Saturday, April 07, 2007

Special Economic Zones

When a progress should be made, there should be appropriate sacrifices. There is no doubt in it. 'No Pains No Gains' There is no exception to the rule. The gain might be anything like Tanjore Temple, Tajmahal, Neyveli Electicity Station, Kolar mines, etc. Similary, now government is popularizing the concept of SEZ(Special Economic Zones). (If my analysis is right, In India, the first SEZ was formed in 60's)
Government says that these SEZs would help improve the nation's economy. We have P.Chidambaram, Montak Singh Ahluwalia, and Manmohan Singh who were are all educated in some of the best universities of the World. If they would suggest that SEZ is good, the Let us accept it.
Yes??? Yes.....Yes....
No.

A few questions arise in the mind of ordinary Indian

1. The major advantage/reason (as mentioned by the government) of SEZ is Foreign Investments. The major rule of SEZ is that the Government MUST provide uninterrupted supply of Power and Water to SEZs. There are several places in India which have not received even the traces of electricity. People might feel it as UNFAIR to provide something to foreigners when they are not entitled to it.

2. The primary requirement of SEZ is Land Acquisition. This has already created enough havoc all through the Nation. If SEZ has to be established, then the agricultural lands are targeted for acquisition. But, when there is a need to grow in the global arena, these sacrifices have to be made. But, Lands should be obtained(plucked) from farmers only after providing the proper compensation.
Now, the question of Proper compensation arises. What is the Proper compensation? The Government says that Proper compensation is decided by the document value of the Land. But, that value could not be used for any purposes. If the document value should be followed, the a ground at Old Mahabalipuram Road could be obtained for a few thousands. The government has acquired lands near Delhi airport. The compensation provided is few thousands. The land is provided for Reliance SEZ. The market value of land is many lakhs. Is it necessary/ethical to buy the lands at such cheap prices (from ordinary farmers) and sell it to Reliance.
Now, a similar issue has been raised in Udumalpet between Locals and Government. This deals with the Special Power Project for Power Grid Corportaion. The government is planning to remove atleast 6000 coconut trees. When the Government is ready to pay a compensation of 3000 - 4000 Rs per tree, the farmers expect Rs. 50000+ per tree. Everyone would already be aware of the Nandigram incident.So, Government should be ready to provide proper compensation for all the lands. The Government must also ensure the proper living of the People (removed from SEZ) through alternative business

3. The companies which would be established in SEZ would enjoy huge tax benefits. They enjoy the benefits in almost every aspects like Export Import License, Service Tax, Commercial Tax, etc. When it is possible for the Government to provide such huge tax benefits for SEZ, why do not the agricultural sector get some concessions? (The only concession provided, by all the governments, to agriculture is cancellation of the Agricultural Loans.) The exports and imports of agricultural products are taxable.

4. What is the rate of Employment through SEZ? There is no clear numbers. Also, it is well known that SEZ focuses on Hi Technology companies esp. IT companies. So, when the government acquires land from farmers and develop Hi Technology industries, How is it planned to compensate the defeciency in the poduction of agricultural products. The Government should provide a clear statement about its plan.

5. The Government says that SEZ will develop the Country. But, What is development? From my point of view, If all my people would get food, dress and shelter then it is the Primary Development. Then, Government can bring about further developments. But, if Government is planning to improve the standards of few at the cost of poor, then thi would lead to Chaos in the long run.

After all, India is in Global arena. There is no doubt that SEZ has become an absolute necessity. But, if the SEZ have to be fuctioning properly, the Government should address the concern of People. If Government would fail to address the People's concern, it might win in short term. But, there need not be any doubt that India will become a Yet Another Srilanka...

26 comments:

Anonymous said...

sarangan,
first thing P.chidambaram is against these many SEZs .. it is commerce minister KamalNath who does this and gives Grants for SEZs.. due to the tax benefits for these SEZ s the govt will have to absorb a loss of 100000 crores in four years and thats why the finance minister is against it..
SEZ is not mainly to attract FDI but to develope areas.. TATAs, RELIANCE and M&M are not foriegn companies... it is more of consolidating business to develope it and develope the area...
u say that there is no proper study abt the employment opportunities.. but there r ample surveys.. one eg is sisuseri.. It is a SEZ.. the area has developed a lot and there r job opportunities..
and next SEZ is not mainly for IT sector.. it is mainly for MANUFACTURING sector bcoz it is easy to transport raw materials and to transport finished goods thus cutting the transport and other charges so it is not mainly for IT but for MANUFACTURING sector..(IT is also there).. in manufactuting sector most of them r not professionals but laborers..

