It is a year since Nandigram, and a fortnight since Goa. In both places, the locals overturned ill-considered decisions of the state governments. The same thoughtlessness pervades the Central approval process for special economic zones (SEZ), as argued by Partha Mukhopadhyay in Mint’s views pages on 8 January. This slapdash attitude to regulatory responsibilities can damage the government’s credibility.
Some of these problems stem from the absence of strong local government involvement in making decisions. While the SEZ rules make it clear that the “developer shall abide by the local laws, rules, regulations or bye-laws in regard to area planning, sewage disposal, pollution control, labour laws and the like as may be locally applicable,” the dominant impression is that SEZs are laws unto themselves.
(Illustration: Malay Karmakar/Mint)
In most countries, the control of land use by representative local governments permits the direct incorporation of local sensibilities, but in India, state governments have retained this function. Thus, there is no locally representative forum where the claims of the SEZ developers can be weighed against the apprehensions of Nandigram farmers that they would be left with no livelihood. Or Goan misgivings that the state would turn into the Indian version of Florida, which many do not want. Protests then end up being the only outlet for local fears.
These fears that SEZs are real estate scams are not baseless. Substantial portions of any SEZ can, and should, be used for non-industrial purposes. In places such as Goa, and around existing urban centres, it is possible for SEZs to succeed financially just based on housing and shopping, even if they fail as industrial hubs. Besides, IT SEZs are virtually indistinguishable from commercial real estate, and the Centre’s unthinking acceptance of fanciful projections belies hopes that they will hold SEZ developers to their current promises.
Mukhopadhyay also showed that two-thirds of all SEZs are in the IT sector, with a large number of these coming up near existing towns. The local planning bodies have had no role so far. This is not just an issue of lack of capacity. More than a dozen SEZs have been notified in the National Capital Region (NCR) itself, without consulting the NCR planning board. Similarly, two dozen SEZs, mostly IT parks, have been notified around Hyderabad. These are too small to be individually viable and will thus become a claim on the city—but the local government has no say.
Thus, even where there is capacity, it has not been used. If this is a deliberate policy choice, it is a dangerous one. Who will manage these emerging urban areas to ensure that they do not become governance disasters such as our existing cities? Who will regulate urbanization in SEZs that plan to create modern urban spaces in hitherto non-urban areas, where governments have even less experience with land use planning? In deregulating for the ostensible benefit of industrial growth, are we generating haphazard urban expansion spawned by unfettered real estate development?
China is now restructuring its cities and relocating entire industries to rectify the many errors committed during its rapid urban growth. It is able to do this because its governance constraints are different and because local governments retained planning control over the zones. Here, not only will our politics constrain the ability to redress mistakes, we also seem to be abdicating the very right of government to regulate land use planning.
Such absence of local government and the apparent thoughtlessness of state and Central governments have the potential to destroy any benefits from SEZs.
An initiative to generate manufacturing employment by insulating industry from the travails of poor infrastructure and the burden of unnecessary regulations is turning out to be just more concessions for the IT sector and a looming urban nightmare to boot. A review is urgently needed.
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