Govt says no to Left demand for ceiling on special zones

NEW DELHI: The war of words between the Left and the UPA over SEZs intensified on Thursday with the government rejecting the demand for capping the number of Special Economic Zones and the CPM saying that “proliferation of SEZs” had discredited the policy.

Commerce minister Kamal Nath said the government wanted more industrial units to come up in SEZs. “Some countries have a small number of SEZs but they host thousands of units. The issue is how do we increase the number of units in these zones — we have to ensure this,” the minister said.

The government had pointed out to the Left that while seven SEZs had been approved in West Bengal, 11 requests from the state were pending with the Centre. The CPM, which is now in the eye of a storm over the Tatas’ project in Singur, has dubbed as “specious” the government’s argument that requests were being made by state governments for SEZs.

“Several state governments made the request to lift the cap simply because they did not want a situation to arise where the 150 SEZ proposals would be cornered by a few states with the others left out of the race,” an editorial in the forthcoming issue of the party mouthpiece “People’s Democracy” released on Thursday said.

The commerce minister, who described SEZs as industrial clusters for promoting exports, said the land acquired for SEZs was just a fraction of the area used for other purposes.

The Board of Approval (BoA) for SEZs has so far given formal approval to 237 SEZs and in-principle approval to 164. The CPM said the “basic flaw” in the approach of the government was that instead of following prudent practices elaborated by the RBI, the BoA was sanctioning SEZs “en masse”.

In the note to the Left, the government while justifying lifting the cap on SEZs said, “It is best to leave it to market forces to operate. Stipulation of any cap of establishment of SEZ would only lead to a sort of Licence Raj and a premium on transfer of SEZ approvals to other parties. The Department of Commerce is therefore of the view that there should be no cap on the number of SEZs to be established.”

Rejecting this argument, the CPM said it would lead to regional imbalances in the country and the government would start pushing states to give greater concessions to developers. The Left has been demanding a review of tax concessions, another demand the government has not agreed to.

“It is the proliferation of SEZ proposals which has already discredited the SEZ policy and given rise to genuine concerns related to large scale acquisition of fertile farmlands, massive displacement, enormous loss of tax revenue and gross misuse for real estate purposes,” the CPM said.