the land acquistion in Delhi was for extending the Delhi airport.. and for tat land near the Airport only has to be taken and not from anywer else.. also land is acquired for all purposes like roadways, railways , dams , airports etc etc.. in these things the govt cannot give the land owners te market price bcoz practically it is not possible..
why is tat u dont ask abt the demolition of the houses and stores in our OMR road for the four way road.. bcoz u r going to be benefited? u all expect it to be completed soon.. but thousands of people r affected.. whatr u going ot do for tat?.. not travel thru the OMR road?..

as u said in a democratic country there will be some oposition for everything the govt does.. there will be a section of people always affected.. bcoz of reservations the OC s r afftected but the others r benefited.. nothing can be done abt it.. i dont say tat it is right but nothing can be done..
and u cant say the govt to give the current and water for agriculture bcoz giving them freely wat they want is not going to help agriculturists..rather they shld be enlightened with proper techs of farming..

see in a country of 104 crores not all can be satisfied.. the whole country has to be taken into account rather than a section of people..

Pandi said...

Well, As your comment everyone seems to accept that SEZs. Anyway still I could not figure out what is REAL progress ! Last decade we have expereinced a rapid growth in technology and manufacturing etc. But what about the agriculture. Most of the people in india depend upon the agriculture and it still far behind from development. Everyone wants to replace the agriculture in the name of progress.

Even the FM announced some good news to agriculture this year, no one knows how much it will reach the farmers and it entirely depends upon the implementations rather than the objectives.

Why agricultural lands are targeted? All SEZ companies ( IT, manufacturing) wants to have a fair access to the transport, water and other supplies. Because of india's natural geogrpahical location the farmlands are near by the water and transports. So they just want to migrate the farmers to someother location.

They cannot do anything with your compensation( no matter whatever the amount it is).Bcoz they don t know anything except agriculture.Most of them are simply uneducated.

Consider Reliance Fresh.. Another example to devstate farmers. Ordinary people wont go to that shop, bcoz the rates are considerably high, comparing to other shops. But some poor farmers entirely depends upon the vegetable sales.

Finally, Globalization makes rich people to become more richer and it makes poor people to poorer than anticipated.

Better we stop the support to globalization(SEZ etc),even if it is posed to threat, and we find some alternative way to improve our economy

Siva said...

50000 per tree ? Then how many crores do we have :-) ?

SEZs don't just benefit foreigners. That is not fair to say that. Communists, (or whoever is in opposition parties will say that).

As someone pointed earlier, PC is against the tax benefits to companies in SEZs.

If you are worried about the loss of production in agriculture then check this post of Atanu on the importance of agriculture in GDP.

http://www.deeshaa.org/2007/04/07/the-importance-of-agriculture-in-gdp/

Anonymous said...

first thing abt the REAL progress.. ttoday the OMR in chennai is an IT hub .. aand the progress is visible very much..
next thing.. they dont target farmlands.. SIRUSERI is not a farm land.. MAhindra city is not a farm land. it happened tat nadhigram and singur r farmlands.. and my friend SEZs and agriculture r two diff things that needs to be concentrated separately.. you cannot ask them to stop concentrating on industries and to spend tat amount on agriculture..
manufacturing industries constitute around 20% of the GDP and it is an area which has to be concentrated to keep the pace..

i agree that agriculture has to be developed.. but the way is not by compromising on other industries but by devicing ways to improve AGRICULTURE..
now tat the economy is booming we ll have to use it for the developement of manufacturing industries.. tat doesnt mean we leave the agriculture..
there r a lot of things tat need to be done for agriculture..long before there used to be agricultural officers who used to go to farmers, examine their land and advice them on the farming tech tat can be carried out in tat place.. but now such a thing doesnt exists..
SEZs affect farmers due to the land acquisition.. but it cannot be avoided.. i am not saying it is good.. and for any major developement which needs huge land many have to compromise.. might be the govt shld appoint a special committee tat takes care of the compensation given to these farmers..

Anonymous said...

and SEZs have started coming up in a large scale only after 2000?.. but even before that agriculture has been performing very badly?.. u mean to say tat our agricultural sector is weakening bcoz of this SEZs.. was it improving before these SEZs..
so it a high time tat we concentrate on the real problem in the agricultural sector leaving behind these SEZs...

