Govt adds wealth creation to list of SEZ benefits

The Indian Express, April 30, 2007

By Vikas Dhoot

NEW DELHI, APRIL 29: With the Parliamentary Committee on Special Economic Zones (SEZ) headed by BJP’s Murali Manohar Joshi expected to submit a “politically stimulating” report anytime soon, the Commerce Ministry is gearing up with a fresh line of defence for the SEZ policy. Apart from attracting investment and creating jobs, these zones are leading to massive wealth creation and employment even outside their perimeters. Meanwhile, on Friday, the Finance Ministry also reminded the Lok Sabha that the exchequer would lose over Rs 100,000 crore by 2009-10 due to the concessions extended to SEZs.

Speaking to The Indian Express, Commerce Secretary Gopal K Pillai said, “In the 14 months since the SEZ Act came into place, just the first 29 notified SEZs have attracted investments worth $3.5 billion, over 20,000 people have been directly employed, over three times have got jobs outside the SEZs. And I am not counting the lakhs of mandays for construction labourers employed in creating the SEZs.”

“Now, there are 99 notified SEZs. We expect $5-6 billion investments this year itself and the total employment to run into lakhs. The wealth creation in rural areas is huge—not less than Rs 15,000 crore wealth has been created for farmers outside the SEZs through increased land prices around these 99 zones alone,” he said.

While the SEZ policy has been highly politicised over acquisition of farmland and the recent Nandigram fracas in West Bengal, the Commerce Ministry has also backed adequate compensation packages for farmers. “There is no doubt that farmers should get adequate compensation—let them get maximum benefits. Many developers are now trying to make them partners in their ventures,” Pillai said.

But beyond the compensation for displaced farmers, there is a larger socio-economic impact which is largely going unnoticed. “For every 1,000 farmers displaced, there are at least 15,000 farmers outside the SEZ whose lives have changed,” the Commerce Secretary stressed, before pointing to some anecdotal evidence.

“I met a farmer with 2 acres of unirrigated land outside an SEZ—his earlier net income was Rs 6,000-8,000 per year and his land was worth Rs 5 lakh an acre in 2002. Today, his land is worth Rs 80 lakh an acre—he no longer thinks of himself as a subsistence farmer,” Pillai said. Similarly, in Mundhra, the state government had acquired land at Rs 25,000 an acre, in 1993. After the export-processing zone became an SEZ recently, land prices outside have touched a crore rupees per acre.

Apart from soaring land prices, support economies sprouting up around SEZs are also creating wealth and job opportunities. With most SEZs using most of their land for processing purposes, the demand for social infrastructure like residential units and services like transport, hotels and restaurants are increasing outside the SEZs.

To back the anecdotal evidence with some numbers, the Ministry has asked policy research think-tank CUTS International to conduct a detailed study of the direct and indirect wealth creation due to SEZs. “They will be looking at the evidence from ten to twelve SEZs picked at random, from across the country. We expect the report to be ready by June,” Pillai said.