Displacement

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According to A CITIZENS REPORT CARD ON SPECIAL ECONOMIC ZONES prepared by civil society organization, South Asia Citizens' web:

http://www.sacw.net/IMG/pdf/CITIZENSREPORTONSEZs.pdf

THE NUMBERS

    * Total amount of land to be acquired across India: 150,000 hectares (the area of National Capital Region). This land - predominantly agricultural and typically multicropped - is capable of producing close to 1 million tons of foodgrains. If SEZs are seen to be successful in the future and more cultivated land is acquired, they will endanger the food security of the country.

    * The latest available statistics on Special Economic Zones show that the Board of Approvals at the Ministry of Commerce, the central body authorised to clear SEZ proposals, has approved 578 SEZs of which 315 have been notified.

    * An analysis of figures up to 8th December 2008 displays a continuation of the pattern which has been evident since SEZ Act in 2005.

    * As of December 2008 the Central government gave formal approvals to a staggering 552 SEZs in 19 states; 272 of these have been notified. (As of April 2009 the total number of Formal approvals was 578 and notified SEZs were 330)

    * With the significant economic slow-down towards the end of 2008 for the first time we started to see companies applying to de-register/denotify SEZs and it remains to be seen what the net effect will be.

    * The overwhelming part of SEZs continues to be in information technology and related industries. 181 notified SEZs exist for IT companies representing 66% of the total number of SEZs. Additionally there are 341 formally approved and 11 in-principle approvals.

    * With all the different SEZs taken together at various stages of approval the IT sector still accounts for more than half at 55% of the total. The second largest sector will be multi-product with 9% of the all zones.

    * Andhra Pradesh tops the list of notified SEZs with 57, followed by Tamil Nadu on 44 and Maharashtra on 43.

    * Maharashtra has the most SEZs waiting to be notified however with 104 formally approved and 34 in principle, compared to AP's 99 and 2 respectively and Tamil Nadu's 66 and 18.

    * These three states thus account for almost half of all the SEZs in the country. The share is especially significant among the already notified SEZs with 144 out of the total 274.

    * Even more imbalanced is the spread of SEZs when one considers the locations within each state. 48 out of the 99 formally approved SEZs in Andhra Pradesh are in or close to Hyderabad, while 34 of 66 formally approved are similarly in or close to Chennai.

    * The main number of SEZs can thus easily be characterised as being in the IT-sector and in one of primarily Western or Southern cities.

    * This said, almost every state has tried to get a couple of SEZs to be established within their territories includingtiny Dadra & Haveli's 4, and Pondicherry's 1 formally approved zones.

    * 53 multiproduct SEZs are at the in principle approval stage meaning they might soon become formally notified. These are the zones which require really large areas of land and have been contentious on the issue of displacement.

    * Recently the rule preventing larger SEZs than 5,000 hectares was lifted which lead the Adani group to apply for and get granted a merger between the 3 zones of (4498 + 2658 + 2648 hectares) it had created next to each other at Mundra in Gujarat to avoid the land ceiling

    * Among the actually operating SEZs the biggest ones apart from the Mundra zone(s) in Gujarat is APIIC 2,206 ha SEZ in Visakhapatnam and the Kakinada SEZ 1,035 ha both in Andhra Pradesh and the Navi Mumbai SEZ 1,223 ha in Maharashtra

    * With the many really large multi-product SEZs in the In Principle category these cover an area of 1.22 lakh hectares, or 869 hectares per SEZ on average.

ISSUES OF CONCERN

   1. Large scale requirement of land and Forced Acquisition of Land - India is almost unique in its concept of creating SEZs on demand: i.e. the location, size and nature of the zone is explicitly determined not by state economic policy but by the demands of private capital.

   2. Despite issuing of guidelines by the Ministry of Commerce and the EGoM, that no forced acquisition of land will take place for private SEZs on 15th June 2007, nearly all states are using the Land Acquisition Act 1894 to acquire the land for developers of SEZs and that too in the absence of any provision for rehabilitation

   3. In some states like Tamil Nadu and AP the governments are even using the urgency clause - 17/4 of the LAA to acquire land compulsorily.

   4. It is argued that much of the land being diverted for SEZs is already available with the State Industrial development Corporations (IDCs). While this is a fact, it needs to be specified that in many cases lands which had previously been acquired by IDCs and are now being transferred to SEZ developers also used the Land Acquisition Act.

