Kerala chief minister VS Achuthanandan has denied state Cabinet nod to 21 special economic zone (SEZ) proposals from China. The state had been counting on picking Rs 25,000 crore ($5.8 billion) investment from the proposals.

While CPI(M) is not at all supporting its senior politburo member?s skepticism on the Chinese SEZ concept, CPI, RSP and Janata Dal, partners of the ruling LDF, back Achuthanandan. ?Let the allies have their say,? Achuthanandan said, brushing aside the pro-SEZ decision of the CPI (M) state panel meeting presided over by Prakash Karat.

The anti-SEZ camp raises two apprehensions:

* Will the investor, who gets several tax benefits, pass it on to the state economy in a matching proportion?

* It could open floodgates for a no-holds bar hire-and-fire regime, says CPI?s youth outfit AIYF.

CPI(M), however, is in a liberalisation mood. ?SEZ is a job-spinner and we want jobs,? counters DYFI, the youth wing of chief minister?s party.

Interestingly, a recent econometric study on SEZs in China and India (done by Chee Kian Leong) shows that there might be a grain of truth in what the senior CPI(M) leader says. Leong?s statistical patterns of export and regional growth in two countries point out that ramping up the number of SEZs is not as helpful for growth as thought to be. On the hand, jacking up the overall scale of liberalisation seems to give better ?multiplier? effect on economic growth.

In Kerala, the SEZ ball is now in the court of high-power panel of ruling coalition LDF. The state?s only active SEZ? Cochin special economic zone?is chockfull with no further space for new entrepreneurs.

Recently, 13 projects have got a final clearance besides eight awaiting the central government nod. Some of the proposed SEZs are Cochin Port Trust (CPT), Vallarpadom (multiproducts), Kinfra, Kakkancherry (food processing), Kinfra, Kazhakkoottam (IT), Technopark, Thiruvananthapuram (IT), Smartcity, Kochi (IT), Sutherland Global Services, Kalamassery (IT), Kinfra, Kochi (electronics) and Unitech Realestate, Kunnathunadu (IT). Some of them are to be run by public sector faciliators like Kinfra, Technopark and CPT.

Meanwhile, as Chinese SEZ concept delimma has caught the Indian communist state, China too is giving the once-over to Kerala. Stirred at the cultural chords by the Chinese fishing nets on Kerala coast, the visiting Chinese ambassador Zhang Yan was bullish on the prospects of mutual trade in commodities like cashew and pepper.

?A sub-office of Indo-China Cultural and Economic Council in Kerala is on our agenda,? Zhang Yan said.

It?s a fair chance that before the China-born SEZs, the Chinese Embassy outpost arrives in Kerala, quips a CPI (M) cynic.