Wednesday, September 20, 2006

SEZ memorandum to the President

Ashwin helped draft the following memorandum, which was handed to the President by a delegation led by former Pime Minister V.P Singh.


Shri Abdul Kalam,
President of India
Rashtrapati Bhavan
New Delhi

Subject: The large scale grab of agricultural land going on under the guise of the Land Acqusition Act.

Dear Rashtrapatiji,

We wish to draw your attention to a most deplorable instance of the worst tyranny of the policies followed by the successive governments in the last fifteen years in the name of economic reforms and development.

The Government of Uttar Pradesh had acquired 2500 acres of highly productive agricultural land for the ostensibly “public purpose” of infrastructure development, namely, to set up a gas based thermal power plant near Dadri in Ghaziabad district. Nobody would question the need to augment the generation of power supply in the power- starved state. But what is most questionable is the way in which the government of U.P. has been acting at the behest of and for the benefit of one corporate house, flouting all norms of propriety and prudence.

It is not at all clear why such vast tracts of good agricultural land were acquired for the power project. No where in the world is 2500 acres of land required for a power plant. There is no evidence to show that the government considered alternative possibilities that would have meant little or no displacement of peasants from productive land. Moreover, no competitive offers were called for before deciding in favour of one particular corporate house. What is worse, the state government has virtually subsidized the corporate house to the extent of sixty percent of the cost of land acquisition. The compensation, such as it is, has not yet fully reached the oustees. We also understand that Reliance has shown the value of the land (for the purpose of seeking a loan for this project) to be several times the cost at which it is being given this land by the U.P. Government. The land has been transferred to the company even before they have tied up the fuel linkage for the project.

The power project was supposed to be operational in two years time. But there is no sign of the work having begun on the project. The price at which the energy so produced will be available is not known to the public; there is no clause binding the corporate house to either the time schedule of the project going on stream or the price at which power would be supplied.

Even applying the norms of neo-liberal market economics, which have become almost a matter of faith with our policy makers, the decisions of the U.P.Government in regard to this project are indefensible. We suspect a thorough going public enquiry would unravel a scandal of magnitude bigger than the notorious Enron project.

What causes us deep anguish is not only the impropriety and venality that are palpable, but the way in which the state government has reduced itself to being a willing handmaiden of a corporate house. Never before have we seen such takeover of the government by the corporate sector. The atrocities and violence let loose at Bajhera near Dadri by the state police in collaboration with the private security agents of the corporate house on the night of 7th-8th of July on the eve of the Satyagraha planned by the peasants will put to shame even a lawless dictatorial regime: houses were searched at night; women were manhandled and injured; children were grievously hurt; property was looted: all in the name of maintaining “law and order”.

We find that government machinery is being more and more insensitive to not only the interests of the poor and the powerless but also the basic humanitarian values. The pretext of development is being used to push through the corporate agenda at the cost of the kisans and the marginalized sections of our people.

Land Grab and Displacement : A National Crisis:
The liberal grant of mining leases to private parties; the spree of MOUs entered into by governments of MP, Jharkhand, Chattisgarh and Orissa with the big industry, both indigenous and foreign; the above mentioned most deplorable instance of the U.P.Government’s policies and action; similar trends witnessed recently in Haryana and Punjab; misinterpretation of the “public purpose” provision in the Land Acquisition Act and violation/evasion/erosion of the fundamental legal obligations of the State regarding non-transferability of adivasi lands, facilitating large scale dispossession of adivasis and other poorer sections of their land for the benefit of big business; the pursuit of construction of big dams without regard to prior and proper rehabilitation of the oustees; the demolition of the jhuggi-jhopris in the name of creating “world- class” urban centers; the allotment of major share of the lands of the closed textile mills in Mumbai in favour of the real estate sharks at the cost of the claims of housing for the laid-off workers and also the environmental needs of the burgeoning metropolis-all these moves and measures expose the anti-poor and pro-big business and pro-rich bias of the policies being followed. The recent instances of brutal use of force by the State against the adivasis, dalits, kisans and other poor sections resisting this State- supported aggrandizement of the big business only confirms the barbaric resolve of the system to crush all opposition to the designs of the big capital, forgetting the promises made in the election manifestoes, and with little regard to the fundamental rights enshrined in the Constitution. The already marginalised Adivasi India, the vast hinterland of hardworking peasantry and the soft underbelly of the urban centers where the poor reside in makeshift habitats are seething with unprecedented fury.

