Income generation from SEZs exceed revenue loss: study

Income generation from SEZs exceed revenue loss: study
PTI
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First Published: Sun, Aug 26 2007. 10 34 AM IST
Updated: Sun, Aug 26 2007. 10 34 AM IST
New Delhi, 26 Aug The Finance Ministry has always been concerned about it, former IMF Chief Economist Raghuram Rajan has called it a tax “give-away,” but a new study commissioned by the Commerce Ministry says that returns from special economic zones are far greater than the revenue loss.
To be precise, “the total revenue loss due to SEZs would not be more than Rs 33,065 crore (in the next five years). On the other hand, additional economic activity (in SEZs) would create additional revenue of Rs 148,332 crore during 2005-10,” a study done by think-tank Consumer Unity and Trust Society (CUTS) International said.
Revenue Department has estimated the income loss on account of tax sops to SEZs at about Rs 175,847 crore.
The study, however, pointed to the Revenue Department’s own estimate which put the revenue loss on account of fiscal incentives to SEZs in 2006-07 at only 3.99% of the total outgo due to various export promotion schemes.
“It is thus unclear why there is so much debate on revenue loss on account of SEZs,” the study said, adding that the findings did not reflect the view of the Commerce Ministry although it has been commissioned by it.
According to the analysis, there would be net revenue gains on account of SEZs, given the additional economic activities that these initiatives are generating or expected to generate at a local level.
The Department of Revenue estimates that the same amount of investment and additional economic activities would have been generated if the units were located outside SEZs, the study said.
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First Published: Sun, Aug 26 2007. 10 34 AM IST