Special twilight zones?

The other day the empowered group of ministers (eGOM) succumbed to the exertions of a powerful lobby to lift the cap of 150 on the number of special economic zones (SEZs) that can come up in the country. What was so sacrosanct about the 150 figure, wondered all those who wanted more SEZs in the country. They claimed that the Supreme Court would not countenance this cap on numbers as it was arbitrary and not good in law. If there can be 150, then why not many more?  Perhaps there is merit in this argument, but SEZs and their numbers cannot be judged from the blinkered confines of law alone; there is a formidable moral and social component to this issue that is somehow getting ignored due to the celebratory tone of analysis emanating in the pink dailies about these economic zones.

A devise to fast-track globalisation, SEZs are seen as a panacea to the problems of underdevelopment, low foreign investment and the delay entrepreneurs experience in setting up their enterprises. SEZs are meant to lessen government corruption as they prevent access of the inspectors to these zones and give primacy to the self assessment of revenue accruals by the entrepreneurs. Besides, these zones promise no custom duties, tax holidays and hassle free repatriation of profits to their principal countries. Any foreign company can create a 100 per cent unit in India and remain immune from the restraints imposed by Indian labour laws. The companies would be free to hire and fire any one.

Indeed, SEZs promise all those facilities that have been a bane of Indian society. Top quality infrastructure, captive power and adequate water supply — all missing from most Indian cities — are promised to investors. Little wonder that the Indian corporate houses are so gung-ho about this policy. They are falling over each other to grab a piece of prime land before, they fear, it all gets gobbled up. Reliance Industries, after picking up 25,000 acre in Haryana, hopes to pick another 75,000 acre to have many more SEZs all over the country. There are others from different sectors who are trying to emulate the elder Ambani’s model. The government seems keen to rush through this policy ostensibly for attaining 8-10 per cent growth rate.

Every kind of criticism of this policy is brushed aside by mentioning the success story of SEZs in China. Shenzhen and Guangzhou are reverentially mentioned as the examples of how these zones can transform the economic landscape of the country. Can the China model be replicated in the Indian context? China, whatever the protagonists of this economic model may say, remains a regulated economy where State planning enjoys primacy over market forces. Shenzhen was a backward area which was transformed. Pray, what is happening in India? There is no manifest application of mind in deciding where the SEZs have to be set up. Prime agricultural land around the metros is being targeted by corporate houses to create these SEZs.

A large part (65 per cent) of these zones is earmarked for residential purpose and there is more than a kernel of truth that the Indian corporate sector is using this policy to gobble up prime real estate. The worrisome part is that the government has not paid any attention to the social cost of these SEZs. There is no way to find out what happens to farmers who are uprooted by the big power projects or SEZs. Would they get employment in these walled zones or get fenced out to fend for themselves? With the business houses liberated from any social obligation towards the uprooted, VP Singh’s agitation has huge implications for political parties (see interview inside). If the government, which is giving an impression of being the guardian of corporate interest, does not wake up, then the aam admi, still holding his/her constitutional power to vote out governments, could hit back with vengeance.