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| Farmers as victims | | SEZ model is too authoritarian | |
The special economic zone (SEZ) model has created a great furore in the country. The proponents of the model consider it as a panacea for the all-round development of the Indian economy, while opposition comes from the cultivating community which is likely to be forcibly deprived of its livelihood.
Ironically, the model was adopted in China, an authoritarian state, and is naturally alien to a democratic set-up like ours. When China decided to reform the national economic set-up in 1978, the Chinese government embarked on a policy of opening to the outside world in a planned way and step by step.
Shenzhen, a coastal region, was first declared as a SEZ in 1984 and later on more and more coastal cities were designated as special economics zones. In addition, China has also developed about 15 free trade zones, 32 state-level economic and technological development zones, three high-tech industrial development zones, besides a large number of rural business hubs. One wonders why did the SEZ model alone catch the eyes of our policy-makers?
A special economic zone is a territory where investors enjoy complete freedom in respect of labour laws, tax laws, minimum wages etc along with other special incentives, and is “deemed to be a foreign territory for the purpose of trade operations, duties and tariffs.”
At the time of its opening up, China was short of productive resources, viz. capital entrepreneurship, modern technology etc. China adopted the SEZ policy directly under the central authority to attract FDI. It allowed SEZs only along the coastal line and river beds and not in the interiors.
Thus, the farming community was duly protected. It is another thing that it created a wide gap between the farming and non-farming communities and between the rural and urban areas.
As reported in the Washington Post, China has landed itself into “a two-tier society separated by a widening gap in incomes. Social discontent has been on the rise, fuelled by income disparities, land disputes, pollution problems and an inadequate legal system that is widely seen as failing to address people’s needs.”
Now all of a sudden it appears that perhaps the spectacular growth of China was due to the creation of special economic zones, which, in fact, it was not. It was more due to the sops and other concessions offered to the investors in general and foreign investors in particular.
Then the low economic base and the sudden shift towards the market-driven economy accelerated the growth process. The commune system in agriculture was abandoned and full property rights were given to the actual tillers. The prices for compulsory grain deliveries were raised substantially and 50 per cent premium was offered for grain delivered above quotas.
Now coming to the adoption of SEZ policy in India. The SEZ model is neither indigenous nor have we moulded it to suit our own requirements. More important is the fact that we have never initiated the necessary debate over the adoption of this model.
The irony of our decision making is that most often than not, some of our politicians in power feel as if they are the storehouse of all wisdom. However, in a democratic set-up, before taking any vital decision, we should always initiate a wider public debate and have collective wisdom.
This is more important in a federal country like ours, where the states are also the stakeholders. The Union Government must take the states into its confidence before taking any decision on their behalf.
For example, take the adoption of VAT in the country where both state governments and the Union Government enjoy their independent tax jurisdictions. Although it took about three-four years to implement the VAT in the entire country, a wider public debate and involvement of all stakeholders made the transition very smooth.
One wonders what the Centre wants to achieve through the adoption of the SEZ model. Already there is a rat-race among the states to attract private investors, whose sole objective is to enlarge their empire of real estate through fair and foul means.
They are offered various packages in the form of sops and freebies by the states. In fact, in respect of the special economic zone, they will be the sovereign owners of their own territories. Why the states pamper them is understandable. But why should the poor farmers become the victims?
Let the government continue to give various tax and other incentives to private investors but there should be no use of force on farmers to sell their land particularly to the private parties, where no public purpose is involved, as is the case with a SEZ.
It should also be kept in mind that the provision of such sops and tax holidays leads to artificial channels of diversion of resources. For example, many units in Parwanoo (HP) continue their production in their erstwhile firms located in other states. They have opened their offices in Parwanoo just to avail of various sops and subsidies.
Further, in respect of the SEZ policy, even if one forgets the problems of revenue loss (which otherwise would have been there), food security, poverty and inequalities, there is no justification in using the state’s might against farmers to deprive them of their livelihood.
There is no guarantee that the model which has succeeded on the economic front but failed on the social front in an authoritarian state, is workable even on the former front in a democratic set-up.
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