Congress Privy Purse for New Maharajas

Dr. Shri Manmohan Singh,
Hon'ble Prime Minister,
Union Council of Ministers,
Government of India,
North Block, New Delhi – 110 001.
2) Shri Pranab Mukherjee,
Chairperson,
Empowered Group of Ministers – SEZs,
Government of India,
North Block, New Delhi – 110 001 .
Hon'ble Sirs,

We are greatly concerned and disturbed with the rapidly deteriorating Rural Economic Conditions across the various States in India, especially the parts which are dependent upon the Agriculture as main source of income. The Policies of the Governments either at Union or the States are killing the Rural Economy.

The Special Economic Zones (SEZs) culture has posed great threat to the survival of poorest of the poor & the entire Agrarian Community is becoming the victims of the special treatment meted out to the select class of the society in the name & style of promotion of SEZs and the mad competition being seen across the various states by the Corporates and the support given by the State Governments without considering the long term impact of such SEZs in India.

We are submitting this representation for lodging our strong protest against the Policies of this Government in extending the extra-ordinary helps to the Industrial Houses and the Corporates in the name & style of the SEZs and its mushrooming culture across the Indian States, which has been proved as disastrous to the economy of Rural India.

We sincerely hope that you will consider following vital points in light of the facts raised through this Representation and pass suitable orders directing the Core Group of Ministers' on SEZs which has taken a positive step by bringing to halt the approvals of Special Economic Zone projects and considering the need to review the Special Economic Zone Policy and Act 2005.

We are glad to know this decision was the need of the hour in response to the wide scale opposition and rising discontentment among communities across India for forced acquisition of their resources and also among the civil society and people's groups in general for not opening the issue of SEZs for dialogue or discussion.

We, being the Members of the civil society, have consistently been raising several concerns in the matter of establishment of SEZs. The key issues that have been raised by us include

1. Large scale forced acquisition of land and promotion of real estate businesses

2. Loss of local agriculture, fisheries based and other traditional livelihoods

3. Lack of equal and non-exploitative employment opportunities for local communities in SEZs

4. Increasing burden on natural resources like land, water, forests and environmental destruction

5. Revenue losses and lack of real economic development of the country and people

6. Breakdown of governance systems especially of the local self governments with the creation of foreign enclaves

7. No effort by the government to initiate or open public consultation on the matter.

The grounds of opposition to the culture of SEZ has been detailed as below :-
(A) Issue of Land and Displacement of livelihoods :
In countries like India the issue of large scale acquisition of farm land leading to dispossessed farmers and loss of farm based livelihoods across the country side has been dominant in creation of SEZs. In India, as of now the total amount of land for the 400 projects (both formally and in-principle approved) comes up to 1,25,000 hectares according to a news report The government however, claims that most of this land is available with the State Industrial Development Corporations which is indeed untrue. Farmer's protests against acquisition of their lands in Haryana, Maharashtra, Punjab, Tamil Nadu. Orissa and Gujarat are evidence enough to prove that.
The fact is that before the opposition started the government was completely unprepared to deal with the issue of land acquisition and the subsequent fallouts on farmers.

