A Citizens’ Report Card on Special Economic Zones
November 24, 2009
Summary by Panayiotis T. Manolakos, Sanhati.
The Citizens Report Card on Special Economic Zones (CRC-SEZ) is a report continuing the radical articulation of people’s dissent over special economic zones (SEZ). This report presents much useful quantitative and qualitative information on SEZs, and as such will be of interest to concerned citizens, social activists, political workers, organic intellectuals, and academicians.
The SEZ has been significant throughout the history of capitalist development. For example, an early avatar of the SEZ was born with the “putting-out system” during the early phase in the capitalist development of England. In that historical context, a section of the merchants in certain towns realized that various regulations of the guilds were prohibitive with respect to their economic interests. Therefore, the merchants evaded the regulations of the guilds by adoption of a policy of sub-contracting into the countryside. Raw materials were distributed to rural households for the production of textiles. The putting-out system enabled the extortion of surplus into the coffers of early capitalists by means of non-compliance with “burdensome” regulations. This capitalist policy has been re-born in a variety of forms throughout the capitalist period, including the SEZ Act (2005).
CRC-SEZ provides eight compelling reasons as a basis for SEZ dissent. First, the report expresses concern over the unconstitutional character of the SEZ Act and its subversion of other pro-people legislation. Second, the SEZ Act sets the conditions for a corrosion of democracy on account of the creation of enclaves for capital. These enclaves are effectively outside the purview of the State. Third, the expropriation of land for an SEZ results in a loss of agricultural output in addition to posing a threat to the people’s traditional livelihoods. Fourth, the SEZ Act leads the creation of an exploitative work environment. Fifth, there is concern over the degradation of natural resources and the environmental damage. Sixth, there are serious reservations over the corresponding loss of tax revenue and the creation of serious economic imbalances. Seventh, the SEZ Act breaks down the multi-stakeholder system and supports a hegemonic-cum-monopolistic economic model with centralization of capital and control of resources. Finally, the Government of India has made no effort to open democratic consultations on this matter.
The report has a number of valuable sections concerning Special Economic Zones. There is a discussion of the current profile of the Zones, which includes those actually existing, notified, and in earlier stages in the application process. This is followed by discussions on the expropriation of land; the displacement of agricultural labour without compensation; the destruction of rural economies; and, the creation of exploitative work opportunities and conditions resulting from nullification of labour laws. The report summarizes a Ministry of Finance study, which estimated that the cumulative revenue loss from tax holidays over the period 2004-2009 was Rs 1,75,487 crores. Annually, this is equivalent to about 6-7% of the central government’s receipts during 2005-06. The foregone tax revenue is four times the annual allocation for the National Rural Employment Guarantee Scheme (NREGS).
This is followed by sections of the regional and sectoral imbalances associated with the SEZ policy; a discussion of whether the stated objectives of the SEZ policy have been attained; the breakdown of governance systems, especially of local governments, associated with the creation of foreign enclaves; the dilution of democratic space; and, the question of environmental degradation. There is a useful discussion of the Comptroller and Auditor General of India’s (CAG) Union Audit Report 2007, which outlined that some existing SEZs are operating within a system that enables the government to forego tax revenue. Duty foregone by the Government on the SEZ scheme during the period 2000-05 was Rs 8,842 crores. Similarly CAG Audit Report on Goa probed into land allotments by Goa Industrial Development Corporation for seven SEZs and these findings are discussed. Points raised by standing parliamentary committee on commerce are also weaved into the discussion.
Some of the findings of the report show that 552 SEZs have been approved and of these 272 have been notified (as of December 2008, according to the Ministry of Commerce). Of the SEZs with notification, 181 were for the information technology sector. With respect to the regional distribution of notifications, Andhra Pradesh has 57 notified SEZs; Tamil Nadu has 44; and, Maharashtra has 43. Maharashtra has the most SEZs in the queue for notification. Unfortunately, however, the only formally cancelled notifications are those of Nandigram and Amritsar while the prohibition on the creation of Zones in excess of 5,000 hectares was recently abandoned. The report observes that among existing SEZs, the largest zones apart from the Mundra zone(s) in Gujarat is APIIC (with 2,206 hectares), the SEZ in Visakhapatnam and the Kakinada SEZ 1,035 ha both in Andhra Pradesh and the Navi Mumbai SEZ 1,223 ha in Maharashtra. The notified have officially required 30,122 hectares of land.
Accordingly, CRC-SEZ demands:
o A moratorium on further approvals of SEZs;
o An independent review of the functioning of existing SEZs vis-a-vis stated objectives as recommended by the Parliamentary Standing Committee in its 83rd Report. Public audit of SEZs should be conducted through public consultations and hearings as a part of this review;
o In areas where there have been protests against approved and notified SEZs the projects must be cancelled or de-notified and land acquisitions already made be annulled;
o The democratically elected government starts responding to the interests of its citizens and people than to those of companies and developers.
December 1st, 2009 at 11:00 am
One may like to look up ‘SEZ: The Indian Experience’ at http://www.europe-solidaire.org/spip.php?article11799.
January 21st, 2010 at 10:58 am
Pl mail me the complete article as it could not be downloaded/opened