Volume 23 - Issue 16 :: Aug.

12-25, 2006
INDIA'S NATIONAL MAGAZINE
from the publishers of THE HINDU

SPECIAL FEATURE: BOOM TIME IN CHENNAI

Real estate rush

A SPECIAL CORRESPONDENT

The unprecedented growth of the real estate business has changed

Chennai's reputation as a relatively sober market.
N.SRIDHARAN

TIDEL PARK AND Ascendas IT Park at Taramani, the new catalysts of

growth in Chennai.

CHENNAI is experiencing a major real estate makeover. Indeed, the new growth
areas are not in the heart of the city; it is the sleepy suburbs that are witnessing
frenetic construction activity. Nothing illustrates this boom better than the shooting
up of land prices to levels unimaginable even a year ago.

The obvious catalyst for this growth is the phenomenal development of the
Information Technology sector in the past decade. But just as important are the new
facets of the traditional strengths that the city offers, particularly as a retailing and
manufacturing hub. Simply put, IT has led to increasing levels of disposable income
in the hands of the young workforce. Their consumerist culture has had important
implications for the city. The happenings in the real estate market only testify to this.

CORE STRENGTHS

Chennai is an important base for all the IT majors, including Wipro, Ascendas, Tata
Consultancy Services, Infosys and Polaris. There are several reasons why this is so.
The most important one is the city's reputation as a reliable centre for technical
education, which results in companies being assured of a steady supply of qualified
personnel. Apart from the Tier I companies, there are several smaller ones that

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operate in the IT-Enabled Services (ITES) and Business Process Outsourcing (BPO)
segments.

Not everything that is new is related to IT. International automobile giants such as
Ford and Hyundai, telecom majors such as Motorola and Nokia, and retailing majors
such as Shopper's Stop and Lifestyle have an important presence in Chennai.
Moreover, several mega malls are being planned. There are also indications that the
consolidation in the retailing industry could result in larger retail outlets and better-
paid jobs.

In order to provide a further impetus, both the Centre and the State government are
initiating projects such as the four-lane Chennai bypass Phase II, a cloverleaf
structure close to the airport that will directly connect the city to different National
Highways. This is expected to ease traffic congestion in the city. The Rs.200-crore
project is to be completed by 2008. A six-lane road, replacing the two-lane Old
Mahabalipuram Road, leading to the IT corridor is also due for completion.

In order to cater to the needs of business travellers, several business centres have
been established in the city. For travellers who combine business and leisure several
up-market hotels have been built in recent years. International players such as
Courtyard Marriott, Radisson, Hilton and Le Royal Meridien have a visible presence in
Chennai. Several more such facilities, including five-star hotels of the Leela and JW
Marriott group, are under construction. The city already has a convention centre, the
Chennai Trade Centre, spread over 25 acres (1 acre is equal to .4 hectare).

Until about a decade ago a typical property hunter would have been about 50 years
old, planning for a house on the verge of retirement. Invariably such persons would
have been residents of Chennai or would have hailed from Tamil Nadu. This situation
has changed. Real estate developers say the average age of prospective clients now
has dropped to 28-35. Young and adventurous, with disposable incomes that are a
manifestation not only of the IT boom but also of newer occupations in the service
sector, they come from all over the country. Says one real estate promoter:
"Chennai's biggest advantage is that it blends the characteristics of a small town and
a big metro."

It would be a mistake to think that the boom is entirely driven by the IT

phenomenon. The noticeable change in the age profile of the industrial workforce -
not just in IT but also in the manufacturing and services sectors - has been made
possible by a more flexible approach to labour. Employers across the board appear to
prefer a younger workforce, which has implications for the real estate sector.

But this workforce is highly segmented. At the top of the heap are professionals of
the IT and allied sectors and those working in private banks and the financial
services sector, followed by top executives working in the manufacturing sector,
particularly those employed in the private sector and multinational companies. The
most important element within this segment is the non-resident Indians who are
increasingly buying property in the city. This segment constitutes the core of the
"high-value" market in the real estate sector.

Land prices in Chennai have spiralled in the past few years. This means that the
traditional bungalow, or `independent house', is beyond the reach of even the
wealthiest. The "flat culture", although slow in taking off, has now matured

2
significantly. This makes it possible for owners to get amenities and a quality of life
that would be virtually impossible in an "independent house". Swimming pools,
penthouses, round-the-clock security, landscaped gardens, play areas for children -
all these are standard amenities provided in the new housing complexes.

As land prices increase and the provision of basic amenities come under strain, scale
becomes critical in the real estate business. N. Ravichandran, chairman of True Value
Homes India Private Ltd., told Frontline that real estate was "more of an organised
business", implying that small builders are finding it more difficult to satisfy the
discerning buyer.

M. KARUNAKARAN

THE SIX-LANE road under construction, at Taramani.

More important, the economies of scale that accompany organised business make it
possible for large-scale builders to offer the amenities that buyers want. "Life in the
city has reached a point where a dwelling unit is only a small part of what buyers
want," explained Ravichandran. Buyers not only realise that these amenities are
critical elements in their new lifestyle aspirations, but also know that these enhance
the resale value of their properties. When operations are scaled up, amenities that
were earlier considered luxuries now appear within the reach of the new middle
class.

Jain Housing and Constructions Limited is regarded as a pioneer in handling large

projects. In the past 16 years the company has built more than 3,000 dwelling units,
covering more than 2 million sq ft. Its current projects involve another 2.5 million sq
ft. The company provides its customers a preferential allotment scheme, which
enables them to book built-up property in advance.