The Central SEZ Act 2005, for instance, is silent on land acquisition for SEZs. Further, land is a state subject and State governments are being expected to take the lead in establishing SEZs and, in characteristic fashion, the policy on land acquisition and potential displacement has been left unattended.
The SEZ rules do mention that the land can be acquired by the developer only after BoA approval. However, in Haryana and Maharashtra we have seen that the state government and developers have started acquisition before receiving a nod from the MoC.
Further , while there is a lower limit to the amount of land that can be acquired for an SEZ, there is no upper limit. Chapter 2 Section 4 of the Central Act in fact says that the central government after notifying the SEZ, if it considers appropriate, can subsequently notify, any additional area under the SEZ.
What is also ironic is the government's position that state should stay out of the land acquisition process and that it should be between the two parties (Private party and the land owner) in case of private land. This is rather unfortunate considering that the state is supposed to protect interests of the marginalized sections of the society rather than let the big sharks free to eat the small fish. Unless we move with the assumptions that farmers and rural communities in India are no longer marginalized this is a bit hard to understand
Another statement that "wastelands and single crop lands" can be acquired for SEZs is also adhoc and irrelevant. Any one who has an understanding of the rural areas would know that land use in India is not confined to cultivation but also extends to collective use for day-to-day survival. Fuel, fodder, other non-timber forest produce requirements are met from land, which could be categorized as 'common property resource' or charagah, gaucher, padit bhoomi in local languages but is referred to as "wasteland" by the government. Another critical issue is that in many states these "waste" lands are also either already under cultivation where the farmers are yet to get legal titles. In Raigarh district, where Reliance is planning to build a massive SEZ, almost 12,000 hectares of what are known as Dali Lands have been under cultivation by the tribals for decades now. Most families though are still awaiting regularization of these lands since they fall under the category of Forest land. Similar is the case for Orissa. For example, in Jagatsinghpur district the area where the Multinational Pohang Steel Company is planning its Special Economic Zone, almost 300 families are yet to be allotted legal titles. In the absence of pattas or titles, the villagers have virtually no bargaining power and get displaced without adequate or any compensation. Rehabilitation in such cases is not even considered by the government.
Also, considering the size of many of the special economic zones – they would be spread over an area of hundreds of hectares. It would be rather difficult to find contiguous "wastelands" spread over large areas, especially in many of the states like Tamil Nadu, Haryana, UP and Maharashtra, where these zones are coming up. So it would be virtually impossible to locate them "only on wastelands". In its myopic view of the problem of "Land" in SEZ projects the Ministry has failed completely in considering these complexities and dynamics which will have serious consequences for rural communities and the last of the common property resources in our country.

The principle of "eminent domain" which is the basis of our colonial Land Acquisition Act (1894) is being clearly misused and even given priority over the principles in the 73 rd and 74 th amendment of the constitution, which give primacy to gramsabhas as autonomous decision making entities.
Now, in a rush to facilitate the setting up of these zones the Government is also pushing a National Rehabilitation Policy based on a 2006 draft circulated by the Ministry of Rural Development. This draft has been extensively criticized by people's groups for being sketchy and inadequate. Further, this draft completely overlooks the earlier draft prepared in 2005 by the National Advisory Council (NAC) of the UPA in extensive consultation with people's groups. The 2006 draft does not draw from the principles of the 2005 draft version but in fact ignores them. In spite of detailed people's opposition to the new draft the government is pushing for its passage.
In a scenario where new mega-projects like Special Economic Zones are coming up at a fast pace within the legislative framework of the SEZ Act 2005, such a Rehabilitation policy in combination with the colonial Land acquisition act would do little to address the issues that arise out of development induced displacement.
(B) Labour Exploitation Issues :
It is a well known fact that all over the world trade and export zones have reported instances of labour exploitation as a characteristic feature. India is not very different.

