SEZ policy flawed?
-
10/02/2008
-
Business India (Mumbai)
The government continues its patchwork repair of SEZ policy, as opposition mounts
ew issues in India have inflamed passions as have the Special Economic Zones (sezs), the sprawling enclaves conceived to function under special laws, beyond the pale of the normal law of the land.
The mode of land acquisition has clearly overshadowed the sez debate. Undermining the sezs' cause still further has been the state terror perpetrated against land-holders in Nandigram in West Bengal's East Mid-napore district and near Paradip in Orissa's Jagatsinghpur district. This has evoked criticism that the government's sez policy is the most unabashed land grab movement in the history of modern India.
All manufacturing units need land. But in a largely rural India, so do the farmers. The tussle thus magnifies the "food versus development" debate that rankles many a developing economy. But in India, the controversy is flamed by the unrealistic prices properties are fetching. The Standing Committee on Commerce, in its report on The Functioning of sezs, submitted to the Rajya Sabha, notes: "Food security of the country cannot be jeopardised; everything else can wait. Food production is stagnating since the 1970s. Per capita cultivable land has gone down from 0.27 to 0.18 hectare in the last decade."
Alarm bells have already been sounded on commerce secretary Gopal Pillai's recent announcement on the government's intent to lift the 5,000-hectare land ceiling imposed by an empowered group of ministers last April. The move is expected to benefit some of the huge sezs being set up by Mukesh Ambani and his associate Anand Jain in Navi Mumbai and Haryana, as also by Kandla Port Trust and developers dlf and Omaxe. Following two previous deferrals in approval, Ambani had splintered his land into three zones for engineering, biotechnology and pharmaceuticals.
India's sez Act was framed in June 2005, and both it and its rules were made operative from February 2006. Commerce and industry minister Kamal Nath affirms that the fiscal package provided in the Act has roused much enthusiasm from both domestic and foreign investors and nris. His ministry, the nodal authority for sezs, is inching close to its target of notifying 200 sezs by 2007-08, its board of approval (BoA) having notified 193 of the 404 sezs that have so far been granted formal approval. Of these 404, Maharashtra has bagged the maximum of 84, followed by 66 in Andhra Pradesh, 56 in Tamil Nadu, 39 in Karnataka, Gujarat, 36 and Haryana, 32. n/nes sezs comprise 62 per cen-t of these, while multi-product and biotechnology sezs have a 5 per cent share each, and pharma and textiles, 4 per cent each. An additional 167 proposals have been granted in-principle approval.
The Goa government, however, delivered a blow to the sez programme recently when it bowed to mounting public agitation in the state against sezs. Residents of Goa were protesting against the 15 sezs proposed in the state, including the three notified ones, forcing the hand of chief minister Digambar Kamat, to cancel the three approved sezs and say his government's sez policy was now open to debate.
West Bengal had also been compelled to shift the proposed chemical sez that was to have been set up in Nandigram by Indonesia's Salim Group after 14 protestors were gunned down by the police in a bloody stand-off last March. Despite the Kolkata High Court's condemnation of these state-sponsored attacks as 'unconstitutional', vigilantes from the ruling cpm again ran amuck against locals who had gingerly returned to their ransacked dwellings, abducting, killing and raping afresh. Marauders from the ruling Biju Janata Dal have been similarly terrorising villagers opposed to South Korean steel-maker Posco's plan to set up a $10 billion multi-product sez that encompasses its steel plant, iron ore mine, power station and captive port. Both Posco and the Naveen Patnaik regime are, however, determined to stay the course.
"sezs provide inclusive growth, as most of the employment provided by those that have started functioning is to the rural youth from nearby villages," asserts Kamal Nath. "These jobs have completely changed the life of the workers as also their families and this is the greatest contribution sezs will make to society." According to him, some Rs52,400 crore has already been invested in the newly-notified sezs, where employment now stands at nearly 60,000. These include Mahindra World City in Chennai, Mundra's multi-product port-based sez in the Kutch, Brandix Apparel City and Divi Laboratories sezs in Andhra's Visakhapatnam district, Hyderabad Gems Ltd sez and Wipro's iT/iTes sez outside Hyderabad, and Eon Infrastructure's IT/iTes sez in Kharadi, near Pune.
The minister anticipates further investments of Rs285,000 crore and additional employment of 22.3 lakh by December 2009 and of Rs350,000 crore and jobs for 40 lakh once those sezs formally approved become operational over the next five years.
The last alarms have not yet been sounded on the sez issue. The ongoing conflict is compelling questions on the mode of development for a socially and economically disparate country like India. The authorities are finding it difficult to repeatedly fine-tune their guidelines on the establishment of these zones. What is agitating the potentially displaced is insufficient relief and rehabilitation (r&r) measures for those whose lands have been acquired. It was the resettlement controversy that had almost scuttled the Narmada dam in the late 1980s and 1990s, leading to a better reloca