What do SEZs really mean for India?
We need to look beyond mere economic benefits and open a debate on their governance
RAMESH RAMANATHAN
A few weeks ago, the Haryana government signed a memorandum of understanding (MoU) with the Reliance Group for a special economic zone (SEZ). The numbers are staggering: 25,000 acre, Rs 40,000-crore investment, anticipated annual returns of Rs 10,000 crore, with a 24% minority stake for the state. A week later, the Mahindra Group signed a similar MoU with the Rajasthan government. Over 100 such proposals have been cleared by the government of India. The future tenants of these SEZs are multinationals—Indian and foreign. Mukesh Ambani said: “We will get the best of the Fortune 500 companies here.” Clearly, SEZs are the latest buzzword in India’s charge onto the world economic stage.
What do SEZs prom-ise? There are fiscal goodies—customs duty exemption, income tax and service tax benefits— that are intended to generate economic and employment benefits. However, these are being questioned, with talk of job cannibalisation and fiscal distortions. I want to focus on a less discussed aspect: the land cannibalisation and, more importantly, governance distortions that they create.
The fiscal benefits are really a red herring to draw attention away from the real estate benefits that developers are getting from these SEZs: access to precious land at throwaway prices, cleansed of all land title and litigation issues. Some of these land arguments are already being made. In Haryana, for example, a Congress MLA, Kuldeep Bishnoi, has raised questions about the Reliance deal, but has been issued a show-cause notice by his party; an independent MLA, Naresh Yadav, has threatened a farmer protest on August 1, raising issues of water equity and loss of land to farmers.
Cynics might dismiss these as opportunistic politics, but there is no denying that there is more to SEZs than just economic incentives. These are not necessarily tiny plots of land: the Reliance SEZ is 25,000 acre. All of Bangalore is 50,000 acre. In Superman Returns, ace villain Lex Luthor says: “It’s all about land.
You could manufacture anything else, but you can never make land.”
The governance issue has attracted less attention. The reality is that SEZs are like a governance virus in the areas where they are located. Read the SEZ Act, it is full of unilateralism. Section 31 says that the Development Authority of the SEZ shall have ‘the Development Commissioner, three officers of the Central Government, (and) not more than two nominees of entrepreneurs.’ This is centralised and privatised governance, a throwback to the feudal state, with traces of the Raj — a potent and dangerous mix of public and private interest.
There is more. The SEZ has the mandate to develop infrastructure within it, provide water and sanitation services, levy user charges and collect property ‘fees’. This means that it will essentially function like a sanitised local government, without the politics. This is a complete violation of the 73rd and 74th Constitutional Amendments, which mandated that rural and urban local governments would be responsible for these functions. This is sad, given how tortuous the political process of decentralisation has been, with activists and advocates having devoted their entire lives to the cause. Despite the Amendments, it has taken 15 years for panchayats and municipalities to get their share of finances and responsibilities—and the battle is still being fought. This is how due process ought to work.
Against this background, the SEZs are a businessman’s dream response, the creation of a kind of political ‘cleanroom’. And so, while some parts of government are engaged in the legitimate political battle of decentralisation, other parts of the very same government sanction thousands of acres of SEZ projects, slicing up our our villages and towns and auctioning them off to the highest bidder. I don’t believe these things begin with a group of conspirators sitting down to figure out how to carve up the country. I think that the process begins with the genuine desire to improve the responsiveness of government to economic demands; but in a globalised world that is moving at warp speed—with everyday comparisons being made to China— there is little time to follow due process. Pretty soon, we have the end justifying the means. Unfortunately, most businessmen and bankers are constrained to think only of their interests, which is exactly why they are successful at what they do; and which is why we need the government to act as the check-and-balance here, not become an IPO-partner with a conflict-of-interest.
Are we making too much of these developments? After all, every successful country has made compromises between development and equity on its way to prosperity. The SEZ issue is symptomatic of complex intertwined issues, of how globalisation is reaching into countries and shredding their political identities; how a new localised phenomenon of interlinked cities across the world is setting the development agenda. Saskia Sassen, professor of sociology at Chicago, writes of how the political process— which is meant to slow the pace and allow for deliberation—is now getting tainted by economic forces. She talks of a ‘geography of globalisation’ and says, ‘national urban systems are being partly unbundled as major cities become part of a new or strengthened transnational urban system.’
Business leaders know that great institutions are distinguished by their governance processes. We all know that India needs to strengthen its democratic institutions even as it responds to its economic impulses. This tension between progress and process is similar to that between liberty and equality in a democracy.
Unfortunately, SEZs are the wrong kind of solutions—even as they provide sops to the business community, they severely debilitate our public institutions and our democratic processes. It’s not too late, the mania has just begun. We need to hit the pause button, and nurture debate about what SEZs really mean for India, and the price we will have to pay for them in the long run.