Prior to the SEZ Act 2005, and the introduction of the SEZ policy, theoretically, all labour and factory legislation were fully applicable in the EPZs. However, even in the EPZs, trade unions were practically absent and rare despite attempts of trade unions to organize. The key reason being the restriction to entry into the EPZs, which is limited to the employees who are transported directly to and from the factory door. Workers have also reported fear of victimization by management if they become part of union activities. In the Noida EPZ, workers have been sacked for demanding that labour laws should be implemented.
The government had restricted the right to strike in two of India's export processing zones (EPZs) - the Santacruz Electronics Export Processing Zone (SEEPZ) near Bombay and the Kandla Free Trade Zone – by giving them "Public Utility" status under the Industrial Disputes Act. This makes strikes illegal unless they are preceded by specified reconciliation procedures involving the Labour Commissioners' Office
In the current SEZ regime, the labour laws have been significantly watered down. Chapter 2 Clause 5(g) of the SEZ rules hands over the power to the Development Commissioner to declare the SEZ as a "Public Utility Service". Clause 5(f) delegates powers to the Development Commissioner to handle workmen-employer relations. Functions of the labour commissioner are also handed over to the Development Commissioner.
As in other parts of the world in Indian EPZs it is the women who constitute the bulk of the work force in the EPZs, employed in establishments such as ready-made garments and electronics-based and software industries In an All India Convention of EPZ/ SEZ workers organized by CITU in 2002 it was discussed that women workers are exploited in these zones, Women are made to work in night shifts without providing proper conveyance to their residences. They are not given maternity leave. On the other hand, women found to be pregnant are removed from service. Cr unches are not provided. Young and unmarried women are only preferred. The use of toilets is controlled by issuing tokens. Sexual harassment is very common.
In the Santa Cruz Electronics Export Processing Zone (SEEPZ) near Bombay, ninety per cent of the workers are women who are generally young and too frightened to form unions. Working conditions are bad and overtime is compulsory. The same is the case in the Cochin SEZ. The Contract Labour (Regulation & Abolition) Act 1970 specifically prohibits employing contract workers in activities which are "permanent and perpetual" in nature. We have example of many SEZ/EPZs where almost all the activities conducted by the units in are permanent and perpetual in nature and yet the practice of employing contract workers goes unabated
In the time to come the issue of labour is going to emerge as a major concern in these zones.

(C) Environmental Issues in SEZs :
While it would be very premature to talk about the environmental impacts of the large number of SEZ projects that are coming up, we have the Chinese example to imagine the extent of the environmental losses involved. India is already going through a crisis in terms of water scarcity as well as loss of forests and biodiversity. The point is that in the current framework for economic development costs of loss of forest and other common lands; large scale exploitation of water resources; coastal lands and lines; pollution – air and water; generation of e-waste etc; are not even being computed.

The Environmental Governance Mechanisms have only seen weakening since the past five years.
We have the following points to consider :

It was way back in 2001 that the 1994 Environment Impact Assessment notification an amendment was made in 2001 that exempted SEZs from Public hearings, which was a critical part of the Environment Clearance procedure
The EIA notification 1994 was amended in a major way and a new notification was introduced in 2006 in order to issue fast track clearances for all projects
Schedule 1of the EIA notification, 2006 issued by the Ministry of Environment and Forests, under item 7c covers industrial estates/parks/complexes/areas, export processing zones (EPZs), Special Economic Zones (SEZs), Biotech Parks, Leather Complexes. The above categories continue to be exempted from the requirement of a public consultation even in the new notification
The EIA Notification, 2006 divides industries, projects and activities into Category A and Category B where projects under Category A have to be cleared by the Central Government, and Projects under Category B are to be cleared by the State Government.
Under Category A slated for Central Clearance " if at least one industry in the proposed industrial estate (SEZ) falls under Category A, the entire industrial area shall be treated as Category A irrespective of area", and "industrial estates with area greater than 500 ha. and housing at least one Category B industry" will be considered Category A and will require Central clearance.
Under Category B, with "industrial estates housing at least one Category B industry and area <> 500 ha and not housing any industry belonging to Category A or B", require an EIA report to be cleared at the State Level.
An industrial estate that is less than 500 ha and does not house an industry of either Category A or B is exempt from Environmental Clearance.
While it seems fairly clear that units operating within SEZs largely require an Environmental Clearance at either the Central or State Level, on the basis of an E.I.A, but without a public consultation, a broad-based, sweeping "Special Condition" undermines even this basic requirement. The condition states -

If any zone with homogeneous type of industries (under sections of chemical and petrochemical/bulk drug industries), or those Industrial estates with pre –defined set of activities (not necessarily homogeneous), obtains prior environmental clearance, individual industries including proposed industrial housing within such estates /complexes will not be required to take prior environmental clearance , so long as the Terms and Conditions for the industrial estate/complex are complied with

Construction projects are out of the purview of the EIA notification 2006 :

The SEZ Act and rules also leave the following ambiguities :

