Saturday, March 3, 2007

SEZ’s and Slum Rehabilitation

A major storm is brewing in a teacup with regard to both these ventures. While the SEZ’s are promising to become a national headache the Slum Rehabilitation projects in Mumbai are already mired in controversy. Though I don’t know why it should be so. Sitting on the sidelines I can see a solution clearly.

The way I see it the logic is simple: If someone lives on/off a piece of land he should be a partner in the economic progress that is planned on the land and s/he must have a stake in the process the same way that a builder or industrialist or new owner has. It seems terribly unfair that after accusation of land the profits enjoyed by the developers/industrialist should not be shared by the people to whom the land belonged in the first place.
We have seen in the past that whenever a big industrial complex or building project comes up land prices shoot upwards. The developers who buy the rights to develop the land make a killing. The new owners also make a killing as the prices keep moving up. But the man to whom the land belonged in the first place gets nothing of the new escalated prices or the economic development that follows.

If we want a peaceful and healthy development atmosphere we should look at establishing a partnership that allows the evictees to share the future rewards of development. The moment this kind of partnership is established everyone gains and chances of any opposition, politically motivated or otherwise, are minimal.

A simple two point compensation package should be worked out on these lines:

1. Give the compensation that you would normally do while accruing the land. This process is already in place.
2. In addition to the compensation package allocate a percentage of the projects shareholdings to the people whose land you are accruing as their investment in the project. This percentage is to be distributed in accordance of the individual land holdings and would be in the form of tradable shares.

Once the landholder becomes the promoter of the company that is starting the project s/he stands to benefit from any development that is undertaken on the land and stands to benefit in perpetuity. Also, these shares could be traded on the stock exchange like any other shares and the individual owners could decide in stay invested or exit as per their own convenience.

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