JSW Steel's stock-for-land deal turns sour for India's farmers

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Farmers in India are furious that JSW Steel has not followed through on its $2.6bn steel plant pledge.

The shock wave from the collapse of Bear Stearns Cos. and Lehman Brothers Holdings Inc. is hitting Tuklal Murmu, an illiterate farmer living in a mud hut in India.

Murmu and other farmers in West Bengal sold their land to JSW Steel Ltd., India's third-biggest steelmaker, for cash and the promise of shares and a job in a planned $2.6bn plant.

Falling metals prices and the slump in equities triggered by the collapse of Lehman and Bear Stearns has delayed construction and the initial share sale, leaving Murmu to live on less than the $2 a day he earned from the half-acre rice field he sold.

"The uncertainty is killing me,'' said Murmu, who received 150,000 rupees ($3040) in cash as part payment for the land, some of which he said he needs to repair his home. "I have to feed my family of six for at least three years.''

JSW's offer had been seen as a model of cooperation with farmers, side-stepping the protests organised by opposition parties that derailed projects by companies including carmaker Tata Motors Co. and South Korea's biggest steelmaker Posco.

By buying land directly from farmers, without the government as an intermediary, JSW's Managing Director Sajjan Jindal avoided confrontation with the opposing politicians.

"Jindal was lucky to get a continuous stretch of land and willing farmers,'' said A.S. Firoz, an independent steel analyst and former chief economist at India's steel ministry. "We've seen several instances where there have been bureaucratic delays and political negativism.''

Tata Motors was forced to ditch its brand-new factory to build the world's cheapest car at Singur, about 240km (149 miles) from the JSW project, after farmers demanded the return of land bought at below-market rates by the state government to lease to the automaker.

"We are not against industrialisation, but we won't let the government subsidise companies at the cost of the poor,'' said Partha Chatterjee, a member of the local opposition party that led the rally against the Tata Motors deal.

"The villagers don't know what shares are, so it's up to us to guide them. We'll oppose JSW if at any point we think the poor are not being given their due.''

Chatterjee said his party will ask JSW for a timeline on the company's plan to give jobs and shares.

"The global economy is going through a downturn but we are committed to the West Bengal steel plant,'' JSW's Jindal said in an interview. "We will definitely give them the promised jobs and shares. It's just that the timetable has been pushed back.''

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