No mention is made of regulatory mechanisms for Multi-product, single product zones, tourism zones as well as clearance for entire SEZ clearance vs. clearance for units
Guidelines for notification of SEZs are silent on environmental and ecological concerns
Single window clearances and roles of the approval committee are over arching. It is the development commissioner and later the SEZ Authority that would
The single window clearance feature makes the Approval committee at the state level under the DC responsible for approval of all SEZ units and even compliance to conditions of approval if any are to be monitored by the AC
There is no mention of the role of the Pollution Control Board
There is mention of Coastal Regulation related provisions in the sez rules and act. CRZ Notifications make space for SEZ's with almost no conditions and regulation
These issues become even graver with provisions like the one restricting entry into the SEZs , which will be open to authorised persons only. This would obviously make it difficult for independent researchers to enter the area to carry out any environmental impact assessments or studies.

Issues of Governance and sovereignty of self governments :
The most antidemocratic aspects of the SEZ Act which hit out at the sovereignty of governance systems

Special Economic Zones have been given the status of industrial townships as per provisions of clause (1) of Article 243Q of the Indian Constitution and defined in Section 3.2 of SEZ Act, 2005. The State Government will declare the SEZs as Industrial Township Areas to function as self-governing, autonomous municipal bodies. Once an SEZ is declared as an Industrial Township Area, it will cease to be under the jurisdiction of any other local body like- Municipal Corporation and gram panchayat. Moreover, the SEZ Developer and Units would also be exempted from taxes levied by the local bodies because of its self-contained local body.

This clearly undermines the constitutional status given to Urban local Governance and Panchayats under 74 th and 73rd amendment. The present need is to improve financial powers given to the Panchayats to enable them to invest in physical and social infrastructure as a means of promoting growth and equity. And unregulated excessive industrial exploitation of land, water and other natural resources would only worsen the life of rural poor when Panchayats do not have any control of decision and taxing SEZs.

The status of "deemed foreign territory" to SEZs will snatch the sovereignty of locals from their lands, and natural resources which is the backbone of local economy and sustenance and also their fundamental right to movement as Indian citizens will be violated.
What is really going to challenge the governance system is the creation and concentration of power in the hands of the Development Commissioner at the state level and the Board of approvals in the Centre.
Further, the SEZ Act provides that grievances related to the SEZ can only be filed with courts designated by the state governments which will only be for trials related to civil and other matters of Special Economic Zones. No other courts can try a case unless it goes through the designated court first.
Building of a physical boundary around the SEZ and restricting entry to authorsied persons' only means that it would be difficult for any individual or civil society groups and independent agencies to enter the area without prior approval of the Development Commissioner.
Creating foreign territories as SEZs within the national boundary will challenge the sovereignty of the country and undermine the constitutional right to freedom and liberty. This will enhance the internal conflicts led by economic and infrastructural disparity.
The act is completely silent as to the mechanisms for accountability of these (SEZ authority/ Approvals' Authority) bodies to the people of the country.

Countering the Economic Logic :

There are several questions that have been raised by economists and intellectuals challenging the arguments being offered in favour of SEZs as "engines of economic growth". Some of these are

Revenue losses from tax exemptions :
According to an internal assessment of the Union Finance Ministry in 2005, the government had to forgo about Rs. 90,000 crore in direct and indirect taxes over a period of four years on account of the SEZs.

The 1998 Comptroller and Auditor-General Report on EPZs, stated that "customs duty amounting to Rs.7, 500 crore was forgone for achieving net foreign exchange earnings of Rs. 4,700 crore and the government does not seem to have made any cost benefit analysis.".
The RBI has estimated that till 2010 the country exchequer would lose 1,60,000 on account of the tax subsidies to SEZ projects. The other concern is of SEZs turning into real estate businesses considering that 65% of the area within a zone can be a non industrial set-up.

Domination of IT and Software projects :
In the developing countries, the optimism generated by the boom in IT services allows the government to ignore the fact that growth of employment in the commodity producing sectors has not merely decelerated sharply but is increasingly less responsive to increases in output – the jobless growth syndrome. The optimism that IT services generate is only because this is the only segment where employment is increasing significantly. But that growth may be inadequate for most of the population except the middle class minority.

