Posco's Rs 53,000 cr SEZ cleared

TIMES NEWS NETWORK[ THURSDAY, SEPTEMBER 28, 2006 09:50:33 PM]

NEW DELHI: Even as the discord within the government over special
economic zones (SEZs) has intensified with commerce & industry minister
Kamal Nath questioning Reserve Bank’s decision to dub SEZs as 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 Prime Minister is looking at it... I have brought it to his
notice," Mr Kamal 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 Kamal Nath’s appeal to the prime minister for 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 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 said that state governments have 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 Kamal 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 Kamal 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-2037225,curpg-2.cms