Several countries have tax free Special Economic Zone(SEZ) where goods are produced for direct export. India seems to have jumped on that idea and started implementing it without proper guidelines and regulations.
SEZs in India are flawed for several reasons. First, they involve forcible procurement of good agricultural land under the colonial Land Acquisition Act of 1894. The small landholders are discriminated. Second, it helps the rich businesses through undeserved tax breaks and other concessions at the expense of the public.
Third, they create fewer jobs than the people they displace. What about all the agricultural workers who have no land. Are they expected to end up in the city slums? Finally what about the neighbouring villages where land becomes unproductive due to water being sucked out by industries and the effluents being discharged into their environment?
There has been wide spread protest and lot of bloodshed due to police violence at the proposed SEZ sites, prominently Kalinganagar, Nandigram, Singur and Reliance SEZ in Raigad. Some of these SEZs don't even make sense: 960 acres in Singur to build a Tata car plant is ridiculous when Toyota is doing the same in 200 acres.
After so much bloodshed, the government decided to scrap the SEZs at Kalinganagar and Nandigram. What about the suffering that people displaced at other SEZs are enduring?
A clear policy is needed on the rehabilitation of displaced people before land is acquired. There should be proper review, which includes the affected people before approving a SEZ instead of a random shot at the idea.
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7 comments:
Kiran,
Nice blog
Some comments about the SEZ's.
Completely agree with your first point - any forcible displacement is wrong and anyone displaced should be compensated corectly. A clear policy around rehabilitation is definitely neccessary in India.
Second: Incentives to rich business? Begs the next question should there be any incentives to any. Maybe do away with all the free power and any price-fixing we do for farmers, which drains the resources of India (& other countries).
SEZ's incentives are to bring in technology (semifabs e.t.c.)is a method of attracting industries, which would hopefully add more productive jobs. Surely the IT parks have worked wonders for Indian economy, they were deplored initially, now it supports a huge middle class. Remember the brouha about how computers were going to displace people, and people used to go on strike against computerization in India (& elsewhere), because they felt their jobs were threatened. But hey it ended up creating more jobs (& more productive) than it displaced.
Surely any displacement of labor causes hardships, but it benefits the country in the longer run. Look at the brouha about outsourcing, today US benefits from outsourcing boon more than anyone else. Refer to the McKinsey report on the same, which has more quantifiable data.
There is simple explaination for all the same - Productivity.
India closed it's doors for 50 years, which relegated us to limits of unproductivity and ineffiencies. If we want to create more jobs, why not ban internet and email, this will definitely increase the number of postal workers required to deliver the mail. Extreme point, but I hope you get the idea.
Maybe we don't need as many farmers to cultivate the land in India, maybe we need to embrace modern farming equipment. The farmers with appropriate training could be armed to do higher productive work and be less dependent on vagaries of rain and dependency on moneylenders. They can do this without having migrating to cities (SEZ?).
I deplore the violence at Nandigram e.t.c but let's not take the eye from the main theme. Proper rehabilitation - Yes, but SEZ's are not bad idea either.
-Anand Kamannavar
I guess question here is more of rights than technology. For a poor farmer losing his land forcibly can be a disaster. How about providing some resources and education first so that farmer appreciates what technology is all about and becomes open to changes in his life style from agrarian to industrial economy.
I think a state-sponsored forced-through-your-throat industrialization has no place in a civilized society and SEZs need to be looked from the perspective of the people to be displaced. Its their right to have their own land and even if one farmer says that they are not willing to give up their land we should respect that.
Rule of law should be for everyone and not only for the capitalists.
Like I said a just rehabilitation program is neccessary, but wanted to point out the fact that SEZ's are not a bad idea either.
Rule of law applies to everyone to farmers, capitalists, socialists.
Also practically speaking, even if one farmer says no, No highways/railroad/SEZ will ever get built in form/shape and in time that makes sense.
Imagine how the railways or our national highways would have looked to take into account interest of every individual who decides that he doesn't want to move.
Maybe there has to be an element of practical implementation that has to be taken into account in the rehabilation program.
Anand,
The idea of SEZ is great and it worked wonders on a small scale in many countries.
The concern is the way it is being implemented in India, with force and lack of clear guidelines or regulation.
When farm land is taken away, it is the landless farmers who suffer the most. They rarely get any compensation or training.
Giving 10 times more land than needed to SEZ doesn't push efficiency or productivity.
As for the jobs, I think there are some great examples of how Roukela, Bhilai, Bhokaro plants became enclaves for skilled migrants while leaving the locals to do menial jobs even after 40 years.
None of these SEZs with their high tech, closed doors seem to have room for "unskilled" farmers. No one will train the unskilled farm workers.
Yes, incentives should be removed across the board. Farmers in India did not asked for incentives first. Government pushed incentives, so that they could enforce the "green revolution". Now, that farmers are addicted to government subsidies and land to the fertilizers and pesticides, government like a "crack dealer" decided to pull the plug. So, the field is open for GM crops and pesticide companies to make the killing. Yes! subsidies are not needed. Why introduce them in the first place?
