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Zoning in, at last

While the government may be a facilitator or arbitrator in resolving disputes, land ceilings in themselves do not make sense.

india Updated: Dec 04, 2007 20:31 IST
Hindustan Times

There is little doubt now that the saga involving special economic zones (SEZ) has been a soap opera of sorts, involving players of every hue posturing for gains. From software barons seeking tax breaks in a new avatar of software technology parks (STPs) to states luring investments, from manufacturing companies seeking a new revival to farmers seeking land, the tale has had its rich set of conflicts involving stakeholders. The latest indication from the Commerce Ministry that the government may relax the land ceiling of 5,000 hectares for an SEZ on a case-by-case basis could then be taken as a sign of thaw in a tug-of-war, and a welcome one at that.

Land acquisition is best done in a transparent way, based on the principles of a free-market economy. While the government may be a facilitator or arbitrator in resolving disputes, ceilings in themselves do not make sense. There are fiscal dimensions in terms of tax revenue foregone because of tax breaks offered to SEZs and questions concerning whether they encroach on agricultural land. However, one involves a governmental issue, while the other is in a grey area where the litmus test must lie in whether a company that wants to set up an SEZ can directly engage the farmers or not. Land-owners, individually or acting collectively, can be helped by local politicians, intermediaries or lawyers. To politicise the issue at the central level and bring in more controls would bring in discretionary powers to the bureaucracy, which can only enhance a climate of mistrust over SEZs. Of the 500 SEZs proposed thus far, 220 have already been created. The focus now should be on infrastructure issues and implementation woes in the zones. As it is, the concept of administering the whole issue through discretionary approvals smacks of a control regime. To the extent possible, the government must regulate but not control aspects where its discretion unfairly enriches or deprives any group or individual.

Given the socialist baggage of decades, there will be calls from either side for State intervention hiding behind the rhetoric of lofty ideals, but what is needed at this moment is an atmosphere of clarity. It is best to handle the issue with a business-like attitude, accompanied by a sense of transparency and neutrality. If there are social issues to be addressed, the government has fiscal instruments that can be evoked suitably.