Sarangan Rajamanickam said...

Hello Anonymous,
I would be happy if I would have known your name. Ok. Now Lets come back to the issue.

1. Kamalnath vs Chidambaram
So, you say Chidambaram do not want them. But he is permitting them??????

2.I should not be mentioning it as Foreigners. That was my flaw. I intended to say 'Biggies'.

3. OMR Development? Are you really calling that as development? A lot of Buildings and 4/6 lane road are not the certificates for the development.
Do you know where 50-80% of Software companies are built in OMR? Do you know the situation of the area before few years? Do you know how many lakes were in this same area? Where are those lakes?
Do you know the price of apartments in OMR Road? Rs. 25 lakhs for about 750-1000 Sq.Ft. Do you think this increase is natural?

4.Do you think Siruseri has been developed? We have spoiled the agriculture of the entire area. The only area left is the Coconut farm near CTS and Mango farm in Navalur. What happened to the rest of the farm land?

5. You say SEZ is not for IT sector alone. Yes. But now the major focus is on IT sector only. As you said, Siruseri. How many manufacturing companies are available in Siruseri?

6. In delhi(Haryana), Government has acquired 50000 acres of land and gave it to Ambani. The lands are just 11 Kms away from Delhi Airport.

7. In case of OMR, the issue is totally different. If Government is going to acquire private land(without paying them the proper compensation) I am totally gainst it. It is irrespective of the personal comforts. But If government is going to destroy the illegal acquistions then I will support it.
8. Government need not give electricity freely. But It can provide electricity and water to all. Right??? That is what I ask for.

Yes. There will always be someone against government. But If that someone is the backbone of the nation, If that someone is the majority of the country then we would better listen to them....:-)

Sarangan Rajamanickam said...

Yes Siva. The farmers say it is Rs. 50000.

Their logic is the following:
The Spcific breed of that area('Naatu Maram) will yield for about 100 years. There are about 6000 trees marked for removal.

Those trees are in good yield for the past 15 - 25 years. The Agricultural dpartment says that each tree could provide about 180 coconuts per year. (average).

If you calculate for 100 years then 18000. The current price of the coonut is Rs.4. (In Udumalpet) So, it is about 720000. If you remove the 25 years, then it would be around Rs. 540000.

Then you have the cost of land, cost of wood, etc. So, they expect atleast Rs. 50000. I do not say this 100 Years estimate is proper. But see the difference between 3000 and 50000.

My argument (as mentioned by Pandi) they are farmers. They do not know anything else, Even If you give lakhs they do not know what to do. They might lose it and stand as paupers.

You can not argue that they should handle some other profession. That is not a fair deal. I say I will give you 1 crore. (Note: Not more than that) You can go and do something else. But No computers, maths, algorithms and research. Will you accept it?

Sarangan Rajamanickam said...

Pandi,
Well said. Especially, They do not know to do anything else except agriculture.

It would not be fair for the Government to tell me to stop working with Computers.

Sarangan Rajamanickam said...

Hi Anonymous,
About the real progress and OMR. Seriously, I do not accept OMR as real progress. You say Chennai has OMR and it is progress. Someone could say Chennai has Royapuram and Chennai is not developed.

Siruseri WAS a farmland. Just ask the locals. Mahindra City area is still covered by farmlands. It was a wonderful Farmland. You can still check the area, soil. The best way is to ask the locals.

"agree that agriculture has to be developed.. but the way is not by compromising on other industries but by devicing ways to improve AGRICULTURE"

We also say the same. Industries have to be developed. But the way is not by compromising on Agriculture but by devicing other ways to develop industries.

With the idea of committee, I completely agree with you. If there is no other way other than farm lands, then this is the only possible solution (But still I would say avoid touching the farm lands) :-)

Sarangan Rajamanickam said...

Regarding the before and after 2000.... It is like the last straw to break the bone.....

With SEZ, I am not against it. I am against the way it is established. China is the major opponent of India. The total area of China is more than that of India.

But the number of SEZ in China is 6. Whereas in India, it is 105 in one and half years. In tamilnadu, it is 42. These numbers are the problem...

Anonymous said...

