RBI hands ammo to Left on SEZ
The RBI’s concern about uneven development as a fallout of India’s SEZ laws has provided ammunition to the Left and left-of-centre sections of the Congress who have raised an alarm about the policy.
By TNN |
NEW DELHI: The RBI’s concern about uneven development as a fallout of India’s SEZ laws has provided ammunition to the Left and left-of-centre sections of the Congress who have raised an alarm about the policy.
The central bank’s assessment, in its annual report for the year ’05-06 that tax breaks for SEZs can be justified only if they establish forward and backward linkages with the domestic economy — is just the argument that the Left could use to bolster its contention that the government could be aiding a “massive loot of assets”.
The CPM has demanded that the government give up its proposal to review the cap on SEZs and re-examine all approved SEZ projects on a case-by-case basis. Taking the line that the SEZ policy requires only 25% of the land to be earmarked for industrial purposes, it has said that the rest can be handed over to developers for residential and commercial complexes.
The question that the CPM wants an answer to is why builders should be given tax breaks. “Why should property developers be given tax incentives? It is a massive loot of assets, “ CPM politburo member Sitaram Yechury said. With the RBI’s views on the subject now in, the Left could now be asking what substantial forward and backward linkages to the domestic economy can builders provide.
Another CPM leader Chittabrata Majumdar has petitioned Prime Minister Manmohan Singh asking him to stop the proposal to review the cap on number of SEZs and the 25% stipulation for industrial production. “Far from promoting industrial development and employment generation, this will lead to a speculative real estate bubble,“ he has said.
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Interestingly, even sections within the Congress are of the view that the issue of adequate rehabilitation and compensation for the land oustees of the SEZ projects needs to be addressed or else it would lead to massive social unrest. This issue had acquired political colour when Haryana MP and former CM Bhajan Lal’s son Kuldeep Bishnoi spoke out against the Bhupinder Hooda government in relation to the Reliance SEZ project. There are others in the party as well who do not dispute the thrust of Mr Bishnoi’s ‘farmer versus corporates’ argument.
This section is likely to voice its concerns over SEZs at an upcoming meeting of Congress chief ministers where the state of agriculture and farmers will be discussed. Even the finance ministry has apprehensions about the potential loss of revenue due to tax exemptions. Finance minister P Chidambaram has expressed apprehensions that the estimated revenue loss would be about 1,00,000 crore.
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