Why did Tata walk away?

If we look at Singur, it is a simple case of conflicting wants and divergent preferences among people. Tata wants land to build its wonder car, thousands of workers want the jobs that will be generated; but many farmers want their land which would be acquired.

Now, there are many ways of resolving such conflict. Tata could use violence, employ some gunmen and get rid of the opposition. Unfortunately the government holds the monopoly over violence and Tata cannot legally employ such violence. The second is using rent seeking methods to ensure that the government will favour Tata over others. This sounds like an alternative to violence, but what was witnessed in Singur is violence against this kind of decision-making mechanism. And the last alternative is to use the market to farmers better off than when they owned the land; to make people in the area better off than before by offering them jobs and making Tata better off than before by allowing it to make profits.

The most important thing about the market is that it is an alternative to violence. When people could pillage and plunder the market provides a way of resolving conflict.

The problem with Singur is that the market alternative is unavailable. The government has ensured through that people cannot directly interact with each other; that farmers cannot sell agricultural land for non-agricultural purposes and so on. This is the reason for the violence.

One can hardly blame the Tata for leaving. Anyone who operates peaceably in the market will find it impossible to operate in such an environment and the added costs of police and private protection are probably too high. The only way to bring Tata and others to West Bengal may be to allow sale of land without government acquisition and let the market resolve all conflict.