting these people.

I encourage people to visit some of the villages, not to exploit, but to learn how to live. Show some love, please!

5 comments:

Can't C Me said...

For more on Tata, read the Tata Rap Sheet:

http://www.bhopal.net/tata_rapsheet.html

Sushil said...

very true! that's the result of unrestrained capitalism

Gaurav B Jain said...

Well I disagree with not just what u say but the very style of thinking ….let me ask a few questions:
1. How do you know for sure that Tata s did not pay fair price to farmers & farmers are right in asking more. Does being poor make them more honest or more vulnerable to exploitation ? ….well I have seen quiet some land aggregation for an SEZ & I can tell u that they might be uneducated, poor but more shrewd than professional business men when it comes to their land…its their most price possession.

2. How well are you aware of acquisitions , valuations by analysts n the Tata deal to know that was it at a premium. If so why ? What is the business implication of this deal . Why was the premium given ? Comparing it with robbing poor to pay rich is not just a naive rhetoric but factually incorrect as well.

3. Most of the new developments done in outskirts of cities like factories, power plants, big townships are all made on farm land acquired as such n later converted for commercial use. The law of the nation permits it & morally it acceptable because …well….as a nation we need them as well…they too add to GDP….provide employment & add to the overall development of the nation ….which by the way is needed the most by villagers. If you say all this doesn’t impact them positively ….then well… I can prove it to you that it does.

4. About SEZ well I agree with you for a while that we were better off even without them. But given my view they still do some good…if u happen to know the exact legislation & implications of an SEZ.

5. Well retail giants coming to India or our own giants (like Big Bazaar) bring efficiency in the retail market, benefits a lot of middle class by providing them cheap stuff…..this middle class are also our own people (I won’t say the most valuable like you said for the poor because there is no barometer which can say which type of ppl are most valuable for a nation). About middle men losing work…yes ….they will in the short run of say 5 years but in the long run this will add to we becoming a developed nation & benefit all. Also, there retail giants pay tax on every penny they earn since they can’t evade but these middle class self employed the biggest tax evaders. The nation benefits in totality is my bottom-line.

One more thing – Business IS Business…there is nothing bad about it ….

And finally in my defense, I have spent large part of childhood vacations in really small villages. I am pro development & believe that govt must pay more attention to ensure the development of small villages and yes ppl in metros sud learn from villages how to be happy in all situations.

Gaurav B Jain said...

reply to me at
gauravjb@gmail.com

Can't C Me said...

Gaurav,

1) If you read the news, you would know too that Tata did not pay a fair price to farmers. Farmers were duped into thinking they were getting a good price. And yes, being poor definitely makes you more vulnerable to exploitation. No doubt about it. It would be too naive to think otherwise. Poor and uneducated usually go hand-in-hand, so it's easy to exploit these people - even if their land is their most prized possession.

2) I'm well aware of acquisitions and valuations. Tata paid a huge premium. That was the price to pay to enter the European market. That's all fine and dandy. However, why can't they pay a fair price to acquire the land from farmers as well? The answer is: because they can cheat the farmers and get away with it. After all, the government is on the side of where the money is (Tata), and not the farmers.

3) Yes, development is good. But one has to stop and ask - at what cost? Clearly, the development now happening in India is unsustainable. For proof, look at the infrastructure of any major city and the answer will be obvious. Poor public transportation, water shortages, electricity outages etc will only get worse from more development. Providing employment and increase in GDP are only short-term benefits. In the long-run, unsustainable development will eat away all the benefits.

India needs to do more to protect farmland from developers. Once a self-reliant nation, India may now have to import food.

4) This much is clear. The SEZ legislation is not meant to benefit the poor. It is meant to benefit the rich (tax-free haven for businesses). SEZ's built on farmland will only lead to food shortages in the future.

5) Retail giants are not good for the millions of self-employed people. All family-owned businesses will be forced out of business once these arrive because they won't be able to compete with the giants' economies of scale. This will only lead to more unemployment and certainly won't be good for the economy.

Also, I did not say the poor are the most valuable people. I said the poor are the most vulnerable people.

I don't understand how all the small business owners losing work for 5 years will benefit the nation in the long-run. Unless you can find jobs (which are already so few) for all of these people, it definitely won't do the nation any good.

And yes, business is business, but there is much bad about it. Polluting our ground water and environment are only some of the things. I'm not against development, but I'm against unsustainable development, which is the way India is growing.

 
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