Regarding the price fixing for farm produce: they are not needed if it is a level playing field. Indian farmers without subsidy cannot compete with American farmers with subsidies.
McKinsey in "Vision 2020" suggested that the current 60% population dependence on agriculture should come down to 20% without any indication of what should be done with that 40% (=400 million people).
With the limited resources for the population size, adoption of the western model does not work in India.
Computers in India did great in terms of GDP and jobs for the educated. But they did nothing for the lower rung. Poverty and malnourishment levels are at the same as they were 10 years ago. To make ends meet, the servant maid has to work 10 hours in the city now compared 6-7 hours 10 years ago.
Development is real and sustainable when it helps the poorest of the poor without destroying the environment.
Let me tackle some of the points:
Incentives are given to jump-start something, they are not meant to be a long-term solution. Currently there are incentives for using clean energy, which will hopefully drive adoption, reduces prices by economies of scale to a point where the incentives no longer have to given. The argument holds for fertilizers, SEZ's or IT parks.
Incentives forever is definitely a bad idea.
So is it govt.'s fault that they are reducing the subsidies after 5 decades of incentives. If govt is the crack-dealer does it absolve the crack addict of all responsibilities?
Your argument that computers have done nothing for lower-rung of India maybe needs to be looked in the light of the fact that for every IT job created, there have been around 5 more jobs created around it to support the ecosystem, which didn't exist before!!!. Engineers in India had very few options 15 years ago, today the number of engineers graduating in India have increased manifold and have much better options for them in India. These jobs created has definitely reached the large-middle class and is trickling down. Didn't the middle-class deserve to live a better lifestyle? Even though the lower rung hasn't completely benefited from the IT boom, is it wrong that some section of the country which had fewer options earlier is now doing much better.
So now by your argument because the IT Park benefit didn't reach the poorest of poor in India, should we ban all IT parks??? Technological advancements and their adoption in India has benefited everyone including the poor.
Today India has the lowest cellphone rates in the world, largely driven by the relentless innovation in the IT sector. Has this benefited the poorest of poor - Perhaps no? Then perhaps by your argument we should ban cellphones then? But it has definitely benefited a large section and has helped productivity. The argument of whether it will benefit the poor was the same argument govt. earlier used to throttle the growth of telephony sector in India, by classifying telephone as a luxury item, which didn't benefit the poor.
Development of poorest of poor doesn't mean we freeze development of everyone else. Like I said in my prior comment, proper & practical rehab policy - we definitely need one, but SEZ's may not be a bad idea either.
"Computers in India did great in terms of GDP and jobs for the educated. But they did nothing for the lower rung. Poverty and malnourishment levels are at the same as they were 10 years ago. To make ends meet, the servant maid has to work 10 hours in the city now compared 6-7 hours 10 years ago".
Refering to your prior comment in quotes.
Increase in wages of skilled workers (IT-Industry) is good, even though the inequality with the non-skilled workers has increased.
The basic idea is that the demand for skilled labor has increased, leading to an increase in supply of skilled labor (e.g. IT sector). The goal is not or should not be to reduce income of this skilled labor group and reduce inequality via increased taxes on the skilled labor or on SEZ's and drive down the demand for skilled labor.
This demand for high-skilled labor is what will drive down the need for unskilled labor (whether in agriculture sector or other sectors).
Anand,
You make some very compelling arguments.
If we agree that incentives are good to jump start a new avenue of development, they should be phased out slowly. An analogy that comes to mind is parents supporting the kids initially and slowly phasing it out instead of throwing them out at 18. Unfortunately, the way it was dealt with farmers is like the latter.
We could agree that it is important for government to focus on all sections of people. But if the government is obsessed with GDP growth, the elite and middle class (about 35%) and ignores the remaining 65%, then we need to question that.
Here is a link to a related article by former Petroleum minister: Manishankar Aiyer
http://www.indianexpress.com/story/29112._.html
The trickle down theory worked in developed countries when they were exploiting resources from developing countries. But when resources are limited and population is huge, trickle down theory fails. The demands from the newly rich middle class will be for luxury items which are produced in capital intensive and mostly automated factories. So money will not come down to the poorer sections (unskilled labor).
That brings us to your next point: "demand for high-skilled labor is what will drive down the need for unskilled labor."
In an ideal world everyone would become a skilled labourer and live happily. But the ideal world also has unlimited resources. A classic example is ice land: With the little population they had left after the great migration, a very efficient government and huge surplus income from fish exports, they managed to erradicate poverty. Every one there is a skilled labourer.
The question is if India with such huge population and limited means can get there. We need to find a more sustainable path than blindly following the western model of unlimited supply.
Some of the steps that the government has taken are good like more transparency and private competition, but the guidelines should be clear and enforced. At the same time, any scheme that is causing unjust loss of livelihood should also be questioned.
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