Thursday, April 05, 2007

SEZs cleared: Feed the globe with Indian goods



NEW DELHI: At last there is some movement on the contentious special
economic zones (SEZs). But, all outstanding issues have been swept
beneath the carpet while de-freezing the 83 zones.

Promoters of these zones where land acquisition has been completed may
go ahead with setting up the SEZs. These zones are billed as the major
economic expansion show pieces of UPA Government to feed the
international markets with both goods and services from India.

But, several questions remain unanswered. Lifting the ban on SEZs should
have been done in sync with finalization of rehabilitation policy for
farmers and rural families impacted due to land acquisition.

Empowered Group of Ministers (EGoM) headed by External Affairs Minister
Pranab Mukherjee has made a meek attempt towards fine-tuning the SEZ
policy especially after bloody pitched battles that were fought in the
hinterlands of West Bengal and Orissa.

For instance, the ceiling for land area has been fixed at 5000 hectares.
This means larger zones proposed by companies like Reliance Industries
Ltd may have to be clipped. It has also been made mandatory that 50
percent of the area under SEZs must be utilized as 'processing area'. In
effect, stringent land utilization norms have been stipulated to negate
the charge that most of these zones have become major real estate
ventures while actually putting minimum land to create additional
industrial capacities for multiple products.

State Governments role in land acquisition has been minimized.
Especially with the Left allies in West Bengal getting the flak for
Nandigram massacre, the UPA Government seems to have made life easier
for the state satraps. But, it may not be a wise move to leave the
farmers to negotiate with the corporates and export community on the
land price.

An institutional mechanism may have to be put in place to ensure that
farmers are paid adequate price on the land sold to developers of SEZs.
One model that has quietly worked well and worth considering was in
Gujarat where instead of ownership only land lease was transferred to SEZs.

UPA Government is yet to take on board the various models for
rehabilitating the farmers and providing them with adequate
compensation. Proposals range from making farmers cooperatives and
associations' equity partners in the SEZs (in lieu of the land) to
providing jobs and reserving ancillary units for the rural families.
They are yet to pass muster of the powers that be.

Noted agriculture economist Dr M.S.Swaminathan's idea of setting up
Special Agri-economic Zones (SAZs) to boost farm based industry and
related infrastructure to boost its contribution to GDP and exports

Finance Minister Palaniappan Chidambaram's concerns on revenue angle may
also have to be taken on board by the UPA Government.

Nevertheless, it is movement forward.


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