Flats are not the only kind of dwelling units coming up in Chennai. For those who
have high levels of disposable income, there are builders and promoters who offer

3
"independent" houses, different from the bungalows of yesteryear. For instance, Isha
Homes offers middle-class villas with facilities such as food courts, party halls,
gymnasia, swimming pools and special recreational play areas for adults and
children. Moreover, the project, located near the nerve-centre of the IT corridor,
provides dedicated Internet connections, apart from a common sewage plant, black-
topped roads and other facilities on the campus.

A new breed of developers has ventured into large projects. Ravichandran, a civil
engineer, started his business in 1997 by building in the range of about 25,000-
30,000 sq ft per project. In contrast, True Value Homes' Park Villa project, a
"premium project launched two years ago at Perungudi close to the IT corridor, is
spread over more than 5.25 acres. It consists of 288 dwelling units. Built adhering to
the principles of Vaasthu Sastra, the project has virtually created a mini township. It
has its own ATM-banking facility, open-air theatre, shopping arcade, play areas,
swimming pools and health clubs.

Since the project is located on the outskirts, every need of the residents had to be
met in order to make it a self-contained township. Ravichandran said the company's
"face changed dramatically" after it completed the project. It is now building
residential complexes of 1 million sq ft. He said land prices in the area shot up from
Rs.5 lakhs an acre to Rs.50 lakhs an acre since the project was completed.

The real estate market in Chennai has traditionally enjoyed a reputation for being
less speculative compared to markets in other metros. Even during the early 1990s,
when the sector witnessed a major boom, land prices in Chennai did not rise as
sharply as they did in the other metros. That reputation, of being a relatively sober
market, has changed for sure.

Ravichandran says the change has happened for several reasons. First, several
international companies have set up base in Chennai. "These companies," he said,
"are not particularly bothered about rental values. They are more worried about the
quality of the infrastructure. They are ready to pay even the rental values in Delhi if
they are assured of good quality." In fact, True Value Homes, like other big property
developers, is building an IT Park at MRC Nagar with a capacity of 4 lakh sq ft. The
company is also planning a 100-acre satellite township near Tambaram. Several
major real estate players have entered the market in recent years. Ravichandran
predicts that the building activity will soon reach Mahabalipuram, about 60
kilometres from Chennai. One of the most important consequences of the
unprecedented boom is that small builders, who were the pioneers of the 1990s
boom, are unlikely to remain competitive.

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Representatives of larger real estate developers say that in the new situation those
without proper project management systems will find it difficult to stay afloat. This is
because rising land and building costs require builders to plan projects in order to
keep costs under control. Real estate developers say that the boom in the industry
has meant that inputs such as steel, cement and concrete are not only costlier but
not available off the shelf. This means that builders have to plan their projects in
advance. A builder said: "If you need steel or concrete, you have to book a month in
advance from the vendors and get the test certification. This means that the different
aspects of a project have to be synchronised. This is what is meant by organised real
estate business."

The unit cost of a built-up property on a small plot will not be competitive vis-a-vis a
large-scale residential township. The clinching factor is that the large project will be
able to provide a host of amenities and services that would be simply impossible in a
small property. Big developers say that the future of the business is in the organised
sector, not in the small builders. There are problems associated with the boom. Land
prices have shot up to astronomical levels, there is a shortage of quality manpower,
building materials are costly and are in short supply, and, the presence of "trial and
error" operators in the business is also a burden for better-quality builders.

The housing business, like any other, is also a segmented one. Property developers
have been paying attention to housing projects for the relatively well-to-do sections.
The Tamil Nadu Housing Board has been a relatively quiet player in this ongoing
boom. Soaring land prices have made the purchase or construction of houses beyond
the means of the middle and lower middle classes. Recent reports have indicated
that the Tamil Nadu government proposes to acquire about 7,000 acres for the
establishment of a satellite town outside Chennai. It is estimated that 30,000 acres
would be required to build the township, inclusive of all amenities.

5
The Chennai Metropolitan Development Authority (CMDA) plans to implement a
`single window' system for processing building plan applications quickly. The idea is
to devise a system that would provide a "one-stop shop" for building plan approval -
from verification of land records to approval of building plans and on-the-spot
inspections. At present, applicants have to verify the records of land use and get
approvals from the various government departments. Industry sources said the new
system would expedite the planning approval process.

The promotion of Tamil Nadu as an investment destination has resulted in prices of

industrial and commercial plots becoming costlier than housing plots. The increase in
the Floor Space Index (FSI) for IT companies has played an important role in the rise
of the price of land for commercial and industrial use. In fact, this was sanctified by
the State government's IT policy in order to encourage hardware and software
industries and associated services. The policy also encourages private developers to
establish IT parks. These IT parks are eligible for various concessions.

Specifically, IT parks are allowed an FSI that is 50 per cent more than the normal
limit. The FSI basically sets a limit on the extent to which a builder can build within a
given extent of the property. From a town planner's perspective this is important
because it indicates the extent to which the infrastructure, in a particular locality
would be pressured to meet the needs of the people using the facility. A higher FSI
for the IT industry means that, other things remaining the same, the area's
infrastructure would come under pressure. If a town authority increases the FSI for
IT companies without developing the infrastructure it can result in severe strain on
the city's infrastructure. Critics of the CMDA have pointed out that merely increasing
the FSI without actually developing the infrastructure has resulted in severe
problems, particularly in the management of traffic.

Lured by the enormous opportunities for profits in the real estate business, property
developers are now seeking to occupy the industrial wasteland in the city. The old
industrial heartland, extending from the northern part to the western part of the city,
has particularly attracted them.

One of Chennai's oldest industrial landmarks, the Buckingham and Carnatic Mills in
Perambur, is now being developed as a real estate project. SSI Ltd, which acquired
the property from Binny Mills, the site of a bitter industrial dispute in the 1990s, is
building 5,000 apartments on a 70-acre plot. The Rs.1,000-crore project, with
landscaped grounds is projected to change the face of the area which was once a
working class suburb. SSI expects to build 1,000 apartments, priced between Rs.30
lakhs and Rs.40 lakhs, every year for the next five years. The company also plans to
let a leading private school establish its premises in the township. Also planned are a
hospital, a three-star hotel, and a 20-acre commercial area.

