The Ruckus Over SEZ's

India is facing a dilemma which is endemic in any developing economy. In an increasingly globalized world where borders are literally blurring, India is finding it difficult to decide what is going to be its growth trajectory which would integrate it to the world. The country is facing an agrarian crisis and also registering 7-8% G.D.P growth. This dichotomy, due to its perpetuity since independence, has stopped to shock us. 57% of the population still earns its primary living from agriculture. We have to transfer the extra labour from agricuture to other industries. One way to do it is through SEZ. But even before the success of a SEZ, the whole idea has triggered a battle between commerce minister Kamal Nath and finance minister Chidambaram, the former is for the idea of increasing the number of SEZ beyond 150 and the latter against it. This post seeks to study the whole SEZ idea from its inception to its future in India.

What is a SEZ?
Special economic zone or SEZ is basically a restricted geographical area where the government,provides tax benefits and labour and FDI flexibility,to businesses willing to start their operations in that area to enhance export, employment opportunities and gain competitive edge over other countries.

Why SEZ in India?
Poor infrastructure, virtually bankrupt government and massive unemployment has made SEZ a very alluring idea. India needsmassive investment to make it a developed economy and for that it has to woo foreign investors. SEZ will do the same as it will give MNC's access to cheap labour and Indian market. Moreover,the responsibility of developing the SEZ will be divested off the government to the companies investing so the cash strapped government will only have to create an environment of facilitative rules and regulations. The commerce ministry is toying with the idea of sanctioning 400 SEZs. Some of the big players already in the SEZ arena are Reliance Indstries led by Mukesh Ambani which has committed a whopping Rs. 55000 crore in SEZs in Navi Mumbai, Haryana and Jamnagar; Mahindra and Mahindra, Infosys, Accenture, Posco,etc. After passing of the SEZ act in february 2005, 28 SEZs have been formed, which have attracted investment of Rs 2000 crore and providing direct employment to 1.23 lakh people. The commerce ministry is expecting an investment of Rs. 1 lac crore in the next three years with a potential to provide direct employment to 5 lac people. If such is the scenario then why is Chidambaram,Rahul Bajaj and Raghuram Rajan opposing increase in number of SEZ from 150 to 400.

We need SEZ but not so many

The finance ministry has problem over the potential revenue loss to the government. It is reckoned that SEZs will cost the exchequer corporate income tax of around Rs 132,000 crore and loss from customs, excise and other duties will be around Rs 10000 crores over the span of 10 years.

A land scam?

The contention of R Kavita Rao, senior fellow at the National Institute of Public Finance and Policy, a govt think tank is that SEZ will be a real estate scam because developers of SEZ will be able to use 65% of the land for residential and shopping purposes, hotels and malls. The basic purpose of making SEZs export centres will be undermined. The developers will procure land at cheap rate and have the freedom to allocate the space on commercial basis. IMF chief economist Raghuram Rajan fears dislocation of companies at substantial cost to the society as every company will try to transfer its business to SEZs. The tax benefits enjoyed by IT companies will come to an end in March 2009 so they will be willing to shift their base to SEZs to get extend tax breaks for another 10 years.

Another issue which has not been debated much is that the developers will have monopoly over providing basic facilities which is actually the job of municipality. Such powers which are in contravention of the 73rd and 74th constitutional amendment relating to Panchyati Raj can be challenged in court

India doesnt need SEZ...

Professor Jagdish Bhagwati of Columbia University, a staunch exponent of globalization( he lost this year's nobel prize in economics narrowly) argues that India doesnt need SEZ. He says ''SEZ's are a sort of scaffolding with which you climb into more openness. But now that you have the building, why do you need the scaffolding. We dont need to learn lesson from china anymore. We should concentrate on making further reforms that would integrate India with the world''

Well the arguments for and against SEZs will go on, lets wait and watch how the future unfolds.

Information source :

The Times of India

The Indian Express

Outlook Business

Wah Vicky Babu!

