The new year has ushered a new resolve in the people to resist the effects of the policies of globalisation. And, this was never so clearly evident as in the opposition to the proposals for creation of Special Economic Zones (SEZ) in Goa. The nature and intensity of the resistance have also exposed the limits of the government in pushing globalisation-induced policies.  

At the outset, it is necessary to unravel the interconnection between the present SEZ policy and globalisation. As has been argued, many times over, that one of the defining characteristics of globalisation is the transformation of the principal function of capital itself. In the pre-globalisation phase of capitalism, the principal function of capital was towards production of goods and services, whereas, that in globalisation is for speculative activities which ensures superprofits for the owner and investor of such capital.

It is inherent in this role of capital (which overwhelmingly acts as finance) that it does not lead to the dispersal of benefits to any sizeable section of the population. This is obvious.  Because, activities which do not involve real production do not obviously create any significant employment opportunities.  

The design of the SEZ policy in India was touted as a major impetus for employment generation. The conceptual framework that was sought to be projected by the government was one which would create enclaves with world class physical infrastructure to make Indian industry globally competitive. Further, such enclaves would be blessed with tax waivers to make exports eminently viable. The Commerce Minister sold the dream of creation of SEZs – in export-led labour intensive enterprises thriving in such SEZs – where millions of employment will be generated.

But that the design and the delivery of the policy are quite at variance is becoming increasingly clear. The formal approvals, which the Commerce Ministry has accorded for 404 proposals till 30th November, 2007 established this beyond a shred of doubt. The consortia of promoters who have authored these proposals are, to a large measure, players in the real estate sector. As we have pointed out, apart from the capital market, land and real estate has emerged as major financial instruments for speculative activities in India in keeping with the globalisation-oriented policy paradigm. 

The major shortcomings of the SEZ policy was pointed out by the Left in the very initial phase of its implementation. The first was the land question. What would be the nature of land which would be made available for SEZ? The Left was unambiguously opposed to indiscriminate conversion of agricultural land for SEZs.
The second question was that of the freedom to the SEZ promoters on land use. Only 25 per cent of the total land was to be used for the actual manufacturing/processing activity leaving huge tracts of land for commercial real estate development. The next question was that of the quantum of land. The minimum requirement was 250 acres for single product SEZs and 1000 acres for multi-product SEZs with no upper cap. Then the tax question. Not only were taxes exempted on excise, customs and income but even on profits, taxes were waived. And, finally, the complete silence on rehabilitation of those who will be displaced. But, inspite of the reasoned argument of the Left, the government has not shown any major sign of budging.

Except for raising the land use from 25 per cent to 35 per cent for the actual activity in the SEZ and the rather high levels of cap for the upper limit, the government has done precious little in revising the policy. The manner of acquisition was also changed with major focus on the promoters themselves to buy the land. Without any rehabilitation policy in place, such an approach would be particularly harsh on the land losers, especially if they are small and marginal ones.  

The government appeared to be quite oblivious of the recommendations of the Commerce Standing Committee of the Parliament which is constituted by representatives of all political parties and not just the Left. To exemplify the approach of the committee, it had stated : “The Committee feels that the undue haste in approving SEZ proposals and the consequent proliferation of SEZs have contributed to the development of resistance against the SEZ policy”.

It is in the background of all these, only in the last session of the Parliament, the government has proposed the amendments to the 1894 Land Acquisition Act to reflect the rehabilitation policy which has been formulated. Obviously, it will take sometime for the new law to be enacted. But the government does not seem to be deterred by this and is going on in providing approvals at a breakneck speed.

From a sector wise break up of formal approvals given, it is clear that the original idea of employment generation has gone completely in the background. Of the 404 formal approvals, 255 are in the IT/ITES sector which constitutes 62 per cent. Similarly, of the total 172 notified SEZs, 112 are in the same sector, which is 65 per cent.  

Therefore, Goa had to happen. The broadest unity of the people against SEZs forced the state government to echo their demand in New Delhi — of scrapping all SEZs including the ones which have been notified. And, that forced the bizarre spectacle in the Commerce Ministry. The Commerce Secretary came out with a statement that notified SEZs cannot be undone by the state government – quite oblivious of the fact that in democracy, an elected government is ultimately accountable to the people, regardless of legal niceties. That brought the angry Goa Chief Minister to Delhi. And, the Commerce Minister, Kamal Nath, was waxing eloquent singing a different tune – admitting that no SEZ can happen in the face of  opposition of the state government.

But, Kamal Nath’s response on Goa is not enough. The government must forthwith stop giving any further approvals. It must revisit the entire policy gamut. Meanwhile, let the Parliament discuss and evolve a more humane law to replace the antiquated Land Acquisition Act. Otherwise, an explosive situation is very much on the cards. 

(The writer is a Central Secretariat member of the CPM.)