The speculative interest in land has resulted in promoters from all over the country
flocking to Chennai. Developers from Ahmedabad, Bangalore, Hyderabad and Delhi
are now promoting large projects in the city. They are planning integrated townships
along the GST Road, on the Tambaram-Velachery Road, at Valasaravakkam,
Sriperumbudur, Vandalur and at Siruseri where a major IT park is already located.
The extent of land for such projects ranges from 10 acres to 200 acres. Added to this
is the government's move to open up Foreign Direct Investment in the sector.
Moreover, the Securities and Exchange Board of India has approved guidelines for
the Real Estate Mutual Fund, a scheme meant to facilitate investments in real estate

6
property. This could cause prices to spiral out of control. And that may have
implications for equity in the real estate business. In specific terms, a roof over the
head for the poor could well be in jeopardy.

For the State government, the increasing value of land is a boon. Higher property
prices translate into higher revenue collections. In the first quarter of the current
financial year revenue collections from stamp duty and registration charges showed
an increase by nearly 40 per cent compared to the same period in the previous
financial year. Chennai accounts for more than 40 per cent of the total stamp duty
and registration charge revenue accruing in the State. The Tamil Nadu government's
Registration Department collected nearly Rs.320 crores in the first three months of
the current financial year from the three zones of Chennai.

Sources in the real estate business say that nearly 1,000 medium and large
residential housing projects are coming up in the city. The buoyant interest rates on
housing loans have not dampened the market.

SPECIAL FEATURE: BOOM TIME IN CHENNAI

Widening investor base

A HOUSE is usually built or purchased to last a lifetime. However, the idea of building
a house to reside in it has been replaced by the motive of "investing" in property to
serve a speculative urge. The sharp fall in nominal interest rates for housing loans
since the late 1990s acted as a catalyst for this changing perception. The tax breaks
on housing loans are an additional incentive. It has resulted in a large segment of
the upper middle-class acquiring houses. Speculative excesses are bound to happen
in a market which is widely perceived to be opaque. Moreover, the system, open to
rampant abuse because of the large-scale deployment of black money, enables
excessive speculation. It is not surprising that land prices have escalated sharply in
such a situation.

Aiding the euphoria is the common perception that there are no risks in the real
estate business. This is not true. How much the value of a property will appreciate
depends on several factors. For one, the rate of appreciation of properties, which are
already overvalued, will be slower when compared to properties in areas that have
not yet been hit by the boom.

Moreover, the extent of appreciation depends on what else is going to come up in the
vicinity of the property. New malls and shopping complexes, IT parks and other
facilities will cause property values to shoot up.

A leading builder in Chennai said that a large property built by him recently near the
IT corridor resulted in a general appreciation in the land prices in the area. The point
is that there is no such thing as a general rate of appreciation; the specific factors
result in actual appreciation. Herein lies the catch for the "small investor" in real
estate. In fact, it is very similar to the share market where the large players have
established complete control over the market. The opaque nature of the market
makes things even more difficult for the "small investor" in real estate.

The Securities and Exchange Board of India (SEBI) recently laid down guidelines for
real estate mutual funds (REMF). The logic appears to be to provide depth to the

7
property market and widen the investor base, possibly enabling the small investor to
participate in the highly speculative market.

The Board has prescribed the following investment options: Direct investment in real
estate properties within India; mortgage-backed securities; shares
/bonds/debentures of listed/unlisted companies, which operate in market for
properties; and other securities. The safeguards to investors are similar to those
available in other mutual funds. The REMFs will have to declare their net asset value
(NAV) on a daily basis and list the funds on the stock exchanges.

A Special Correspondent

SPECIAL FEATURE: BOOM TIME IN CHENNAI

Modern methods

A SPECIAL CORRESPONDENT

Builders have been adopting new construction techniques, materials and

organisational practices.
N. SRIDHARAN

A RESIDENTIAL apartment complex at Saligramam on Arcot Raod.

THE scaling up of operations in the construction business has required structural

enhancements to provide sturdy structures. Real estate developers say that builders
in Chennai have been enterprising enough to adopt new construction techniques,
materials and organisational practices that are needed to build modern structures.

Until recently most materials were mass commodities, without a brand name.
However, in the last few years, brands have acquired importance. Until recently,
most builders used to mix their own concrete for use in their projects. But the
growing complexity of the construction business has resulted in the entry of suppliers
of ready-mix concrete of varying specifications to cater to the needs of different
kinds of structures.

"It is just not worthwhile to spend effort and money on making my own concrete mix
for my various projects in the city at any given point of time," explains a leading

8
Chennai-based builder. Moreover, the onus of meeting quality standards is now on
the supplier, relieving the builder of an additional responsibility. This change, caused
by the scale factor, has resulted in several branded products in the ready-mix
concrete business. This can also be seen in the case of several other raw materials
such as steel, aluminium, bricks and cement.

One of the new entrants in the branded steel business is Viki Industries Private Ltd.
The company has a plant near Chennai for manufacturing secondary steel. It has
launched its own brand, iSteel, targeted at the construction industry. Viki Industries
will use its branding initiative to educate customers on choosing right-quality steel
and on the right quantity to be used. The first product under this branding initiative
is a TMT (thermo-mechanical treatment) bar. The company will launch other products
under the iSteel initiative, including corrosion-resistant steel. iSteel will also help the
company price its products at a premium over the competition from other secondary
steel manufacturers, according to G. Gautam Reddy, managing director, Viki
Industries.

