Dont halt the SEZ engine

Updated: Jan 19 2007, 05:30am hrs
Domestic think-tanks, organisations like the International Monetary Fund and even finance minister P Chidambaram have expressed reservations on the countrys policy on special economic zones (SEZs), but more for the myriad tax exemptions it offers and the consequent revenue losses. But the Nandigram episode in West Bengal changed it all, forcing the government to sit back and prepare a new rehabilitation policy and a better deal for families displaced by land acquisition. Though belated, it is a move in the right direction. On January 8, the Prime Minister wondered why industrialisation should be contentious at all. He stressed the need for a transparent addressal of land acquisition and people displacement issues. He went on to promise a new rehabilitation policy within three months that would be more progressive, humane and conducive to the long-term welfare of all stakeholders. Soon after, the Board of Approvals under the commerce ministry postponed its scheduled meeting on January 10 to January 19, only to be shelved again without any fresh date. Commerce and industry minister Kamal Nath said he would wait for states response to his letter seeking details on how land was being acquired for SEZs, and also the kind of land being acquired. While the PMs intentions are well meaning and Kamal Naths reality check prudent, the fear is this may derail big-ticket projects including those of Reliance Industries Maha Mumbai and Tata Groups Gopalpur steel plant. In all, 52 SEZ proposals entailing investments of thousands of crores of rupees were to be discussed at BoAs meeting.

In the 11 months since SEZ rules were notified in February 2006, India has attracted Rs 11,900 crore in investment. And these SEZs have generated 15,812 jobs, of which about 12,000 have gone to local people. By 2009, the commerce ministry expects SEZs to attract Rs 59,000 crore and create 8.9 lakh jobs. Interestingly, no fresh land acquisition has been made for any of these SEZs. Either the state industrial development corporations already had the land, or developers bought the land directly. While a group of ministers under Pranab Mukherjee is slated to meet on January 22 to consider the draft rehabilitation policy proposed by the rural development ministry, it will be wise for the government to stay away from forcible eminent domain land acquisitions. It is best to let developers negotiate deals with villagers.