   5. These sales are obviously at much higher rates than their original acquisition price from the farmers.

   6. The issue of compensation at market value, even to land owners is meaningless as the scales are heavily weighed in favor of private buyers and Government owned Industrial corporations, who are the informed negotiators in deciding the package

Landless and Agricultural labourers displaced without compensation-

   1. Almost 80% of the agricultural population in India owns only about 17% of the total agriculture land, making them near-landless workers. Far more families and communities depend on a piece of land (for work, grazing) than those who own it outright. However, compensation is being discussed only for those who hold titles to land. No compensation has been planned for those who do not.

   2. In states like Gujarat a large part of the land being diverted to SEZs is in the category of common or gowcher land (referred to wrongly as'wasteland').Since these lands are 'common lands' with no individual titles, they are transferred without even consulting the local communities and panchayats.

   3. Temple or Panchami land in Tamil Nadu and Waqf board lands in Andhra Pradesh are other examples of Public lands that have been expropriated and privatised for SEZs.

   4. The most outrageous acquisitions are taking place in Andhra Pradesh which has the highest number of SEZ approvals, in the form of acquiring assigned lands (allotted to Dalits and Scheduled Tribes) for SEZs. . This has been seen clearly in places like Polepally, Kakinada, Chittoor and Anantapur where SEZs are proposed.

Destruction of Agro-based and rural economies-

   1. The bulk of land being acquired for SEZs is fertile, agricultural land, especially in case of the multi-product zones. Agriculture Scientists have estimated that close to 1.14 lakh farming households (each household on an average comprising five members) and an additional 82,000 farm worker families who are dependent upon these farms for their livelihoods, will be displaced.

   2. The total loss of income to the farming and the farm worker families, then, is an astounding Rs.212-crore a year. These were the estimates in 2006 after the initial SEZ approvals which are now multiplied three-fold.

Creation of exploitative employment opportunities and working conditions resulting from nullification of labour protection laws -

    * The SEZ policy of the government transfers all the powers of the state Labor Commissioner to the Development Commissioners of the SEZs.

    * The power in the hands of the development Commissioner to declare SEZs as "public utility services" under the Industrial Disputes Act would mean that in SEZ areas workers will have no rights to strike or even to form unions and organize collectively to bargain for better wages or working conditions.

ECONOMIC IMPLICATIONS

    * The Ministry of Finance conducted a study, and came up with the figures that the cumulative revenue loss from tax holidays to SEZs over the period 2004-05 to 2009-10 is estimated to be 1,75,487 Cr.

    * The Ministry of Finance conducted a study, and came up with the figures that the cumulative revenue loss from tax holidays to SEZs over the period 2004-05 to 2009-10 is estimated to be 1,75,487 Cr.

    * In its performance audit-report on indirect taxes for Union Government tabled in parliament on 11 March 2008, the CAG brought 370 SEZ units under scanner with a limited objective to verify if they had complied with existing Customs Act, Rules, notifications etc. The review brought out systemic as well as compliance weaknesses that caused lost revenues to the tune of Rs.246.72 crores.


Stated objectives remain unfulfilled?

    * The Secretary of the Ministry of Commerce has admitted that 40% of the SEZs approved may never really "take off the ground" (Panos-Kalpavriksh media dialogue on SEZs -December 2008). Additionally the figures of 3.5 lakhs employment and 90,000 crores investment generated by SEZs are being questioned on their authenticity and efficacy since these have to be established through a detailed and independent evaluation.

    * Further the conditions of contract labour in SEZs are the most pathetic. Wages in existing SEZs are often below minimum. Sen and Dasgupta in a May 2007 survey found that in the NOIDA SEZ workers were getting Rs.80 a day for 9 hours of work. Likewise in Falta in West Bengal.

    * Indian policy has very little regulation on the activity within a zone. Notwithstanding claims of export-orientation, the only requirement imposed on SEZ units is a vague need for them to have a ‘positive net foreign exchange balance.' Even that only applies to industrial units in the zone. If the goal of SEZs is indeed exports surely a more stringent clause than merely "positive net foreign exchange" for the SEZ as a whole ought to be applied.

    * It needs to be mentioned further that a great recession in the world economy is not a good omen for promoting SEZs, which will produce for an increasingly shrinking and protected export market. Also, it's not specified what happens to a developer whose SEZ does not meet the export requirement.

    * Just like it's not specified what the procedure for denotification is. The recession - and the accompanying demand for denotification by developers like DLF (SEZs) is exposing this loophole. In such cases what happens to the land? Will it be returned to farmers? If so, how?

    * The SEZ Act (Section 9, 11, 12 and 31) takes power back to the center and bureaucracy (by creating 'Board of Approvals' and 'Development Commissioner' and ‘SEZ Authority', whose accountability is not certain.