Viki Industries has its plant at Gummidipoondi near Chennai and has a capacity of
50,000 tonnes a year. It has a 5-MW furnace oil-based captive power plant that
meets almost 95 per cent of its power requirement.

Gautam Reddy told Frontline that Viki Industries was manufacturing cold twisted and
deformed (CTD) bars but later started making TMT bars. While CTD bars are rolled
and twisted manually to strengthen the steel bars, TMT bars are made through a
process of quenching and tempering, which imparts greater strength and elongation
to the steel. Gautam Reddy pointed out that TMT bars were particularly suitable for
earthquake-resistant buildings. They show greater resistance to corrosion, have
better weldability and bendability and are fire-resistant.

ARS Metals Private Ltd is another steel producer catering to the needs of the
construction industry. An integrated steel producer, it has technical collaborations
with companies based in Belgium and the United States. The technical enhancements
made possible with these collaborative agreements have enabled it to introduce
further refinements in TMT bars. Pankaj Mehra, vice-president (marketing), said TMT
bars offered a 20 per cent saving to consumers when compared to CTD. New
treatment techniques, he explained, ensured that the outer layer of the steel was not
exposed to moisture and hence did not peel off.

Mehra told Frontline that the boom in the real estate business, caused by the entry
of Information Technology and Information Technology Enabled Services businesses
and multinational companies, resulted in greater awareness about quality
construction materials among builders and promoters. He also pointed out that
Chennai's builders were quality conscious and open to new ideas.

9
 S.R. RAGUNATHAN

INSIDE THE CHENNAI City Centre, a new mall, on Radhakrishnan Salai.

Referring to the spurt in the price of steel, Gautam Reddy said that the cost of
construction materials had gone up owing to the global boom in the construction
industry. The increase in the demand for steel in China, Dubai and South Asia has
contributed to the increase in steel prices, he said. He feels Chennai is "becoming the
favourite destination for business and has a strong positioning as the next IT
destination". There will be a huge need for residential complexes and other
infrastructure, he said. "Things look very bright for Chennai for the next few years,"
he said.

Gautam Reddy said that the ongoing boom requires manufacturers like Viki to invest
in research and development, in order to produce newer and better grades of steel.
This, he said, would also result in lower construction costs.

Big projects mean that water supply for drinking and other uses had to be made
available on a big scale. Moreover, there is the need for sewage and sanitation
amenities.

Grundfos Pumps India Private Ltd, based in Chennai, sells pumps for water
extraction, pumping and pressure boosting. It also supplies pumps for wastewater
handling and water treatment to leading property developers and builders. In the
wastewater segment, the company supplies the space-saving solo lift pumps for
toilets.

B. Chandra Sekaran, business director (eastern and southern region) of Grundfos,

told Frontline that water management in India has a "major problem". Efficient
management, he said, meant "handling the scarcity of water as well as operating the
system economically".

He claimed that Grundfos' pumps conserved energy and were highly reliable. "They
consume less power because of their high pumping efficiency," he said.

10
"The use of sheet metal and laser machines has resulted in greater consistency and
accuracy in the manufacturing process. In some cases, built-in variable speed drives
are a specialty," he said.

Volume 24 - Issue 9 :: May. 05-18, 2007

INDIA'S NATIONAL MAGAZINE
from the publishers of THE HINDU

THE STATES

Raging battle

SUHRID SANKAR CHATTOPADHYAY

Nandigram flares up again, on April 29, and fighting between CPI(M)

supporters and the BUPC claims two lives.
ARUNANGSU ROY CHOWDHURY

Mamata Banerjee in Kolkata after meeting Governor Gopalkrishna Gandhi on

May 3.

THE intermittent clashes between supporters of the Communist Party of India

(Marxist) and the Bhumi Uchhed Pratirodh (Land Eviction Resistance) Committee
(BUPC) headed by the Trinamool Congress and supported by the Socialist Unity
Centre of India, the Jamait-i-Ulema-e-Hind and naxalites escalated into an all-out
battle - the first major instance of violence since March 14 - in Nandigram, East
Midnapore, on April 29. In the violence, which raged from 6 a.m. until the next day,

11
two CPI(M) supporters were killed and 10 persons injured. Some 500 people of the
region were driven out, and houses and shops were plundered and burnt.

While the CPI(M) points an accusing finger at the Trinamool for precipitating the
violence, Trinamool supremo Mamata Banerjee puts the blame on "armed" CPI(M)
cadre trying to push their way into BUPC-occupied Nandigram. According to State
Home Secretary Prasad Ranjan Roy, the police were told to exercise restraint. "They
did intervene but only to a certain extent. Even now, if the police were to enter many
places in Nandigram, they would encounter stiff resistance, and we do not want to be
forced into a situation where we will be compelled to take recourse to firing," he told
mediapersons. It is clear that the State government wishes to err on the side of
caution to avoid a repeat of the catastrophe of March 14, in which police firing and
subsequent violence in Nandigram left 14 dead and 75 injured.

By May 2, though the intensity of the violence had abated to some extent, news of
sporadic fighting and arson continued to trickle in. From January onwards, more than
3,000 people of Nandigram, including women and children, have been ousted from
their villages by the BUPC and their houses looted and reduced to ashes, all for being
CPI(M) supporters. Many of these people have sought shelter in relief camps set up
in Khejuri, an area bordering Nandigram, where the violence of April 29 was
particularly intense. On April 25, at a massive rally organised by Mamata Banerjee in
Garchakraberia in Nandigram, Trinamool leaders who addressed the gathering said
they would have to remove the red flag of the CPI(M) from Khejuri, Haldia and
Nandigram.

