New Delhi: Early this week, the Bharatiya Janata Party-led Assam government passed an ordinance to allow micro, small and medium enterprises (MSMEs) to set up industrial ventures in the Northeastern state by only submitting a self-declaration.
Terming the state cabinet’s approval as “a historic and far-reaching decision to ease out the process of setting up industries in Assam”, state industry minister Chandra Mohan Patowary tweeted, “No permission, clearance, or licence will be required for three years. Land will also be deemed converted for industrial purposes. Such bold and advantageous change is expected to accelerate the industrialisation process in Assam.”
The news about the ordinance, has, however, generated widespread concern and criticism across the state. Land and its ownership rights have not been an issue of development alone, but directly linked to contestations over identity. As per a survey conducted by the Guwahati-based Omiyo Kumar Das Institute of Social Change and Development (OKISCD) last year, only 56.7% of the rural households in Assam own land.
In an email interview to The Wire, Joydeep Baruah, associate professor at OKISCD, categorically termed the state government’s move “very insensitive and outrageous”.
Baruah, who specialises on rural development, pointed out that “the issue (of protection of agricultural land) was also a major concern for the committee constituted (by the Ministry of Home Affairs in 2019) for the implementation of the Clause 6 of the Assam Accord.”
“This will only result in a process of large-scale land alienation and accelerate a process of primitive accumulation in the state,” he stated.
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Excerpts from the interview, edited for style and clarity:
The state government’s measure is stated to be in response to the COVID-19 related economic slowdown and as a boost to the MSMEs. As per the ordinance, these enterprises would not need any licence to set up a new venture, though for a limited period.
With seemingly no or little regulatory mechanisms, would you call it a sweeping measure by the government? Could there have been other ways of encouraging MSMEs?
The proposed measure, I think, is based on the flawed assumption that MSMEs in the state are constrained only by regulations and licensing requirements. While this may be one of the issues for some MSMEs, the major constraints faced by the MSMEs in the state entail lack of adequate infrastructure including power and other logistics, access to low-cost finance and above all, access to an assured market. These are the areas where the government – both state and Central – should have focused if some substantive change was expected. Without addressing these fundamental constraints, the blanket removal of regulation and licensing in the name of reform and ease of doing business, is not going to encourage MSMEs to develop and expand.
Joydeep Baruah. Photo: Special arrangement
At the end, this will only result in massive rent seeking by some relatively bigger MSMEs rather than real industrialisation for the benefit of the state’s economy, since already definitional change in MSMEs have brought lot of relatively bigger sized units to the fold of MSMEs. Most importantly, the measure will not facilitate a recovery as anticipated. Rather, it will only worsen the state’s economy even further as the rent-seeking itself will adversely contribute to the income distribution.
Also, agricultural land will be deemed industrial on the basis of a self-declaration. What will be the likely impact of this in a state where most people are still dependent on agriculture? Will it really boost rural development?
This announcement of the government seems to be very insensitive and outrageous. It is, however, difficult to comment on the possible consequences of this announcement at this moment since details of the ordinance are still not known. But, the issue of land in the state is not only a development issue; it is also an issue of identity and the larger interest of the people of the state. The question of land alienation within the state has been a major concern for a long time and protection of land, therefore, has been a consensus within the state.
The issue was also a major concern for the committee constituted (by the Union Ministry of Home Affairs in July 2019) for the implementation of the Clause 6 of the Assam Accord.
As far as rural development is concerned, I believe this will only result in a process of large-scale land alienation and accelerate a process of primitive accumulation in the state, and nothing else. The Socio-Economic Caste Census revealed that 56.7% of rural households in Assam only own land. Our institute had conducted a survey between December 2018 and May 2019 which showed that 54% of rural households have ‘operational holding’ i.e. agricultural land under operation. Out of the households having operational holding, only 65% households have Myadi land i.e. land with long term periodic possession.
So, already a vast majority of rural households in the state are landless. Moreover, Assam’s agriculture is still dependent on mono-crop subsistence farming. Given the situation, any state government serious about real rural development should have focused on land augmentation measures. This ordinance is completely the opposite of what is actually needed.
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There is no clarity yet on whether these MSMEs will need environment and pollution control clearances. This is coming at a time when we have seen the environmental disaster in Baghjan where public hearings were skipped by a public sector unit. In the recent Dehing Patkai illegal mining case, we saw how easily natural resources could be looted due to the government’s negligence.
The details of the proposed ordinance are still awaited. But apparently the ordinance provides a bonanza for the industrialists. Increasing relaxation in the norms of environmental clearance only reflects government’s priority and preference for ‘profit’ over ‘people’. Whatever we are witnessing in Baghjan and Dehing Patkai are only manifestations of this preference. If the same preference continues, it is only a matter of time that the state’s environment and natural resources will be the cause of people’s worry and woes, instead of being a means of development.
