Resumo de Making Sezs Tick For India

                SEZs hold the potential of being a panacea for the infrastructural bottlenecks and high transactional cost in Indian Economy. But the growing criticism, the controversies surrounding its cost effectiveness and unjust compensation for land losers calls for a multi-dimensional re-look at the SEZ policy. A few vital changes and a constructive method of conflict resolution could well make SEZs the power house of our Economy.                Nandigram Tribunal set up by an All India Citizens? Initiative; exposed the glaring violations of Human Rights both by machinery of the state and that of the ruling party. Clearly it should have been the moral responsibility of the state to follow democratic and peaceful methods. Moreover if the delays in land acquisition have to be overcome, it will be only through winning the heart of the land loser. Much of the present resistance can be overcome by creating a win-win situation by sharing more benefits with the land loser. The Land Acquisition Act, 1984 determines compensation to the land loser at the rate at which the land as been registered in Sub-Registrar?s office, this rate is generally undervalued and in addition it doesn?t take into account the quick appreciation of land rates that is experience as soon as it is notified as industrial lands. The method of awarding a part of the developed land to the land loser, as followed in the Reliance SEZ and also as spelled out in the recent Industrial Park Development policy of Karnataka, need to be emulated here after as a matter of rule. The SEZ rules, require that at least 25% of the land be used for industrial purpose, leaving a whooping 75% for commercial and residential purposes, thus there is ample margin for the developers even if they give more of the developed land to the land losers. Reliance SEZ has used a number of innovative measures to make the compensation more just. Measures such as providing employment to at least one member of the aggrieved family, giving shop space in the developed land at reduced rates, etc. could go long way in overcoming resistance.
    The other area of controversy, relating the cost effectiveness of the whole policy, was brought out by the finance ministry. Among other things the 5 years of tax holiday; next 5 years of tax half-holiday; exemptions in custom and excise duty, are considered to be too much of cushioning, which the policy offers. There is fear of non-SEZ investments, in considerable portion being diverted into the SEZs; this could result in massive loss of revenue to the exchequer - to tune of Rs. 100,000 crores - and bloat the fiscal deficit. Thus the SEZ policy may in reality turn into a state sponsored tax-scam. The claim that 5 lakh jobs will be created by end of December, 2007, doesn?t seem to the change cost-benefit ratio by much. One way to tilt to cost-benefit ratio to acceptable levels is to link the incentives with the location of SEZ; and labor intensity of the SEZ. A look at the state-wise and sector-wise distribution of SEZs speaks it all. Of the 366 approved SEZs as on 30-Aug-2007, as many as the 44% belong to more developed southern states, while eastern states contribute only 6%, with no contributions from Bihar and just 1 SEZ in Nagaland among the N.E. states. More than 50 of them are in the well-to-do state of Maharashtra, all of which are in or around Navi Mumbai and Pune. Preferential incentives, to make SEZs move from developed states to backward states; from urban centres to backward regions; could be used as an instrument to reduce prevailing regional inequality. 229 of the approved SEZs belong to the IT sector; they could have easily been relocated to underdeveloped regions; as, such sectors only need moderate levels of the physical infrastructure.
Similarly a preferential incentive scheme based on the capital-labor ratio of the sector would give a boost to the labor intensive sectors and also generate larger employment opportunities. The IT Sector Units; - which only needs to be as big as 10 hectares to qualify to be a SEZ - doesn?t have the potential to spawn off Small Scale Industries. Where as, labor intensive sector such as the Textiles creates stronger linkages with the SSIs and bring about all around and equitable development.

                    Big leap in India?s infrastructural strength; freedom from bureaucratic controls and red tape; making our exports more competitive; employment generation; further burgeoning of our forex reserves are indeed what SEZs can offer. This is also what our economy needs most at the moment. At the same time fair compensation; better resettlement and rehabilitation measures; ensuring a more broad based distribution of the benefits; incentives linked to employment generation; and selectivity in locating the SEZs in order to achieve regional development, are the vital aspects to be kept in mind, if we want SEZs to really tick for India.

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