Just a couple of days later, on April 27, Iliyas Mohammad, the Communist Party of
India (CPI) Member of the Legislative Assembly (MLA) from Nandigram, was attacked
at a public meeting in Chourangi Bazaar, a few hundred metres away from occupied
Nandigram's Hazaarkata. Around 50 armed attackers on motorbikes, allegedly under
the leadership of the Trinamool's Abu Taher, roared in at around 5 p.m., hurled locally
made crude bombs, and broke up the meeting. They singled out Iliyas Mohammad
and proceeded to beat him up. The MLA lost a tooth in the attack.

Addressing a press conference on April 30, Left Front chairman and CPI(M) State
secretary Biman Bose, who is also a party Polit Bureau member, said that the
violence on April 29 appeared to be "pre-planned". He referred to Mamata Banerjee's
press conference on the same day at which she said that she had asked one of her
Members of Parliament to intimate the Prime Minister's Office and the State Governor
about the firing at Nandigram, barely two hours after the violence had broken out.
"How is it possible for anyone to get information within two hours of an incident and
that too while violence was still raging?" Bose asked. "The incident on March 14 was
terrible and tragic," he said, "but a solution has to be reached through dialogue. We
have repeatedly assured people that Nandigram will not be touched. The people of
Nandigram will carry on with their lives as they have always done; so what is the
point that the Trinamool is trying to make by creating such unrest?"

In fact, from as early as February 11, Chief Minister Buddhadeb Bhattacharjee

himself has been reassuring people that there will be no land acquisition in
Nandigram and requesting the Opposition, particularly the Trinamool Congress, to sit
for discussions to put an end to the violence. Recently, addressing intellectuals,
artists, cinema personalities and people from all walks of life, Bhattacharjee made an
appeal to the Opposition: "The door to discussions is always open to you, and all I

12
am asking you is not to set up a Bhumi Uchhed Pratirodh Committee anywhere and
everywhere we are trying to draw investments."

The requests and assurances, however, seem to fall on deaf ears: The Trinamool has
refused to enter into any dialogue with the government. The opposition boycotted an
all-party meet called for April 21 to resolve the crisis in Nandigram.

Meanwhile, on May 3, in the course of a hearing on the Nandigram issue and the
status report submitted by the State government regarding the situation, a Division
Bench of the Calcutta High Court, comprising Chief Justice S.S. Nijjar and Justice P.C.
Ghose, gave a number of directions to the State government. The court said that
innocent villagers living in the area were being victimised and it expressed its
concern over the matter. It referred to Article 21 of the Constitution, which
guarantees life and liberty to each individual, and the statement of West Bengal's
Advocate-General (Balai Roy) that the people of Nandigram were being deprived of
their livelihood, and said, "We direct the State government to ensure that a ferry
service be immediately resumed between Haldia and Nandigram." It further directed
the government to ensure that there were no economic obstructions to the villagers
of Nandigram and that they were ensured easy access to markets, schools, colleges,
and so on. The court also asked the State government to ensure free and adequate
medical assistance to the "victims of the carnage in Nandigram" from January till
date. Finally, since a large number of people have been rendered homeless in the
area, the State government has been directed to provide them with free rations of
rice, wheat, kerosene and other essential commodities.

In the last four months of unrest, Nandigram society has undergone a change. Once
a peaceful, sleepy place, it has taken on the image of a region of terror, with the
BUPC declaring it to be a "liberated zone" and no officials of the administration or the
police being allowed in. Large parts of the region still remain inaccessible, with the
BUPC not allowing any repair work on the dug-up roads and broken culverts and
bridges. It is not possible to carry out any development work, and practically all
social celebrations and activities have ceased there. The joyous occasion of Poyla
Baisakh (Bengali New Year) was a time of apprehension and sadness in Nandigram,
with people living constantly in the shadow of violence and extortion. Even marriage
engagements are breaking up. According to a report in a local newspaper, there have
been innumerable such cases in Nandigram.

In fact, the only kind of recreation or entertainment for the people of Nandigram is
propagandist video shows of the various factions of the BUPC. Each faction has
reportedly made its own video interpretation of the "struggle for preservation of
farmland" in Nandigram, in which the views and voices of the respective leaders of
the groups are aired. That has apparently been cause for discord within as each
party, through its video propaganda, has been projecting itself as spearheading the
movement and claiming primacy of place in the BUPC. There have even been reports
of scuffles between different parties.

To make matters worse, in a place where earning a livelihood has become a

dangerous proposition, extortion and kidnapping have become the order of the day.
To rejoin work, one apparently has to dish out as down payment anything between
Rs.500 to Rs.5,000 to the BUPC. Ironically, even agricultural workers on whose
behalf the BUPC claims to be agitating are not spared. According to sources in the

13
CPI(M), a five-member committee has been set up by the BUPC to ensure payment
of Rs.200 per bigha of land for those who wish to carry on the work of cultivation.

One thing has become clear: What started out as an agitation against land
acquisition in Nandigram for the setting up of a chemical hub has become a struggle
for the perpetuation of a "liberated zone" whose inhabitants have to either conform
to the laws laid down by the BUPC or face its judgment.

The ultimate victim of all that is happening in one little corner of East Midnapore
district is the whole State of West Bengal. A Principal Secretary to the State
government told Frontline: "First it was Singur, now it is Nandigram; as a result of all
this, the perception of West Bengal both within and outside the country has taken a
severe beating. It was a very long and hard struggle to achieve the kind of growth
we did, but now it seems to have all gone down the drain."

However, some hope can still be salvaged from Bhattacharjee's words: "We need
industries in West Bengal, and there is no going back. There will be a chemical hub,
and it will not be in Nandigram. The youth of West Bengal today are looking at us for
their future. We cannot let them down."