1)Chidambaram is not the deciding authority in this issue.. it is kamalnath.. chidambaram can say his opinion but cannot stop them.. it comes under kamalnath

2)SEZs is for ambani s is wat u mean.. tats true.. bcoz it is not small scale industry and to create a zone were industries r concentrated it has to be the key and big players.. small scale industries cannot do much with this..
there r areas for small scale industries as in guindy.. but SEZs is for the big players with big capacity..

3) developement of omr.. i come to say tat chennai has developed a lot..i dont say abt the roads and buildings.. i am saying abt the lifestyle of people.. the purshasing power of people has increased many folds.. dont u accept tat.. u mean to say tat the facilities have not improved.. but the problem is it is not evenly distributed.. but even the middle classes are benefitted by this.. i am a middle class guy.. wen i was doing my engg i never dreamt of 25k salary.. but now it is very much possible and very very commn.. there r many students like this.. almost 50% of engg get this chance.. is it not a developement. campus placements have been extended from BE to BSC graduates even.. is it not an improvement.. i call these things improvement.. the cost of living in chennai is very much high wen compared to other cities like CBe , madurai, trichy and salem.. but still people prefer to be in chennai and come to chennai.. bcoz of the opportunities here.. is it not an improvement.. and talking abt the price of apartments it is natural tat wen an area developes the value increases..u urself accept tat the value increases.. no one is ready to pay without a reason.. people r ready to pay lakhs for the area bcoz it has developed.. can u give the reason for people paying this much for these areas?..why?.. and tats why even u have got a land in perungudi na..if u feel tat it is not worth an area why do u go for a land in OMR side?
4) regarding siruseri farmland.. it was a dry area and not much of cultivation was there.. there might be a few places in siruseri wer agriculture was carried and not the entire land..i have been there and my uncle owned a peice of land in siruseri.. so i know the place.. and try to understand that i am not saying tat wat the govt does is correct. all i say is it cannot be avoided..
5) i dont understand why u fail to look at a larger picture.. can u tell me anyother SEZs for IT alone..
almost all the other SEZs in gujarath, west bengal ,tamilnadu etc etc r for manufacturing.. in westbengal it is TATA car manufacturing. in gujarath it is reliance industries and not IT.. in chennai it is mahindra renault and nissan CAR factory..
tell a SEZs other than siruseri tat is for IT alone.. and then argue please..

6)u say tat it is 11 kms away from the airport and then call it is near the airport.. the way itt sounded was as if the land was adjecent to the airport.. and now it is 11kms away.. and if it is near the airport it is not going to be agricultural land.. no one is going to cultivate near the airport..

7) in case of OMR govt has acquired land from private parties.. it is not with their concern.. it is compulsory.. so u ll stop taking tat route.. wat do u mean u r against it.. wat r u going to do against the govt for this?..

do u know in neyveli if ur land has got lignite u ll have to hand it over to the govt.. u cant avoid it.. the sameway if u have a land which is needed by the govt for some valuable reason u ll have to give it..

8) yes the govt has to provide water and electricity.. but tat doesnt mean tat it shld not provide electricity to the industries and other sectors..


developement has to be in all fields and not in agriculture alone.. the govt has to take care of all the sectors.. it is not right to ask the govt not to give any kind of encouragement to the other sectors just bcoz agriculture is in the downfall...

and " AGRICULTURE WAS THE BACKBONE OF THE COUNTRY".. but now do u know how much it contributes to the GDP of the country.. just 20% of gdp.. services contributes to 60% and industries another 20%

Agriculture is an area wer we have performed poorly right from 90s.. it is not bcoz of SEZs.. govt has always been inert to this..

just bcoz we dont do well in agriculture doesnt mean tat we shld not concentrate on industries and services sector. say tat govt shld provide more facilities for agri.. accepted but dont say tat it shld not concentrate on other sectors..
"make hay while the sun shines"...now tat the economy is booming we ll have to use this and develope our economy..

and remember tat india is almost a capitalist country and no more communist in its thoughts.. a communist country like china has itelf changed its attitude...

Aravind.B.A

Sarangan Rajamanickam said...

Welcome Aravind. It was your name which was flashing in my mind from day 1. A perfect MBA style comment.... :-)

1. I am not going deep into PC vs Nath. I think the tax exemptions have to be approved by PC.

2. I have clearly mentioned that SEZ has become absolute necessity. I am not against it. I am against the way of its implementation. That was the reason I gave the SEZ rate in China and India.