—The writer is founder, Janaagraha. Email: ramesh@janaagraha.org
RAMESH RAMANATHAN
A few weeks ago, the Haryana government signed a memorandum of understanding (MoU) with the Reliance Group for a special economic zone (SEZ). The numbers are staggering: 25,000 acre, Rs 40,000-crore investment, anticipated annual returns of Rs 10,000 crore, with a 24% minority stake for the state. A week later, the Mahindra Group signed a similar MoU with the Rajasthan government. Over 100 such proposals have been cleared by the government of India. The future tenants of these SEZs are multinationals—Indian and foreign. Mukesh Ambani said: “We will get the best of the Fortune 500 companies here.” Clearly, SEZs are the latest buzzword in India’s charge onto the world economic stage.
What do SEZs prom-ise? There are fiscal goodies—customs duty exemption, income tax and service tax benefits— that are intended to generate economic and employment benefits. However, these are being questioned, with talk of job cannibalisation and fiscal distortions. I want to focus on a less discussed aspect: the land cannibalisation and, more importantly, governance distortions that they create.
The fiscal benefits are really a red herring to draw attention away from the real estate benefits that developers are getting from these SEZs: access to precious land at throwaway prices, cleansed of all land title and litigation issues. Some of these land arguments are already being made. In Haryana, for example, a Congress MLA, Kuldeep Bishnoi, has raised questions about the Reliance deal, but has been issued a show-cause notice by his party; an independent MLA, Naresh Yadav, has threatened a farmer protest on August 1, raising issues of water equity and loss of land to farmers.
Cynics might dismiss these as opportunistic politics, but there is no denying that there is more to SEZs than just economic incentives. These are not necessarily tiny plots of land: the Reliance SEZ is 25,000 acre. All of Bangalore is 50,000 acre. In Superman Returns, ace villain Lex Luthor says: “It’s all about land.
You could manufacture anything else, but you can never make land.”
The governance issue has attracted less attention. The reality is that SEZs are like a governance virus in the areas where they are located. Read the SEZ Act, it is full of unilateralism. Section 31 says that the Development Authority of the SEZ shall have ‘the Development Commissioner, three officers of the Central Government, (and) not more than two nominees of entrepreneurs.’ This is centralised and privatised governance, a throwback to the feudal state, with traces of the Raj — a potent and dangerous mix of public and private interest.
There is more. The SEZ has the mandate to develop infrastructure within it, provide water and sanitation services, levy user charges and collect property ‘fees’. This means that it will essentially function like a sanitised local government, without the politics. This is a complete violation of the 73rd and 74th Constitutional Amendments, which mandated that rural and urban local governments would be responsible for these functions. This is sad, given how tortuous the political process of decentralisation has been, with activists and advocates having devoted their entire lives to the cause. Despite the Amendments, it has taken 15 years for panchayats and municipalities to get their share of finances and responsibilities—and the battle is still being fought. This is how due process ought to work.
Against this background, the SEZs are a businessman’s dream response, the creation of a kind of political ‘cleanroom’. And so, while some parts of government are engaged in the legitimate political battle of decentralisation, other parts of the very same government sanction thousands of acres of SEZ projects, slicing up our our villages and towns and auctioning them off to the highest bidder. I don’t believe these things begin with a group of conspirators sitting down to figure out how to carve up the country. I think that the process begins with the genuine desire to improve the responsiveness of government to economic demands; but in a globalised world that is moving at warp speed—with everyday comparisons being made to China— there is little time to follow due process. Pretty soon, we have the end justifying the means. Unfortunately, most businessmen and bankers are constrained to think only of their interests, which is exactly why they are successful at what they do; and which is why we need the government to act as the check-and-balance here, not become an IPO-partner with a conflict-of-interest.
Are we making too much of these developments? After all, every successful country has made compromises between development and equity on its way to prosperity. The SEZ issue is symptomatic of complex intertwined issues, of how globalisation is reaching into countries and shredding their political identities; how a new localised phenomenon of interlinked cities across the world is setting the development agenda. Saskia Sassen, professor of sociology at Chicago, writes of how the political process— which is meant to slow the pace and allow for deliberation—is now getting tainted by economic forces. She talks of a ‘geography of globalisation’ and says, ‘national urban systems are being partly unbundled as major cities become part of a new or strengthened transnational urban system.’
Business leaders know that great institutions are distinguished by their governance processes. We all know that India needs to strengthen its democratic institutions even as it responds to its economic impulses. This tension between progress and process is similar to that between liberty and equality in a democracy.
Unfortunately, SEZs are the wrong kind of solutions—even as they provide sops to the business community, they severely debilitate our public institutions and our democratic processes. It’s not too late, the mania has just begun. We need to hit the pause button, and nurture debate about what SEZs really mean for India, and the price we will have to pay for them in the long run.
—The writer is founder, Janaagraha. Email: ramesh@janaagraha.org
posted by Sudarshan Rodriguez at 12:43 PM
0 Comments:
Post a Comment
<< Home