Volume 24 - Issue 19 :: Sep. 22-Oct. 05, 2007

INDIA'S NATIONAL MAGAZINE
from the publishers of THE HINDU

COLUMN

Population bomb

BHASKAR GHOSE
The enormous population growth will one day eclipse whatever economic
status India is supposed to attain in the years to come.
DESHAKALYAN CHOWDHURY/AFP

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 Demographers estimate that India’s population will stabilise when it
exceeds 1.5 billion. Here, a file picture of a busy street in Kolkata.

ENGROSSED as we are with the problems of day-to-day life in our cities and in our
villages, virtually no one except some worried demographers and scholars have time
to consider the enormity of a calamity that is creeping upon us. This does not have
the immediacy of a tsunami or a bomb blast, but over time its effect is far more
devastating.

It is not climate change, a disaster that is also creeping upon us. But, it is going to
come upon us far more slowly than the one that is the subject of this essay, which is
the explosive rate of growth of the population of this country. We have grown so
accustomed to patting ourselves on the back for being an “emerging economic
superpower” that we seem to have lost sight of this terrible disaster that will one day
eclipse whatever economic status we are supposed to have or acquire in the years to
come. (Nobody ever says just when we will actually become an economic
superpower; we are ever the economic giant whose time is about to come but never
does.)

We have been lulled into a state of complacency by such soothing findings as the
slowing down of the rate of growth of the population and never reflect on the fact
that the population is still growing and that the rate of growth is still alarming in the
extreme. It is estimated that it will take several decades before the population
stabilises and it will do so, according to the projections of demographers, when the
number of people in India exceeds 1.5 billion; roughly, therefore, there will be an
addition of a number that is almost double that of the total population of India at the
time of Independence. And all this in only 2.4 per cent of the land mass of the earth,
something that will remain the same.

In 2007, we are told that the population is around 1.1 billion; so we are going to add
another 400 million more before the population stabilises. That, on present
indications, is still a hope, rather than a forecast. And it is not just a question of the
terrible effect this will have on all aspects of our economy – on employment,
education, health, housing and everything else – but the truly ominous skewed
nature of this growth.

Today the southern States have achieved, or are about to achieve, replacement
levels, that is a stable population size, where the number of births and the number of
deaths is more or less the same. But at the other extreme is a region that comprises
Bihar, Chhattisgarh, eastern Uttar Pradesh and parts of Rajasthan where the growth
of the population is not only unchecked but is virtually out of control. Experts have
found that hardly 53 per cent of this region has any access to family planning
methods – condoms, or other devices, not to mention contraceptive pills or any
facilities for vasectomies or laparoscopy. In other words, even if a couple in these
areas want to limit their families they have no access to any means by which to do it.

What this will mean over time is that, as the population in the southern States
stabilises at certain given levels, the numbers in this region are going to keep
increasing at virtually the same rate at which they are increasing now, and there will
be many more job-seekers, many more in need of education or seeking education,
many more in need of health care; in general, the resources of the country will

15
increasingly have to be poured into this region to meet the needs of the ever
increasing numbers.

That is not all, by any means. Today there is a noticeable increase in the economic
development of the South. More is being invested there, more jobs are being created
and, naturally, more wealth.

There is inevitably going to be a movement of the impoverished and unemployed

from the high growth rate regions to these States, and to other parts of the country
where economic development is greater, the areas that make the world refer to India
today as an emerging economic superpower and may well, in the future, make it a
true economic superpower.

We are seeing then a division in the country. One region is going to have, if it does
not already have, a stable population and in addition increased economic
development. And the other is going to have a population growing at a rate that is
virtually out of control and which is economically backward, providing little in terms
of employment and wealth.

The consequent migration will, inevitably, result in social tensions, as resentment

grows among the local people at the influx of outsiders. We have had instances of
this happening in earlier years in Mumbai and other parts of Maharashtra and, for
similar if not the same reasons, in Assam. There is no reason to assume that it will
not happen in Karnataka, Tamil Nadu or Andhra Pradesh.

Indeed, it is not a simple North-South issue here. Parts of Haryana and almost the
whole of Punjab are already growing in economic prosperity; and in these States,
too, the population growth has begun to fall off, and replacement levels will be
reached in these areas in a few years from now. Here, too, what may be tolerated for
a time may turn into resentment and then into anger that translates into violence as
waves of unemployed, impoverished people from the high growth areas begin to
pour in, looking for employment.

Economic tensions will inevitably lead to social anger and hatred, and thus will be
sown the seeds of the fragmentation of the country. There is little hope of the rising
up of some great leader who will, like the leaders of the freedom struggle, unite and
sensitise the country to larger issues.

Our political leadership will have descended to even lower depths of pettiness and
sleaze by then. The prospect before the Indians who have the misfortune of being
alive and actively involved in the economic and social activity of the country at that
time will be to confront the spectre of further partitions and divisions. Of
insurgencies and movements that will be fuelled by the economic and social
disparities, which will be then very evident.

It is, consequently, essential that something be done now to avert that disaster
which will, through the middle of this century, engulf the country. It is time for our
planners to recognise the enormity of this disaster, and to put together a group that
can prepare a plan to involve all sections of society in preventing this from
happening. In the target areas, concentrated unremitting work is needed to reverse
or at least to slow the explosive growth rate. Chief among all of the work they do
must be the provision of facilities – it is a disgrace that even today in a district such

16
as Bhagalpur more than half of the villages (58 per cent) do not have access even to
condoms, which could certainly be put on sale in pan shops in the district.

It only needs some organised work by persons within the administrative system. If it
can be sustained with every section of the people actively involved, perhaps the
generations to come can cope with the enormous population of India in the 2050s.

DEVELOPMENT

Growth through social justice

JOHN M. ALEXANDER
in New York
The alliance between human development and human rights would augur
well for the poor.
R. RAGU

Doing homework on a pavement in Chennai. It is a social irony that a

country registering impressive rates of economic growth leaves a section of
its population illiterate, malnourished, socially marginalised and
impoverished.

