How farmers can reap benefits from SEZs

Sharad Joshi

Farmers can be encouraged to form a corporation, with their land as
equity. This corporation could have helped to create infrastructure and
sell developed plots to industrialists for SEZs.

The Commerce Minister, Mr Kamal Nath, has been a champion of export-led
growth that promotes employment. He recognises that industry is severely
handicapped by the lack of infrastructure, dependable power and an
environment conducive to enterprise.

Mr Kamal Nath knows what will give industry the growth thrust it badly
needs but is painfully aware that these ingredients cannot be provided
at one stroke. He, therefore, decided to go in for the Chinese approach
— set up special enclaves, where industrial units are provided all
possible incentives.

The forerunner of such an enclave was the Export Processing Zone. But
the EPZs did not promote exports significantly on account of the
multiplicity of controls, the absence of world-class infrastructure and
an unstable fiscal regime.

SEZ Policy

To correct the shortcomings of the EPZs, came the Special Economic Zone
policy. This policy aimed to make the SEZs engines of economic growth,
supported by quality infrastructure and complemented by an attractive
fiscal package. With a plethora of sops the SEZs quickly became popular,
especially after they came to be seen offering opportunities to develop
the hinterland.

The compensation offered to the farmers was at the traditional level of
1 per cent of the price charged to the first industrial user. In some
States, the farmers were even evicted. The opposition of the farmers was
palpable — first in Uttar Pradesh, then in Haryana and Maharashtra.

Farmers' Solution

Then, the farmers of Maharashtra offered a solution. According to a
recent survey, 40 per cent of the farmers wanted to quit agriculture.
So, they need a land market that would match sellers and buyers. .

The farmers of Maharashtra suggested that

No farmer wishing to continue with agriculture, single or multiple
crops, should be deprived of his land;

A farmer not wanting to continue with agriculture should have the
freedom to sell his land at the best possible price to a purchaser of
his choice; and

Anybody wanting to acquire a piece of land a farmer was willing to sell
should match the best offer the latter had received. On September 17,
the farmers of the Aurangabad region of Maharashtra organised a massive
demonstration to protest against a covenant being signed between the
Maharashtra Industrial Development Corporation (MIDC) and an
industrialist. The police arrested more than 80 farmers.

On that day, , the Maharashtra Chief Minister, Mr Vilasrao Deshmukh,
warned farmer leaders against those provoking them into an agitation
that was against farmer interest. He also promised them a good price for
their land, jobs in industries that come up, etc. But no doubt to his
dismay the very next day, the leader of his party, Ms Sonia Gandhi,
advised Congress Chief Ministers to be cautious about depriving farmers
of their land.

The Finance Minister, Mr P. Chidambaram, has not been happy about the
sops given to SEZs. Quickly sensing the direction of political wind, he
reiterated this stand.

The Prime Minister, Dr Manmohan Singh, too , expressed serious doubts
about the economic benefits of the SEZs, particularly their employment
potential.

A basically sound idea is being destroyed. The very purpose of the SEZs
seems getting lost because of those interested in grabbing valuable
real-estate.

The issue could have been tackled in a straightforward manner. The
affected farmers, for instance, could have been encouraged to form a
development corporation, with their land as equity. This corporation
could have helped to create infrastructure and sell the developed plots
to the industrialists — with the profits going to the farmer-shareholders.

This would have provided an additional advantage, inasmuch as it would
have transformed immovable land into paying assets, the devolution of
which cannot also be denied to the married daughters or to the widowed
daughters-in-law staying with their parents.

This approach was tried 10 years ago, though not successfully, because
of the opposition by the land-grab lobby in Maharashtra and the absence,
at that time, of a law giving equal and coparcenary rights to women.

Mr Kamal Nath would do well to review the policy on SEZs.

(The author, Founder of the Shetkari Sanghatana, is a Rajya Sabha MP. He
can be contacted at sharad.mah@nic.in)

http://www.thehindubusinessline.com/2006/10/04/stories/2006100400071000.htm