SEZ

Mamata Banerjee, a fitness freak, finally had a small victory in West Bengal.

But this made me ask myself 2 questions.

1) Why on earth is the Government buying land and giving it away to industrialists free of cost?
2) Do we actually need SEZ? What is so special about SEZ?

I feel SEZ is nothing more than a massive scam. It is a nexus between the politicians and Businessmen to skim the government of billions of Rupees.
Why I think so?

1) Why can’t industry buy land for itself? Government can never pay a fair price…. it will either underpay (for which it is already taking the blame) or it will over pay (in which case government will have to subsidize the land when it resells it to the business.) Why should the government burn its fingers in a land deal? Also I see giving land free to industrial houses as a massive transfer of wealth from poor to the rich.

2) What is the size of a typical SEZ… a few tens of hectares???? Do you guys seriously believe that a few 100 people manufacturing something (which is not state of the art/latest technology) on this tiny spec of land can really transform the entire country? And if it cannot, then lets not waste our time on this trivial activity and concentrate on bigger issues.

3) Just look at the industrial cities of the country. eg: Jamshedpur is the pride of India…. It is the seat of one of the world largest Steel producer, an international automobile manufacturer. But in the past 60 years has it been able to bring even Jharkhand/Bihar out of poverty? Then how can I believe in a SEZ which is not even 1/10 of the size of this Industrial city?
If the government is really serious in giving a big boost to the industry, then mark an entire district or even a region/state as a SEZ. Do not give tax breaks, instead give an assurance that all taxes will be reused in developing the infrastructure of the region.

4) I was looking at the location of the SEZ, almost all of then are already connection by at least 2 of the 3: a national highway, a port and railways. Won’t it be better if you give tax holidays in regions which do not have any industry/infrastructure. So that there is an all inclusive growth of the nation? Why does the government move these Special Economic Zones to the most backward regions of the nation?

5) An island of prosperity in a sea of poverty: This is what SEZ has meant in China and rest of Asia…. They have become a state within a state… have special laws, rules and regulations…. the work permit is almost as hard to get as getting a US VISA. Does India want that?

6) What is so special/different about SEZ?…. Its the labor laws and the tax breaks. Lets discard Tax breaks, because a large portion of what the industry will save will actually end up in the pockets of politicians and Foreign investors and lets talk about Labor Laws. If everybody in the country agrees that they are outdated and are a problem… then change them. 3 years into the industry I learned only one thing: “If you see a problem, fix it ASAP. A work around will only bite you back in your ass” By creating special laws for SEZ, government is only creating a disparity between a worker outside the SEZ and someone in the SEZ.

7) What does an export oriented manufacturing industry require?
a) Uninterrupted power supply.
b) A port (air/sea) from which it can export goods and import raw materials.
“A chain is only as strong as the weakest link” Simple laws of economics say…. If you want to spur the economic growth, then invest in removing the bottlenecks and weak spots.
Does anybody know of a state which can say than in the next 10 years we will provide uninterrupted supply of electricity?
Or a Sea port/ Airport which is capable of handling all the traffic it gets?
Invest in these 2 areas and everything else will fall in place.

Productivity (of both land and labor) is higher in an factory as compared to farming. So building up of industry over farm land is not only inevitable, but also desirable (in certain aspects)
So I see the opposition arguments as: why should farmers make a killing by selling land, they should be allowed to live in eternal penury.

All said and done… please do not force the farmers to own shares against their land they give up. Nobody can predict the share market/future, and it will be really harsh if these poor souls loose not only their land, but also their savings. Give them employment, alternate land or just cash.

UPDATE: Today on 6th April Government finally mandated that its the onus of the SEZ developers and Industrialists to acquire the land for their own use.

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