Recall the face of the poorest and the weakest man you may have seen, and ask
yourself if the step you contemplate is going to be of any use to him. Will he gain
anything by it? Will it restore him to a control over his own life and destiny? In other
words, will it lead to swaraj (self-rule) for the hungry and spiritually starving
millions?

– Mahatma Gandhi

Development is the strategy of evasion. When you can’t give people land reform,
give them hybrid cows. When you don’t send the children to school, try non-formal

17
education. When you can’t provide basic health to people, talk of health insurance.
Can’t give them jobs? Not to worry. Just redefine the words “employment
opportunities”. Don’t want to do away with using children as a form of slave labour?
Never mind. Talk of “improving the conditions of child labour”. It sounds good. You
can even make money out of it.

– P. Sainath, Everybody Loves a Good Drought.

“THE underlying concept of justice in the human development approach does not
recognise any national boundaries about whom to include and whom not [to],”
emphasised Amartya Sen in the first Mahbub ul Haq Memorial Lecture on Human
Development on September 19, 2007, at The New School for Social Research, New
York, United States. Such a “globally unrestricted coverage” of the idea of human
development, Sen argued further, places the human development approach in a
unique position to address issues of local and global inequalities, which is much
better than most mainstream theories that confine their focus to a nation or a
particular political community.

Moreover, its distinctive edge, according to Sen, derives from the fact that it adopts
“a comparative approach” to well-being without having to wait for some abstract and
“transcendental” principles of a perfectly just society, and connects justice with the
realisation of basic capabilities and freedoms for everyone in society. “It may well
turn out,” he said, “that in a comparative perspective, the introduction of social
policies that eliminate widespread hunger or remove rampant illiteracy can be shown
to yield an advancement of justice.”

The lecture was part of the fourth annual conference of the Human Development and
Capability Association (HDCA), organised in collaboration with the Graduate
Programme in International Affairs at The New School, from September 17 to 20.
The previous three HDCA conferences were held in Groningen (The Netherlands),
Paris and Pavia (Italy). The theme of this year’s conference “Ideas Changing History”
brought together more than 300 philosophers, economists, researchers,
policymakers and practitioners from 40 countries who are engaged in research on
the capability approach, human development, gender justice, health, human rights,
education, disabilities and other related areas. The HDCA network’s main aim is “to
promote high quality research in the interconnected areas of human development
and capability” and to “bring together those primarily involved in academic work with
practitioners”. It consists of over 600 members from 60 countries.

As envisaged by its chief architect, the late Pakistani economist Mahbub ul Haq, and
his team of visionary economists and researchers, the principal aim of the human
development approach is to draw the attention of the world community to the idea
that development consists in enhancing people’s quality of life, and consider
economic growth only as a means to that end. It is no less than a social irony that a
country registering impressive rates of economic growth leaves a section of its
population illiterate, malnourished, socially marginalised and in poverty. Can this be
called genuine development?

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 M. VEDHAN

Prof. Amartya Sen, Nobel Laureate, highlighted the broader scope of the
human development approach in his Mahbub ul Haq Memorial Lecture.

Since 1990, with a view to shifting the focus from the traditional ‘income-centred’
accounting to ‘people-oriented’ programmes and policies, the United Nations
Development Programme (UNDP) has been publishing the annual Human
Development Report (HDR), focussing on the conceptual issues and policy strategies
to tackle poverty and deprivation. One important component of the HDR is the
Human Development Index (HDI), which ranks countries on the basis of three basic
capabilities: life expectancy (ability to live a long and healthy life), educational
attainments (ability to acquire knowledge through literacy, basic and secondary
education and so on) and economic standard of living (to have access to the
resources needed for a decent living standard).

This index illustrates that the orthodox income-based GDP per capita measure is an
imperfect indicator of human development and that the addition of capabilities-based
indicators shows quite different results. When, for example, countries and regions
such as Poland, Costa Rica, Brazil and the State of Kerala in India manage to achieve
higher levels of and sometimes scandalous, disparity between “human” and
“economic” development that is prevalent in many countries. It appraises the
performance of governments and policymakers and persuades them to devise well-
targeted policies.

Right from the origin of the UNDP’s human development approach, Sen has closely
collaborated with Haq to strengthen its theoretical edifice by envisioning
development as an expansion of human capabilities and freedoms. Yet in his
memorial lecture, Sen was keen to highlight the broader scope of the human
development approach. In addition to being seen as a “call to action” for
transforming people’s lives and as having a global appeal that cuts across national
boundaries, the human development approach is also founded on a different type of
social thinking and philosophy.

Rethinking social justice

Unlike other mainstream political theories, such as the one expounded by American
philosopher John Rawls, for instance, the human development approach in the first
place does not rest on the idea that justice would obtain only when social
cooperation is organised on the basis of mutual benefit. Instead, it starts off from a
kind of public reasoning that does not focus exclusively on the benefit of cooperation

19
but on the responsibility of everyone – particularly of those with more power and
resources – to bring about positive changes in the lives of people.

Referring to the mother-and-child analogy in Gautama Buddha’s Sutta Nipata, Sen

points out how the mother’s reason for action is guided less by the “rewards of
cooperation” and “symmetrical power” than by the motivation that she can and must
do things that can make a crucial difference to her child’s life and future.

Similarly, the human development approach, according to Sen, is steered by the

motivational justification that “if someone has the power to make a change that he
or she can see will reduce injustice in the world, then there is a strong social
argument for doing just that”. New ideas are rarely born in isolation. Quite
frequently, they emerge in clusters and families and try to win over hearts and
minds, relating and at the same time differentiating themselves from other
established concepts and ideas.

Given its relatively shorter life-span, it is amazing that the idea of human
development has captivated the social imagination of many people so rapidly: it has
not only altered the way progress is assessed but has also become the benchmark
and vocabulary widely used by non-governmental organisations, universities, the
media, politicians and governments all over the world.

