Monday, September 11, 2006

SEZ's may turn out to be a farce after all!!

The supposedly 'WISE' have prevailed in the democracy run within the we are to possibly have more and more SEZ with no real cap on the number allowed. We are aping China on the path to success as much as possible. Shouldn’t that make us happy...I am not so sure and so are a lot of people like me including our bumbling PC :)....So SEZs are supposed to bring in its path rapid growth and at the very least a spurt in real estate. The other good thing is that SEZs are supposed to cut the bureaucratic red tape which has been one of the sore spots in India's rise towards development. They are supposed to cut the babu's fiefdom into shreds and help the business function with as little intervention from the government as possible.. Incidentally as cited in these articles (by Swaminathan Aiyer and Gurcharan Das) the most important sore points of doing business in India are the red tapes bound tightly by the bureaucracy...However in spite of all this I am not very sure we are going in the right path, I am apprehensive that SEZs while possibly leading to rapid growth when rightfully used might build greater divides between regions which come under it and those which don’t. Thereby it increases the already skewed development path that India is following. I believe that ultimately SEZ would tend to work in favour of the very BABUs whom we are trying to cut to size as they still are in positions to grant favours to specific private enterprises towards reaping benefits of these SEZ. Although everyone would like to make money on a real estate boom but the bubble may soon burst if it is not supported or protected through solid means. I believe that if the intent was to give industrial growth in any region a spurt then it should be looked at in the right perspective. Lets try to uniformly reduce the bureaucratic red tape. This would help in genuinely boosting the growth of industries rather than providing short cuts in limited regions. I believe that instead of providing a cure to the root cause of our inability to attract more industries we are trying to address it superfluously and allowing industries to prosper in certain regions. This may prevent naturally advantaged regions (post removal of as much bureaucracy as possible) to be left in the lurch in its bid to attract the most favored industry. This will only perpetrate inefficiencies (which are skewed but are still real) which may prove to be costly to India in the long run.

Of course we can still live by the Keynesian philosophy ‘In the long run everyone is dead’


Blogger Sara said...

As you put it rightly the govt is trying to encourage disparity between regions in the name of SEZ.There should be focus on removing the overall reptapism in the system rather than discriminatory systems in SEZ zones.

Is it an excuse to confront our inability?.Govt would want to cry that there is no time left, I don't whether the Left would agree with this. We are trying to imitate the dragon to overcome the competitive advantage in terms of tax sops which the chinese firms in the SEZ enjoy.

I don't know how far the state govt's would accept this in a federal setup given the contradiction of a single source of power in China

Are we constructing a planned division ?

7:36 PM  
Blogger Sudarshan said...

Hey Sara its good that u highlighted the federal setup..I forgot to mention it...It really does not augur well in a system where federal autonomy by states is cherished..Instead of shortcuts I feel even if it takes a longer time we should develop a stable system...

8:42 AM  
Blogger E Pradeep said...

It's a nice argument to say that SEZs are a way to reduce our dependence on bureaucracy but should we pay a cost for that.

Any reason why we should allow tax holidays/benefits for companies and industries which are doing pretty well despite the red tape?Considering the government's growing concern on fiscal deficit, it does not seem prudent.

Land reforms,as a concept has been a failure in India and this is one more example. Land is being provided at throw-way prices(eg.Smart City in Kochi) to corporates when there are thousands who do not have land.

Moreover,under the pretext of development,we are displacing so many poor people who have no say in this at all and do not benefit from SEZs at all.After all,if people in Cuff Parade are to be displaced in the name of development, would they sit quiet?Or is that the poor have no voice and we just drive them here and there and call it development. A human face for development is what we need and not more IT parks,malls showcasing our development.

4:50 PM  
Blogger Kavi said...

In a country like India where the rural urban divide is already as striking as it can get and where even intra-city and intra-zonal differences are glaringly apparent SEZs are definitely not bettering the situation.

Even for SEZs, Tax SOPs n other SEZ privileges are not accompanied by supporting infrastructural developments from the Government. This simply results in an overcrowded and overflowing SEZ that is simply not capable enough to support the structural changes that come with sudden urban development.

Pretty sad - the rich simply get richer n the poor poorer...

6:20 PM  
Blogger pithan said...

Another Issue Highlighted by VP Singh - For setting up of SEZ Govt "grabs" land from poor at very very low prices. But while negotiating/settling prices for finished products (Say electricity) govt is begging private companies to reduce it (Remember ENRON?) I m quoting V P Singh

"We have trumpeted that we have introduced market economy but the first principle of market economy is that the buyer and seller should have the freedom to buy and sell. The choice has to be there whether one sells or not, buys or not, and the price is the price which is negotiated and settled. That is the market price. Now if you deny the buyer or seller the right to exercise his choice whether to buy or sell and instead of negotiating the price there is government intervention, which settles the price, where is this market economy?"

"This is happening all over the country, not just in Dadri, sometimes in the name of hi-tech cities, sometimes in the name of Special Economic Zones (SEZs). All the states and all the chief ministers are doing it, and this includes other companies also and not just Reliance. If you are going to have an economy, which is skewed in favour of the rich, then it is all a bogus market. Consider the build-up of a project. Land is needed. So are machinery, concrete, cement and steel, among others. When it comes to the farmers’ land, everyone puts up a precise question: “Don’t you want development?” Why is this question not put to the Birlas and Tatas? By the same principle, Tata Steel and Birla Cement should also be acquired. Why doesn’t the UP government acquire electricity at the rate it wants to, instead of signing the deal with Reliance? Everybody dictates to the government the price it wants for its product, only the farmer is dictated by the government. This is injustice. "

10:11 AM  
Blogger suri said...

while sez' are an ecellent concept , its an integrated township in away with every facility possible. usually the size of sez's is huge unlike the one in India including the Reliance SEZ...the average size of a SEZ in China is about 400-500 hectares or more. Ours in contrast start from abt 10 hectares, This is a ploy to sell real estate more than anythin else.
hey added u to my bloglist too

10:02 PM  
Blogger Sudarshan said...

Interesting to hear all ur views..broadly we have been talking about
1. Land usurpment: While we would like to have a direct demand and supplier match in case of land taken by enterprises for SEZ..often it maybe possible that some residents are stubborn enough and may not yield to market rates for land due to possibly sentimental attachment to that case maybe there is a case for the govt to step which case i believe that instead of outright purchase of the land they should be provided joint ownership rights in the SEZ..
2. Size of the SEZ: True that our SEZ are no comparison for the size of SEZs in fact i think in CHina the size of SEZs are equivalent to the size of Kerala. WE i guess can ill afford to spare so much of land.. which is I guess why what works in CHina may not work in India..
3. The tax sops awarded: I think in this respect federal autonomy should be protected. In the sense it is upto the region's authority to decide OBJECTIVELY on the tradeoff between tax sops and employment generation and overall well being of the population...
Finally we come to the question of infrastructuren planning...which still remains a big question...

9:53 AM  
Blogger Ananta/Sambhava said...


It's interesting how you can miss an issue this big for so long :D.. anyway, late but not the latest.. i was reading this online news mag which focuses on such core issues.. (see link..) and the infrastructure issue u r referring to re: SEZs is mentioned in this article.. these "princely estates" (as the article calls the SEZs) will be guaranteed power and water round-the-clock!!!

wonder how the govt can do that for them and not for the rest of the country..

8:32 AM  
Blogger Ananta/Sambhava said...

oosp.. forgot the link.. here we go.. and if any of u guys know abt independent news sources (including blog sources) wud b very glad to know..

8:34 AM  

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