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SEZs are critical growth vehicles: Kamal Nath

SEZs are critical growth vehicles: Kamal Nath
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First Published: Fri, Mar 09 2007. 12 13 AM IST
Updated: Fri, Mar 09 2007. 12 13 AM IST
The International Herald Tribune’s global economics columnist, Daniel Altman, moderated an online discussion between readers and minister of commerce and industry Kamal Nath. Here are some edited questions and Nath’s responses.
How do you view the rich-poor divide in India? Is it a potential obstacle in India’s growth to become the next economic power?
Siened Tan, Singapore
There is no doubt that after 15 years of economic reforms, India has moved up the value chain of global perception because of what is widely seen as its economic success story.
The Indian economy is registering a growth rate of over 9% today, which is a record in itself. India’s industrial output is growing at over 10%, with manufacturing growth at more than 11%, while exports are growing at three times the growth of our gross domestic product at around 25% during the last four years.
However, this growth story and the resultant prosperity for some does not blind us to the fact that nearly 30 crore of our 100 crore-plus populace lives on less than $1 (Rs44.35) a day. We have to take all segments of our society in the growth process. We must not only grow more, but also include more in our growth. In my view, making India’s future growth more inclusive is the biggest challenge before us.
As Prof. Joseph Stiglitz has rightly said, “Globalization has been associated with growing inequalities, and unless policies are put in place to counter these, there can be increasing political and social instability.”
Such conflicts can indeed become obstacles to a country’s evolution as an economic superpower. We have to follow a multi-pronged strategy to improve the lot of those living on $1 a day. Such a strategy would include increasing employment in both rural and urban areas, raising wage levels in rural employment through measures to improve productivity levels , promoting entrepreneurship among weaker sections of our society, boosting industrialization in rural areas with significant backward populations, improving standards of education with a stress on vocational and industry education linkages, upgrading infrastructure and providing greater job opportunities to the backward sections.
The poor must be brought into the mainstream of economic growth, as its principal beneficiaries. Economic reform must touch the lives of the poorest of the poor if reforms are to succeed in a country like India. The task is daunting, but achievable.
Do you think the special economic zone is the solution to achieve and sustain economic growth, and close the gap with China?
Neo Naya, the US
Please remember that India was one of the first countries in Asia to recognize the effectiveness of the export process zones—or special economic zones (SEZ)—model in promoting exports. In fact, Asia’s first such zone was set up in Kandla in Gujarat as far back as 1965. We are committed to making our SEZs an engine for economic growth and employment generation, supported by world-class infrastructure and attractive fiscal packages, both at the central and regional levels, with the minimum possible regulations.
We have imparted stability towards the SEZ regime through a special SEZ Act, which was unanimously passed by our Parliament in May 2005. And we have looked at various models, including that of China, while finalizing this regime. I see SEZs as an important vehicle for the generation of greater economic activity, especially manufacturing, promotion of exports of our goods and services as well as promotion of investment and foreign sources, creation of greater employment opportunities and development of infrastructure facilities of world standards in India.
After the failure of the Doha Round of talks, will it not be better for countries to negotiate with other countries on a one-to-one basis? Specifically, will it not be better for India to negotiate with the US rather than going through the World Trade Organization (WTO)? I understand a lot of countries in Africa will not have sufficient bargaining chips, but that is not the case for India ...
Murugapiran Natan, the US
What you are asking is basically, “Bilateral trade or multilateral trade?” And my answer is, both.
India has always stood for an open, equitable, non-discriminatory and rule-based international trading system. We firmly believe that our endeavours at creating regional economic cooperation do not detract from the overall objectives at the multilateral level.
The regional trade agreements and bilateral trading agreements in fact supplement and complement the multilateral order. The regional trade agreements, in addition, also contribute to consolidating peace and security in the region. Countries that are bound by commercial relationships would find it difficult to be aloof diplomatically. It is with these objectives that India has been engaging in several bilateral and regional initiatives.
However, let me reiterate that our commitment to the Doha Round and WTO remains unchanged, and we hold that the bilateral route that we have chosen is complementary to the multilateral process. We believe that rule-based multilateral trading system would be and should be the order of the day. Regional and bilateral trade agreements are meant to supplement this and act as building blocks for ultimately evolving a fair, free, just and pro-development world trading order.
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First Published: Fri, Mar 09 2007. 12 13 AM IST