Goa government scraps its SEZ Policy 2006, even though the state is plagued by scarce investment and rising unemployment It took the Goa government just three minutes to rescind a decision taken on 5 June 2006 and take back the 3.894 million sq metres of land allotted for 18 special economic zones (sezs). Controversies prompted the state government to cancel the Goa sez Policy of 2006, which was expected to give Goa's trade and industry a boost. Presented as a trigger for large-scale investment that would convert Goa from being a tourist destination to an industrialised state, the policy had faced opposition right from its inception. As many as 18 sezs were planned, promising business and employment in r&d, it, call centres, bio-technology and even pharmaceuticals. But people protested that the policy led to grabbing of 3.894 million sq metres of prime land. There were also accusations that the government was unsure of its stand on sezs, as the policy lacked clarity. So, it was not surprising that the state government first scrapped 12 of the proposed 15 sez projects, with only three projects being notified. The three remaining sezs - Meditab Specialities (123.2 hectares), K. Raheja Corp (106 hectares) and Peninsula Pharma Research Centre (20.36 hectares) - continue to exist. However, the state government has been appealing to the Centre to denotify the three sezs. "The decision to scrap the policy has been taken because the people do not want it," says Digamber Kamat, Goa's chief minister. Fresh impetus What gave the opponents to the Goa sez Policy 2006 fresh impetus was a report of the Comptroller and Auditor General (cag), released in May 2009. According to the report, "the Goa Industrial Development Corporation entered into agreements with four sezs for more area than approved by the sez Board of Approval". What caught the cag's .attention was the fact that the land was leased even before the sez policy was formulated in 2006. Moreover, the allotment of plots did not follow any established procedure. "The policy was weak and just gave encouragement to the promoters of these sezs," laments bjp mla Manohar Parrikar. The gidc compounded the problem by leasing the land at lower rates, which resulted in a loss of Rs39.47 crore to the state exchequer. This decision to keep the annual lease rent static for a period of 30 years from the time of allotment, without any provision for a hike in rental, drew flak from the cag, according to whom, "this change in clause was negative to the interest of gidc, as it did not give it any leeway in revising the annual lease rent". But no one has thought of the consequences. Goa's industrial production has fallen from 10 per cent to zero, as no new units have entered the state, says the state's Economic Survey. Combined with exports from the state falling by 80 per cent and unemployment crossing the 1 lakh figure, Corporate Goa's consensus was that one or two sezs would have been beneficial, rather than none. In a bid to lure investment, the Goa Chamber of Commerce and Industry (gcci) has appealed to the Union finance ministry to reintroduce the tax exemption, which was withdrawn in March 2004. The withdrawal of tax exemption had caused existing industries to cancel their expansion plans. gcci feels that with the reintroduction of tax exemption, investments which were negated by the cancellation of the sez policy will begin to flow into Goa once again. "True, 18 sezs were too much," admits Nitin Kuncoliekar, president, gcci. "But within the next 10 years, over 250,000 young people will be joining the ranks of the unemployed and that is the price Goa will have to pay for not having any industry. With government jobs being saturated, where will these unemployed be accommodated?" he asks. "A small sez, it and environment-friendly, could have been the answer," he adds. But the state government is determined to 'listen to the people'. Hardening its stance, the government is now refusing to pay any compensation to the three sez promoters, except refund the money invested in land, because only K. Raheja has done some work on the land, while the other two have let it lie barren.