By Dr P.C. Alexander
Faced with mounting protests and criticism against the scheme of Special Economic Zones (SEZs), the Prime Minister has chosen to announce a few days ago that the decision to go ahead with the scheme is irreversible. He has admitted that there have been “inadequacies in compensation and ensuring the interests of all stakeholders,” but has affirmed that all such concerns will be addressed and the government is in the process of formulating a “humane, effective and just policy” regarding SEZs.
However, the Prime Minister has not held out any promise that the whole idea of establishing SEZs will be reconsidered in the light of the experience in the implementation of the projects. On the other hand, by publicly affirming the irreversibility of the decision on SEZs, the government seems to be having a closed mind on the need and suitability of a scheme like this for the country’s industrialisation and export promotion needs.
The SEZ scheme has its origin in the visit of the former minister of commerce, Murasoli Maran, in the year 2000 to
An important argument in support of SEZs in
A parallel has sometimes been attempted to be drawn between the industrial estate projects started by the government in the mid-Fifties and the SEZs of the present decade. But the two are entirely different in objectives and do not merit a comparison. The policy for industrial estates was adopted in
Two crucial factors, which the government seems to have ignored while going ahead with the acquisition of land for SEZs, are the extreme shortage of cultivable land in the country and the highly sentimental attachment the small farmer has to his land.
One of the oldest and most hated legislations concerning land in
Apart from the criticism that SEZs have facilitated large scale land grab by big corporates and real estate developers, the government should have seriously addressed the question whether the benefits for the nation to be derived through the SEZs are really worth the heavy costs involved. Creation of additional employment is the main plus factor in favour of these projects. But the question is, additional employment at what cost?
A look at the long list of concessions and incentives offered to the developers of SEZs will show how over generous the government has been to them. The concessions include income-tax benefits [under Section 80 (1) A] for any block of 10 years in 15 years, exemption from service tax/CST, exemption from customs duty on import of capital goods, raw materials, consumables, spares, etc., exemption from Central excise duties on procurement of capital goods, raw materials, consumables, etc., from the domestic market, besides various other facilities, which make SEZ a deemed foreign territory for trade operations.
The rough estimates of the loss of revenue to the exchequer because of these concessions indicate that they may run into several thousands of crores of rupees. One wonders how the ministry of finance, which is expected to be zealous in monitoring the use of every rupee of public expenditure, could be so generous in the case of the SEZ developers. No highly industrialised country in the world, e.g., Japan, the US or the West European countries, had considered it necessary to offer so many special concessions and incentives to promote industrialisation or exports and India in its present fairly satisfactory stage of industrialisation and export development does not have to offer such facilities particularly to a class of people who are not in need of any special assistance.
Dr P.C. Alexander was the governor of Maharashtra and Tamil Nadu and is at present a Member of Parliament (RS)