PM urged to review RBI stand on SEZ

TIMES NEWS NETWORK[ FRIDAY, SEPTEMBER 29, 2006 01:59:46 AM]

NEW DELHI: Even as the discord within the government over special
economic zones (SEZs) has intensified with commerce and industry
minister Kamal Nath questioning the Reserve Bank’s view that SEZs are
like any real estate project, the Board of Approvals (BoA) for these
zones cleared a Rs 53,000-crore project by South Korean giant Posco.

Since clubbing SEZs with real estate projects would increase the cost of
these projects, Prime Minister Manmohan Singh’s intervention has been
sought to resolve the issue.

“The PM is looking at it... I have brought it to his notice,” Mr Nath
said. Taking a cue from his touch stance, the BoA provided formal
approvals to 18 projects and in-principle approvals to 13 projects. The
current bunch of clearances, which include projects by Essar and Zydus,
take the total number of SEZ approvals to 181. The Posco project, to be
located in Orissa, was among the major proposals waiting for clearance.

Mr Nath’s appeal to the PM for a review of RBI’s stand on SEZs comes
close on the heels of a political storm over takeover of farmland for
these zones. Congress supremo Sonia Gandhi has said that farmers should
be adequately compensated, prompting various other leaders including
agriculture minister Sharad Pawar, to oppose the takeover of fertile
farm land for SEZs. In fact, the West Bengal government — run by the
Left parties which wield sizeable clout at the Centre — has said that
only wasteland should be used for SEZs.

The commerce & industry ministry said that state governments has
accepted its proposal to allocate only wasteland for SEZs. “State
government representatives at the Board of Approvals meeting confirmed
that lands involved in all these cases would be on waste/barren lands or
single crop lands only,” said a statement issued by the ministry here.

The conflicting views on SEZs have persisted ever since the finance
ministry objected to tax concessions provided for these zones. While the
UPA government has kept the sops intact, the Reserve Bank first
expressed concerns about development imbalances due to these zones.
Then, the apex bank asked banks and financial institutions to treat them
as real estate projects — a move that would increase the cost of
borrowing for SEZ developers due to higher risk weightage.

Urging the industry to take up the issue with RBI, Mr Nath dared the
critics of the SEZ policy for an ‘open debate’. “I am willing for an
open debate, but nobody is coming forward.

There are some real concerns, which the government will address. But
there are some imaginary concerns also... SEZs are the engines of growth
and the government will not allow the regime to be sabotaged,” he said.
Mr Nath assured the industry that government will not allow the scheme
to get sabotaged, while the BOA indicated that it was business as usual
by going ahead with clearances.

The spotlight is likely to be on the prime minister’s view on RBI’s
decision to club SEZs with real estate projects.
http://economictimes.indiatimes.com/articleshow/msid-2038301,curpg-2.cms