Overhyped SEZs, a huge failure

The Special Economic Zones (SEZs), launched by the Central government with a lot of fanfare over a decade ago, has turned into such a quagmire that no one seems to be keen on revisiting it. But a re-evaluation of the status of these SEZs and the remedial action required to be taken will have to be addressed now with the Supreme Court issuing notices to the Centre and several state governments to submit their responses to a Public Interest Litigation (PIL) seeking the return of the bulk of unused land to farmers. The Andhra Pradesh-based NGO, the “SEZ Farmers’ Protection and Welfare Association” has pointed out in its petition, quoting a CAG report, that of the 50 SEZs that were approved, only 15 are operational, while 29 are yet to start any commercial activity and six have been de-notified. It also noted that 77% of the 45,782 hectares of acquired land was concentrated in four states – Andhra Pradesh, Gujarat, Maharashtra and Tamil Nadu – since the SEZ Act came into being in 2005. It also noted that the intended projects had failed to take off.

Besides, of the 12.47 lakh jobs that were promised, only 42,000 had been created.

In an imitation of the Chinese model, the SEZ plan was discussed and debated for over five years before the enactment of the law. It promised single window, speedy
approvals and a stable tax regime with world class infrastructure for Indian manufacturers to compete in the world market and achieve substantial exports. But poor implementation processes in different states have made SEZs an abject failure.

A recent Finance Ministry survey revealed that as many as 804 projects across the country have been stalled for a variety of reasons, with only around 8% of them being unable to take off due to land acquisition problems. Pointing to a possible collusion between unscrupulous officials and land grabbers, the CAG report said that at least 11 developers had raised Rs 6,309 crore of loans through mortgaging of SEZ land, which were later diverted for other purposes.

Quoting the example of cancellation of the land acquired in West Bengal’s Singur for Tata’s small car project and the court’s order to return them to farmers, the petitioners have urged the apex court to similarly review the functioning of the SEZs. As there is no clarity in law as far as failed projects are concerned, the petitioner also wants the state governments to conduct a socio-economic survey of the farmers who have been rendered jobless and review the compensation paid to them. A time has come for the Centre and the states to take a serious look at the SEZs and determine their fate.

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