SEZs and rational expectations

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: The debate on the losses or gains in revenue due to the special economic zone (SEZ) policy is tantamount to missing the wood for the trees. In any event, the debate on numbers is by itself subject to assumption-based opinions across a spectrum of economists, who may not always agree. Besides, it is too early to generate data to enable anyone to speak with conviction. Let us not fall into the trap of numbers, but look at the larger picture. The fact remains that nobody has ever questioned the merits of SEZs or its economic potential. And there is a broad political consensus in the country that the SEZ policy is here to stay for good.

Cuts, too, has done a study recently for the ministry of commerce, but we did not toe their line blindly. We undertook an extensive field survey to see what is happening on the ground. Fourteen SEZs across the country were visited to look into the larger impact (both upstream and downstream) of the functioning of SEZs. We found that SEZs, in addition to export and investment growth, have had a very profound impact on the surroundings, signalling a positive trend, and a significant change in the mindset of the local people.

The new generation SEZs, such as at Chennai, Sriperumbudur, Hassan, Bangalore, Manikanchan etcetera, have created a tremendous local area impact in terms of direct employment, formal and informal activities, consumption pattern and social life in and around SEZs. They are creating jobs for a large number of semi-skilled workers. Wage rates are rising and are higher in SEZs than those outside.

The HSL SEZ at Hassan, Karnataka, has recruited mostly women who have graduated from one of the 80 odd schools in the district. It has, so far, employed approximately 1,700 women from nearby villages. Prior to the establishment of the gems & jewellery SEZ in Manikanchan, artisans used to migrate to Gujarat and its neighbouring states in search of employment, but now with the establishment of the Manikanchan SEZ, they are going back to West Bengal. One has to visit these SEZs to see the energy and vibrancy in the productive environment.