The seriousness of an urgent review of government policy on SEZs and land acquisition has come to the fore once again with the Supreme Court dismissing a petition filed by the Mukesh Ambani-promoted Mumbai SEZ seeking a stay on land acquisition proceedings. The state government has not completed the process of compensating farmers and, in the absence of that process being completed, the SEZ lapses on June 8 (two years after its notification). Hence, the petition by Mumbai SEZ to stay land acquisition proceedings and buy time. The Supreme Court decision will, however, mean that the whole process would likely be restarted from scratch, resulting in significant losses for investors who had already spent around Rs 600 crore on the project. This will hardly be an incentive for other investors to put their money into SEZs, which were a cornerstone of UPA I?s industrial policy.
The President?s address had a passing mention of looking into changing land acquisition laws. At present, there is an archaic law from 1894 that guides policy on this very sensitive matter of acquiring agricultural land for industrial use. Given the political hot potato that land acquisition has become?the UPA needs to only ask its erstwhile Communist allies in West Bengal on the political repercussions of a botched land acquisition policy?the government needs to proceed with its SEZ policy cautiously. To put it bluntly, any new SEZ will become a non-starter until the government sorts out the political economy of acquiring farmers? lands. Any review process will have to start in effect from the very basics?there are still plenty of problems with title deeds to land (in a lot of cases ,they simply don?t exist) that are a huge stumbling block when it comes to compensating farmers for land. The government has to begin with revamping the system of land records before it will be in a position to compensate people legitimately and equitably. Then, of course, there is a question of adequate compensation and whether the government should acquire land directly or let the private players do it. Again, no easy answers, especially when seen in a broader political economy context. Still, all these matters need to be addressed before a rational policy for SEZs can be evolved.