And yet, it is crucial to realise that the future of the human development approach
depends very much on how it explores its links and interconnections with another
globally influential idea with a much longer history and wider appeal – human rights.
Do these two approaches complement or compete with each other? What is the
distinctive trait of human development that can enrich the human rights discourse
and vice versa?

As most leading human development as well as human rights theorists and activists
would agree, because of their common shared motivations in securing the lives and
freedoms of individuals, there is no reason to see these two approaches as rivals. On
the contrary, there is a growing need to see them together as a family of ideas
supplementing and strengthening one another. In fact, the prospect of world
development would turn out to be much brighter for the poor and worse off in
society when a mutually beneficial alliance is forged between human development
and human rights.

HDR 2000, which for the first time explored the interconnections between the
concepts of human development and human rights, underlines this need: “Human
development and human rights are close enough in motivation and concern to be
compatible and congruous, and they are different enough in strategy and design to
supplement each other fruitfully. A more integrated approach can thus bring
significant rewards, and facilitate in practical ways the shared attempts to advance
the dignity, well-being and freedom of individuals in general.”

For instance, one conceptual clarity and richness that the language of human rights
can bring to the human development framework is the notion of claim. When we say
that something is a right, we understand that behind that right is a claim of an
individual agent on other people or institutions that should help in ensuring access to
this freedom.

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Depending on the kind of rights, claims can take different forms, some in the form of
protection from interference and others in the form of positive assistance. But that it
is a claim is what is strongly embedded in the language of rights and this can bring
about an additional perspective to the framework of human development. Quite
often, it is not enough to mention the goals of development; it is also important to
enlist the specific obligations and responsibilities of individual and collective agents to
realise these goals.

Conversely, the human development approach can bring in a variety of enrichment to

the human rights approach. The human rights literature has thus far shown
comparatively less interest in quantitative and qualitative research, while these have
been the driving force behind the human development approach. Data collection,
analysis, measurement and quantification of problems cannot be an immediate and
overall solution to the many maladies of our societies, but it can be of a great help to
make precise and relevant interventions. Furthermore, the human development
approach can play a decisive role in underlining the importance of people’s social and
economic rights.

While theoretically human rights theorists have been careful to talk of the
indivisibility of different human rights, national activism and international
interventions have been more focussed on civil and political rights. Organisations
that are willing to name and shame individuals and governments for the violation of
political rights do not show similar enthusiasm when it comes to failures in the areas
of economic rights such as the right to decent living standards and employment
opportunities.

Intrinsic to the human development paradigm is the idea that people will not be able
make effective use of their rights if they do not possess the required capacities and
at least a minimum of material resources and social conditions. So, the human
development approach can make useful contributions to push forward the agenda of
social and economic rights.

Bridging the Gap

In 2015, the human development approach initiated by Haq, Sen and other
committed experts would have a quarter century of experience and history,
coinciding with the target year of the United Nations’ Millennium Development Goals.
Among the human development theorists and practitioners, there is already a
growing worry that the rhetoric of human development does not reflect the reality of
human development indicators on the ground; the “policy” impact of the human
development approach is much less in proportion to its huge “political” and “public”
success.

For example, since 1995 the HDRs, by introducing the Gender-related Development
Index (GDI) and the Gender Empowerment Measure (GEM), have tried to underscore
through facts and figures the gender-biased character of poverty and deprivation,
and how in many parts of the world girls and women are much more disadvantaged
in terms of nutrition, education, health and self-respect than boys and men. And yet
over the last 10 years very few countries can speak of any significant improvement
of gender-related development indicators.

21
Politicians, including presidents, prime ministers and finance ministers of countries
and their policymakers are quick to pick up the human rights and human
development rhetoric. But when it comes to policy decisions they are led by populism
and short-term gains. Often enough, taking human development seriously means
more investments in social sectors and public infrastructures, and in long-term goals
that will enhance the health, educational, employment and social capabilities of
people.

Also, the world today is in many ways a different place than when the human
development approach was initially launched in 1990. Rising up to the challenges of
globalisation, technological innovations, rampant spread of acquired immune
deficiency syndrome (AIDS), climate change, global terrorism, human security,
migration and so on, are vital to keep the human development movement robust and
relevant.

There is, however, another related concern, the dilution of the theoretical richness of
what the idea of human development as a whole stands for. Ideas are like the ripples
created by a pebble thrown into a pond. As they spread, from a small group to a
wider public, from a minority of believers to a majority of followers, they tend to lose
their vigour, originality and charisma. Sen frequently stresses the need to “go beyond
the human development index”.

People’s well-being and freedom are influenced by a wide variety of social, political,
economic, legal and environmental factors. The HDI, which selects and concentrates
on some of these elemental features, cannot but be limited in comparison to the
complexities and richness of the actual human life. Sakiko Fukuda-Parr, former
Director of the Human Development Report Office and lead author of several HDRs,
speaks of the tendency to “imprison” a wide range of possible human development
ideas and strategies within the HDI and the consequent need to “rescue” the human
development concept from the HDI.

The popular appeal and success of the HDI has, unfortunately, created the wrong
impression in some circles that human development is just about education and
health, and nothing more.

The human development agenda in the future, according to Fukuda-Parr, should

concentrate on other areas such as political freedoms, human agency, participation,
empowerment and collective action. •

John M. Alexander is a Research Fellow at the Centre for Economics and Ethics,
University of Leuven, Belgium and teaches Business Ethics and Society at the Loyola
Institute of Business Administration (LIBA), Loyola College, Chennai. His book
Capabilities and Social Justice: The Political Philosophy of Amartya Sen and Martha
Nussbaum with Ashgate Publishers is due in January 2008.

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