SEZ policy: Is it flawed?

Way back in April 2000, India announced the Special Economic Zones (SEZ) scheme to overcome the shortcomings posed by clearances and taxes and foster economic growth of the impoverished regions. But the SEZ scheme hit a roadblock, getting entangled in one controversy or the other. The policy attracted more criticism than was expected. Human rights groups were up in arms, Nandigram and Singur burned and the repercussions were felt even in Kolkatta. SEZ’s were supposed to offer high-class infrastructure and reduce import duties on raw materials.

But how could a concept borrowed from our brothers in the neighbourhood go so horribly wrong? The concept of SEZ had been hugely successful in China and was one of the driving forces behind the rising Chinese economy. In provinces like Hainan, Hunchun, Guangdong and Fujian, SEZ’s are still operating and continue to provide jobs, knowledge and expertise and still make significant profits. Shenzen proves that under different economic laws, a region can develop better. SEZ’s have not been restricted to these two countries. In fact, long before India thought of SEZ’s, the concept had been tried and tested in countries like Jordan, Iran, Russia, Ukraine, Brazil, Pakistan and the Philippines. So what really went wrong?

The acquisition of land by the government on behalf of the industries setting up their units in these SEZ’s raised many an eyebrow. First there was some confusion regarding the type of land that could be acquired. Could arable land also be used to develop SEZ’s? The Special Economic Zones Act, 2005 made no mention of the type of land that could be borrowed or grabbed by the government.

Under the present laws, acquisition is limited to non-agricultural land. But the question now is what compensation is to be paid to the families being displaced. The government authorities have always been keen on displacing families but never too keen on rehabilitation of the displaced families. Consider the Narmada Dam project; thousands of families have been displaced but are yet to be rehabilitated; human rights activist Medha Patkar continues to fight for their rights. Thus, the process of land acquisition has become the most controversial one. Farmers raised a big hue and cry when their fertile, arable land, their only source of livelihood, was taken away from them.

The point of conflict arises when the farmers or the villagers refuse to sell their land and defy the government; in such cases, constitutionally the government has no right to force them to sell their land. Also the SEZ policy discourages real estate development but the government has not been able to ensure compliance. It is believed that migration would cause a huge problem and disturb the law and order situation of the state. Even if the locals are provided jobs in the SEZ units, it may not provide fulfilment to the locals. Sectors like IT and pharmaceuticals are not labour-intensive. This is another point highlighted by the protestors.

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