    * The fact that the SEZs would have their own regulations, the rights for environmental and labour related clearances, security arrangements, means that they would be 'self contained privatized autonomous entities', where existing constitutional rights would be difficult to exercise.

    * The creation of separate courts for SEZs ridicules the existing judicial system. There is no clarity about how elections will be conducted, and what happens to the governing authority of the Gram Sabha/ Municipality, under the 73rd/74th amendments.

    * There is no transparency in the guidelines formulated for selection, modification and rejection of SEZ proposals by the BoA.The Chairman of the Administrative reforms committee, M Veerappa Moily's report on SEZs states that 'We need to restructure the Board of Approval by putting in people who are objective and can take a balanced view.'

    * The Commerce Ministry had made public announcements of various studies/ comparison of SEZ with other countries. Mr. Kirit Somaya filed an RTI regarding this, and in the answer that was given stated - "study of export of nearby countries of Bangladesh and Sri Lanka was done. No other studies or scientific analysis available."

    * The SEZ Act was passed in haste without much public debate.In both houses of Indian Democracy has passed this bill was passed within a day (10th and 11th May 2005) with virtually no discussion, undermining many of the objections that were raised.

    * Further, information that has been demanded from the Ministry of Commerce on the approved projects under the RTI Act, 2005 has been denied on the clause of maintaining "trade secrets".

    * There is great deal of ambiguity and contradictions when one compares how environment clearances are dealt with in the EIA notification and the SEZ legislations.

    * While it is units with the SEZs which are exempt from Environment Clearance public hearings, the SEZs itself are required to under go public hearing. However, there are cases like the Mundra SEZ where the Ministry of Environment has recommended that Public Hearing be exempted for the creation of the Multi Product SEZ.
 
The CAG report on the Goa Industrial Development Corporation, referred to the Government of India in June 2008, concluded (direct quotes):

    * Corporation deviated from its established role, of acquiring and allotting land directly to the entrepreneur, by allotting land to developers for further allotments by them

    * Allotments were made without any transparent selection procedures

    * Allotments to SEZs were made without publicising, that too before the State Government formulated its SEZ policy

    * Land acquired for small and medium scale industries under IGC (Industrial Growth Centre) Scheme was allotted to SEZ violating GOI guidelines

    * Revision of premium rate of Verna Phase IV (industrial estate proposed to house SEZs) only after major chunk was allotted at lower rate, tentatively fixed, resulted in loss of Rs. 36.89 crore
   
    * Allotment of land contiguous to the land allotted to four SEZs at lesser rate resulted in loss of Rs. 39.47 crore

    * Allotment of 14.36 lakh square metre land to two SEZ developers without adopting approved formula resulted in loss of Rs 17.76 crore

(Source: The Comptroller and Auditor General of India, Goa State Report, Chapter VII Government Commercial and Trading Activities)

POINTS RAISED BY PARLIAMENTARY STANDING COMMITTEE ON COMMERCE

   1. The Parliamentary Standing Committee on Commerce of the previous government under the Chairman ship of Murli Manohar Joshi submitted its 83rd report on the 'Functioning of SEZs' to the parliament on 20th June 2007.

   2. The most critical recommendation made by the committee included the need to 'pause and ponder'.

   3. The report clearly expressed concern about the fast pace at which approvals have been granted by the BoA despite apprehensions raised from all quarters.

   4. Parliamentary Standing committee slammed the Ministry of Commerce on the ground that at the time of the release of the 83rd report there were 152 formal approvals and 82 notifications by the Board of Approvals and there was no effort to put a halt on the approvals despite the committee's recommendation to hold approvals till amendments were put in place.

   5. By the time the ATR was presented in the Rajya Sabha the total number of approved SEZs had crossed 500. The MoC has merely stated that it was in the process of getting a 'scientific evaluation' done on the performance and impacts of SEZs.

   6. Most importantly the report criticised the escalation of displacement as a result of the large SEZs leading to displacement and speculation in many situations.

   7. Some of the other recommendations of the Parliamentary Standing Committee which were brushed aside by the Ministry of Commerce in the ATR include:

   8. Region wise cap on the SEZ approvals to allow for balanced regional development of SEZs.

   9. Imposition of restrictions on unnecessary social infrastructure Linking of fiscal incentives to exports

  10. Tax concessions in SEZs are similar to STPs and EoUs - then why is there are a need for SEZs?

  11. Re-look at delegation of Labour Commissioner's powers to the Development Commissioner

  12. 83rd report of the parliamentary standing committee on commerce 'on the functioning of Special Economic Zones'


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