People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 35

August 27, 2006

SEZs Only For Real Estate Speculation?

CPI(M) MP Demands Case By Case Review 


The following is the text of the letter written by CPI(M) Polit bureau member and MP, Chittabrata Majumdar to the prime minister on August 22, 2006 regarding the issue of Special Economic Zones.


I WOULD like to draw your attention to the issue of Special Economic zones, which you had referred in your Independence Day address. It is understood that the Empowered Group of Ministers had initially set a cap of 150 on the total number of SEZs to be allowed across the country. The haste with which 150 proposals have already been cleared by the Board of Approval in one year is a cause of serious concern. Moreover, it has been reported that the minister of commerce and industry is seeking an urgent review of the cap on the number of SEZs in order to clear more such proposals.


The first issue relates to the very purpose of setting up SEZs. When the parliament passed the SEZ Act in 2005, the ostensible purpose was to promote industrial development and exports. However, the rule that only 25 per cent of land area in a multi-product SEZ needs to be earmarked for industrial production, has led to a situation where proposals for SEZs are being made with the primary motive of developing giant commercial and residential complexes. Far from promoting industrial development and employment generation, this will lead to a speculative real estate bubble. The government needs to review the existing provisions of approval for SEZs, especially the provision for only 25 per cent of the land area stipulated for industrial production. An appropriate ceiling on the maximum land area under one SEZ should also be taken into account.


The revenue implications of the tax holidays being given to the units set up in the SEZs have to be seriously considered. An estimate by the National Institute of Public Finance and Policy suggests that the total loss of revenue would be to the tune of over Rs 97,000 crore in 5 years on an investment of Rs 3,60,000 crore. I am quite surprised about the government’s move to grant such generous tax concessions to the corporate houses when there is hue and cry for the resources for funding social welfare schemes like the Right to Education or the universalisation of the Public Distribution System etc.


I also invite your attention to another important issue, which is the process of land acquisition for the SEZs. A proper cost-benefit analysis of the SEZs, from the point of view of rehabilitation and livelihood security of the displaced people, diversion of agricultural land and its implications for food security, usage of power and water and assessment of its environmental impact, is being precluded due to the way in which enmasse approvals are being given for these projects in a hasty manner.


I therefore request you to immediately stop the proposal to review the cap on the number of SEZs in order to clear more proposals and re-examine all approved SEZ projects by case-to-case basis in every angle. I hope that the government would not take any hasty decisions on such an issue of national importance. (INN)