In Bangalore and Pune, both cities that have witnessed IT driven growth in the past five years, issues of widening class disparities within the city leading to several social problems have emerged. Between July 2005 and 06, the Consumer Price Index escalated by about 8% in Pune, and 7% in Bangalore. This is further driving the real estate market – and cities like Pune have seen a whopping ascent in property prices as well as new construction. The ultimate load is on the city infrastructure – problems that both these aspiring to be metro-cities are facing. The states where these cities are located also are the toppers in the list of approved SEZ projects.

POOR EXPORT PERFORMANCE OF EPZS :
There has been a comparison between SEZs and EPZs and the prediction of performance of SEZs in export production based on the EPZ experience in India

Lets take a look at some figures that will throw a light on the performance of EPZs

EPZs contributed to 4% of the exports in the country (2002)
As per an MoC report the exports from the Special Economic Zones during 2004-05 were of the order of US$ 4 billion, representing an annual growth of over 36%. During April-December, 2005, the exports from the SEZs stood at about US$ 3.5 billion.
During the five year period ending 1996-97 the foreign exchange outgo on imports made by the units and the customs duty forgone amounted to Rs.16461.58 crore against which exports of only Rs.13563.87 crore were reported.
An appraisal of the seven EPZs was undertaken during August 1996 to July 1997. Out of 2333 units granted letters of Approval, 513 units were functional as on 31 March 1997.
The Ministry of Commerce stated that 1351 projects/LOAs had been cancelled or lapsed on account of non-implementation indicating 58 per cent mortality in the units approved.

While the zoning concept remains the same as far as EPzs and SEZs are concerned, there are certain differences here –

100% Export oriented units were essential in the EPZ policy and the conditions to get concessions and taxes were more difficult
The SEZ policy relaxes the conditions by allowing sale of products to domestic market by the Units in SEZ
The doubt that is being raised is that if SEZs are not able to attract EoUs then would they become hubs for domestic market production, which inturn would affect domestic producers in non SEZ areas (or domestic tariff areas)

Under all circumstances, in SEZ, the main beneficiaries would not be the units but the developers who would be getting land at cheap rates from the state along with huge concessions on infrastructure, maintenance and tax breaks. Even if they fail in attracting EOUs, their success will depend upon the set of activities (entertainment and township) that they can carry out for generating profits in the non industrial area of the SEZ.

Regional Imbalances :
The state wise break up of the number of projects below shows the dominance of SEZ projects in Maharashtra , Karnataka, Tamil Nadu, Gujarat and Andhra Pradesh. As in the case of China many of these zones are to be located in coastal areas. They also seem to be clustering around urban and already developed areas due to easy access to infrastructural facilities for transport and communication. The question that is being raised is of creation and further accentuation of already existing regional imbalances. Further, there is a concern about concentration of these zones in areas that are already over burdened and running short as far as supply of water and power are concerned.

The question that is being repeatedly raised is that are these zones relevant in the current economic context of India?

In view of above, we hereby demand the following immediate reliefs in the national interest, especially the interest of Agrarian Community staying in the Rural India.

� the SEZ Act 2005 be repealed to ensure industrial and economic development which is fair and democratic

� the approved and notified SEZs be cancelled and land acquisitions already made be annulled

� an immediate dialogue or consultation be initiated with people's groups, communities and Panchayat representatives to seek opinion on strengthening the development of local economies.

We once again reiterate that the SEZ Act 2005 is anti democratic and unconstitutional as it completely violates the right to life and livelihood of people, who are being forcefully displaced for the implementation of these projects. The Act promotes large scale privatization and monopolization of resources into the hands of a few private developers at huge costs to the state exchequer as well as the economy and environment of this country.

We hope that being representatives of the people, you stand united with us for a just and democratic society that ensures equitable development for all.
Thanking You & anticipating an immediate steps from your Desk,
Yours faithfully,
KISHORE TIWARI
PRESIDENT,
VIDARBHA JAN ANDOLAN SAMITI,
11, TRISARAN SOCIETY, KHAMLA,
NAGPUR – 440 025
India