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Home > Archives (2006 on) > 2007 > June 16, 2007 > SEZ: Tinkering Won’t Help—the Law should be Repealed

Mainstream, Vol XLV No 26

SEZ: Tinkering Won’t Help—the Law should be Repealed

Tuesday 19 June 2007, by Bharat Dogra

Protests against Special Economic Zones (SEZs) have been reported from several parts of the country. These are basically the struggles of people trying to protect their land and livelihood. These sporadic struggles and their demands are highly justified, but these are not adequate. What is needed is nothing less than a complete repeal, a definite nullifying of the piece of legislation called the Special Economic Zones Act, 2005 (Act No. 28 of 2005, dated June 23, 2005). It is such an undemocratic piece of legislation that it cannot co-exist with a healthy democracy—either the law will have to go sooner or later, or else the health of our democracy will suffer grave damage. In fact it is not a question of whether this law would be repealed, but when. It is for the government to decide whether it will repeal this law after much more massive discontent (than has already been seen) has spread far and wide, or whether it’ll learn suitable lessons from the experiences and viewpoints already available. It is also for the ruling parties, their coalitions and allies to decide whether they will wait till this law continues to cause irreparable damage to their credibility and trustworthiness. In fact so unjust and arbitrary is this law that it should be called economic terrorism against the common people of India.

It may be recalled that the early stage of the introduction of this law had witnessed a lot of opposition within the government as well. Finance Ministry sources had reportedly warned that the government is likely to suffer a tax loss of around Rs 95,000 crores (or Rs 950 billion) till the year 2010. Several Ministers/Chief Ministers were reported to have been concerned at the massive discontent the creation of SEZs can cause. The government’s response to these internal criticisms as well as to people‘s protests has been half-hearted at best and full of hypocrisy and deceit at worst. At a time when reports of highly fertile farmland being acquired were pouring in from various parts of the country, senior officials were being quoted to say that no farmland is being acquired.

The government also responded by lowering the maximum limit of a single SEZ, but even this reduced limit is very high and doesn’t mean much for the country as a whole as long as there is no limit on the total number of SEZs. But in any case a few changes and concessions like this are not adequate in the case of an inherently unjust and undemocratic legislation.

Chapter II of this law says:
A Special Economic Zone may be established under this Act, either jointly or severally by the Central Government, State Government, or any person for manufacture of goods or rendering services or for both or as a Free Trade and Warehousing Zone. Any person, who intends to set up a Special Economic Zone, may, after identifying the area, make a proposal to the State Government concerned for the purpose of setting up the Special Economic Zone.

This is ridiculous and most arbitrary. Nowhere is it stated that this person will first take the approval of all the people who are already living and/or working in this area. In effect this means that if any person fancies any piece of land on which other persons or their forefathers have been living or working for decades or even hundreds of years, he can jolly well make a claim to this land (in the name of setting up an SEZ) without any consultation (not to mention permission) with these people at all. It is due to this fundamentally undemocratic and arbitrary nature of this legislation that it cannot be sustained for a long time in a healthy democracy. Of course, when the law says "any person who intends to set up an SEZ”, it actually means a person with millions and millions of rupees. So in effect it means that any rich person can seek to acquire the land of thousands of poor people in the name of SEZ.

Earlier also the land acquisition law and process were very unjust, but there was a need to prove the existence of a strong public interest. But the SEZ Act 2005 is, in its own words, “an Act to provide for the establishment, development and management of the Special Economic Zones for the promotion of exports and for matters connected therewith or incidental thereto”. So all that you have to prove is your ability to increase exports. In the era of globalisation anything—livelihood, environment, fiscal health, above all, democracy—can be sacrificed at the altar of imports. This appears to be the central message of the SEZ Act 2005.

INDIA‘S food security is in a precarious state and the country already has to import a lot of staple food including wheat, pulses and oilseeds/edible oils. In this situation serious objections have already been raised about the escalating transfer of fertile farmland for industries, infrastructure, urbanisation and other non-farm uses in recent years. The SEZ will add further to this disturbing trend. It has been reported recently that about 240 SEZs have been approved and perhaps a similar number may be approved in the near future. This will greatly add to the ongoing process of diverting farmland to non-farm uses. True, some farmers may be able to purchase alternative land, using compensation money but on the whole the direct and indirect impact will involve the loss of livelihood for those involved in farming on a large scale. The most adversely affected will be those like tenants, landless workers and others who do not have land in their name but depend on farmland for a substantial part of their livelihood.

Some government statements have stated that attempts may be made to avoid farmlands while setting up SEZs. It is important to recall that even uncultivated commonland of villages supports livelihoods of several villagers, including the landless workers and pastoral groups. These may include pastures and water sources of critical importance for the survival of village communities. SEZs have a huge presence in coastal areas where these can play havoc with the livelihood of fisherfolk and other related communities.

It has been claimed by a few SEZ promoters that while acquiring farmlands/commonlands people will not be asked to leave their homes. However, when walls are erected all over the SEZ and entry is only by identity card, when several normal laws do not apply to the SEZ areas, when massive-scale construction activities all around village houses is likely to seriously disturb their ecology (for example, reducing them to lower areas where waterlogged/flood conditions are more likely) then how many villagers will feel at homein the new surroundings? The panchayats of villages will hardly have any relevance in the new power-structure proposed by the SEZ law for these areas.

In addition, as already pointed out above, the Finance Ministry had earlier presented estimates that due to the wide range of tax-concessions given to units in SEZ areas, the country is likely to lose about Rs 900 billion (Rs 90,000 crores) in direct and indirect taxes over the next four years. Chapter VI of the SEZ Act promises a very wide range of “special fiscal provisions for special economic zones” in the form of “exemptions, drawbacks and concessions”. No one has yet been able to provide a proper justification for this unprecedented, massive largesse to the rich classes while the schemes made for the poor are denied badly needed funds.

The SEZ Act is nothing but a legislation of plunder. In addition to the massive fiscal concessions there will be plenty of room for huge profits to be made from real estate deals within these gated and walled enclaves of privileges where the elite can lead Western life-style without even a shadow of the poverty and squalor of other parts of the country. The Prime Minister recently warned against crony capitalism but it is laws like this one which promote crony capitalism. There will be plenty of corruption here and sooner or later a demand for exemption from right to information is likely to be raised. Already exemptions, direct or indirect, from various protective laws (for example, laws to protect environment and labour) mean that the industrial units here will be able to function in a very arbitrary way, unencumbered by responsibilities normally expected from them. They will also have privileged reach to farmers outside the SEZ areas, so one can expect faster spread of corporate-style agriculture. Due to the many concessions and privileges units within the SEZ areas will have a many-sided edge over units in other parts of the country, creating several economic problems for the less privileged entrepreneurs and distortions in the economy. This will also create a rush at the level of individual units for SEZs, despite the clear social harm the expansion of SEZs will entail.

Briefly the SEZ legislation is an arbitrary act of economic violence against the people of India which can play havoc with livelihood, food security, environment, justice to workers, fiscal health and balanced development of the economy.
The sooner it is scrapped, the better will it be for the country, its people, its peace, its justice and its democracy

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