3. Siruseri & Mahindra. Siruseri was a farmland. The farms (still) at Navalur, Padur, Kelambakkam are the living proof for it. (FYI, it seems they are going to destroy the Cocnut farm in Thoraipakkam for some multiplex) The greenish fields around Mahidra City is still in my memory. When the real estate broker said that those lands would be converted to Plots in the following months, I was really frustrated. So, Please accept the fact. We destroy the farm lands.

4. You say the life style has improved. Sorry, Aravind. I do not accept it. More Money is not more development.

5. Regarding the Delhi issue, I do not think 11 Kms is a big distance. It was a perfect agricultural land. You do not want to have any doubts on that. The land was taken by the government and given to Ambani.

6. 20% GDP stuff..I am not ready for economics...I do not argue for Capitalist, Communist, Socialist, etc. I want food, shelter, dress and a peaceful life for me and my poor fellow brothers. If your so called development is going to affect these things, then I would better say, it is not the development.

What do you say? If the government would take all your property, your belongings, the things you saved for the whole of your life time and throw you in the streets, Will you accept it?

If 'Yes', then Let me say you are a great soul. But I am a ordinary selfish individual.
If 'No', then it would be better that you do not support for something, which you would not like if it is done to you.

We feel upset if we lose some 10 Rs. Please understand. The Government is playing with the lives of Poor. The lands are their life time savings. The land is their life. The land is their food. The land is their culture. The land is their memories of their ancestor. Please, let them live peacefully with that.....

Siva said...

Chidambaram or Kamalnath is not the issue. They are in the same govt.

Let me ask you this. Why do you think farmland cannot be touched. If I have to maintain status quo on everything then where will I build my new factories ? You of course will be against removing forests as it affects environment. So tell me where can new companies come. If I have to use only unproductive land then companies should move somewhere to Dharapuram or Ramnad which no company will do because of lack of manpower, infrastructure etc.

Remember I don't want all the farmland to go away. If it is ideally located for an IT company then it probably has to be for the IT company. The contribution of that IT company or manufacturing company to your fellow brothers (the employees, their family etc) is much higher than agriculture to your fellow brothers. Sure IT company makes profits too. But remember most of these are companies. Buy their shares, the fellow brothers will again benefit.

You don't want to be branded. But see this line.
"I want food, shelter, dress and a peaceful life for me and my poor fellow brothers."
This is the line of ...... who ?

Also don't tell us you don't see development. You know we are not able to find a good help for the farm because construction industry pays much more. People simply moved away from agriculture. They found new opportunities. Better life. Don't tell me they don't know anything else.

But I am not for the govt to take the land in less than market value. The companies can follow reliance ( I guess) and go for buying the land for market value.

But 50,000 per coconut tree ?
A rough calculation of value of 50,000 in 100 years from now.
50,000 * 50 = 25,00,000
50,000 * 131 = 65,50,000
with a rate of 4% or 5%. No where close to your estimate of 5,40,000. This is not even considering the fact that they have the coconut tree doesn't sit there for 100 years without any investment in time/money.

If you say 5000 * 50 = 2,50,000 + the usual price of land, then it atleast seems a bit more meaningful to me.

Asking for 50,000 now is just fun.

Sarangan Rajamanickam said...

"I want food, shelter, dress and a peaceful life for me and my poor fellow brothers."
This is the line of ...... who ?

Siva, I do some Hero worhsip. I accept. But certainly these lines are not from anyone. It was the lines just aappeared in my mind while I was posting the comment.

Has anyone told these lines?????

Baranidharan said...

Sarang, I may be bit late for this section. Here are my comments.

1. Promoting SEZ is good. But there is should be a limit in concession. No taxation is bit of overdose.

2. Acquistion of farmland, I go with Siva, Houses and Farmlands are spread everywhere, if we want to acquire 30-40 acres we cannot get a free land with out houses or farmlands. But proper compensation should be paid out. The issue in Nandigram is not the compensation, it is emotionally and politically motivated issue. Not paying market rate or near to that will be a injustice. In India, one's house are their life time savings.

Siva said...

No , it is not from any famous person. But it sounded so leftist (not exactly communist though) :-)

saravanan said...

this is saravanan,bangalore....

will SEZ increase indian economy,is increasing indian economy and will it bring up the food level per citizen?

vinesh said...

Your blog is very nice... i like your blog ....

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