'The secret of being a bore is to say everything'
- Voltaire

Mr. Voltaire, there is an exception to your saying. Vikram seth has not only done justice to his muse by not limiting his books to 400-500 pages but also to his soul and millions of homosexual people in India by leading a high profile signature campaign which seeks to do away with the draconian Sec 377 of the IPC. The other signatories are Nobel laureate economist Amartya Sen, lawyer Soli Sorabjee. The section makes homosexualtiy a crime in India. It is terribly difficult for such people to come out and assert their sexuality in a country like India where even mainstream sex is not discussed. Add to it the criminality attatched to it, which is invariably used by the police to make homosexuals feel they are children of lesser God as if the society's hostility is not enough. Surely this section should be annulled and homosexuals be given a new life. I am with Vikram Seth in the campaign. It came as a surprise to me that the reclusive Seth agreed to lead the campaign and come on television and propogate it. For readers who dont know, Seth is a bisexual and has referred to it in his poems. He didnt mind when his mother, Leila seth, former Chief Justice, mentioned fleetingly to his sexual preferences in her biography,' ON BALANCE'.
I have immense respect for Seth because I really enjoy reading his books and hope he wins the Nobel for literature, which he truly deserves. Seth is considered to be the contemporary Pushkin and Tolystoy, a born story teller. His books are not meant for readers wanting to have a fleeting reading experience but for them who seek a true literary journey. ' A Suitable Boy' and 'Two Lives' are not gripping but engaging. It seems he wants to convey a message through his works, though in an understated manner, but not trivially. He can do everything write poetry, paint, play the piano, the flute, sing, read and write languages from Chinese to Tamil. He studied mathematics at undergraduate level and opted for economics at the post graduate level. For Phd in economics he went to China but got fascinated by the chinese language and calligraphy, leaving the Phd half way, he travelled across China and Tibet, result of which was the travelogue,'From heaven lake'. It won the Thomas Cook Travel writing award. But the book which made him a celebrity overnight was the 'wrist spraining' 1349 page novel 'A suitable Boy'. Kushwant Singh writes in his memoirs, 'long last India has produced a writer of international calibre who would win highest laurels for his country.' The novel established him on the international literary circuit and made him the contender for the Nobel prize. He surprised the publishing world by getting highest non fiction advance, 1.3 million pounds, for the memoir of his uncle and aunt, 'TWO LIVES.'

Vikram Seth has said and done everything and is still not a bore. I cant but say, ' wah Vicky babu.'

Why is the M.E.A. silent ?

Gen Musharraf released his much awaited memoirs, 'In the line of fire', this week. The dubious content of the book vindicates the claim of many a strategic affairs experts in India, that the people of Pakistan can be trusted but not Musharraf. The book is infact a roster of Musharaff's dreams which he never was able to materialize. His claims in the book regarding the Kargil war has shocked the whole world, especially India.

Mush's claims : 1) It was India who initiated the war and theirs was just a reply. In reality there was spurt in infiltration and terrorists activities across the L.O.C. before the war. 2) Pakistan won the kargil war. In fact India won the war by reclaiming all the territories which were under Pak army. After the war, Pakistan disowned the bodies of 250 soldiers of their army and India had to bury the bodies.

There are many other false claims. What has shocked me is that why is the M.E.A. silent about it. It should give a formal statement that it disagrees with Mush's claims. Has the government no duty towards the Indian army which bravely fought one of the toughest wars in Indian history? surely such silence will dishearten any soldier, who under worst conditions gaurds our borders.

As for Mush, he is a shrewd politician and a scheming military general, always looking for an opportunity or creating one (eg. his memoirs) to achieve his utopian dreams. How can we trust a man who masterminded the kargil war, who said in 2004 that there is no cross border terrorism and now says we need to tackle the menace of terrorism together.

We are treading on a path fraught with people who are opportunists. Let us be extremely cautious.