Special Economic Zones: Genearised Legal Framework
The Act on Special Economic Zones passed by the Parliament in June 2006 and the Rules framed there-under and promulgated in February 2006 seem to provide a legal cover for continued pursuit of such reckless, pro-rich and anti-kisan and anti-poor policies.

In a nutshell, the Act encourages setting up of tax- exempt enclaves all over the country with the ostensible objective of stimulating production of goods( including agricultural and horticultural products and contract farming) and services( incuding banking and financial services) for export. But the guidelines for approval as set out in the Act include such omnibus purposes as “generation of additional economic activity” and “ promotion of investment”.

The size of the zones contemplated varies from as large an area as 1000ha for multi product zones to as small an area 10 ha in case of the zones converted from the already existing EPZs . The promoters could be private entrepreneurs, resident Indians and non- residents and foreigners, companies incorporated in India or abroad , state governments, joint enterprises. FDI is permissible upto 100 percent.

It is visualized that around one fourth of the land will be earmarked for the production and processing, the rest being available for development of infrastructure and amenities which include residential housing complexes, hotels, recreational and leisure spots.

Some 267 such zones are reported to have been approved so far. According to press reports, some 1,34,000 ha of land has already been acquired for 67 multi product SEZs.

The imports into the SEZ will be exempt from customs duties and import regulations and procurement of raw materials and other goods from the rest of the country will be exempt from excise tax. Income from the exports will be totally exempt from income tax for a period of five years, exemption for half such income continuing for another five years. Thee will be exemption from trasaction tax on securities and service tax, electricity duty, central sales tax.. The cesses and other regulatory provisions currently applicable under various specific acts such as agriculture Produce Cess Act, , Mica Labour Welfare Fund Act, Sugar ( Regulation of Production) Act, Tea Act , Coffee Act, Salt Cess Act etc. will be inapplicable. The state governments will be encouraged to provide exemptions under the Stamp Duty Act and other such state taxes, octroies and cesses.

Normal government machinery, including the organs of the state government under different departments and the Municipal/ Panchayat Raj administration will be short-circuited by concentration of various powers under Development Commissioner, including those under Industrial Disputes Act. State Governments are required to notify the SEZs as public utilities for the purpose of application of Industrial Disputes Act, implying severe restriction on the workers’ right to strike.

Entry into SEZ will be regulated by identity cards to be issued by the SEZ Authority. No representation of local people or the workforce is provided in the structure of the SEZ Authority. There is no transparent procedure for selection of promoters for allotment of land so acquired, except perhaps, first –come- first- served . In Noida, U.P., for example 2,500 acres of land has already been allotted to the Reliance Group, for an SEZ within a month of the U.P. government adopting a policy for SEZs.

Large scale acquisition of agricultural land is taking place in the name of “public interest”. There is no transparent procedure for selection of promoters for allotment of land so acquired, nor for payment of adequate compensation. . This has generated large scale protests and militant agitations, witness Dadri in UP and Pen, Uran, Karla, Rajgurunagar in Maharahstra. Interestingly large tracts of land are being acquired in the vicinity of metro cities, eg. Delhi and Mumbai, incuding Navi Mumbai and handed over to big business. This has ominous potentialities considering that residential complexes, recreational and leisure spots for the rich are visualized as legitimate objectives of SEZs. The boom in the real estate market also explains why big houses are interested in grabbing such large tracts of land.

The obvious implication of colossal loss of revenue to central and state governments does not seem to have been considered seriously. IMF chief economist has recently drawn attention to these tax giveaways that government can not afford. The loss of revenue estimate is of the order of Rs. 1,75,000 crores over the next five years. Ultimately, the fiscal strain so caused will only lead to inevitable cuts in budgetary provisions meant to provide some minimum economic and social security for the poor.

The mushrooming of SEZs also implies out-migration of economic activity from the rest of the regions, including the backward regions. This would only exacerbate uneven regional development. The adverse employment and income effect of the possible leakages of tax exempt production from SEZs into the domestic tariff areas, which will be very difficult to eradicate, can be easily imagined.

We are witnessing in this process a more general phenomenon: the destruction of small producers, in agriculture as well as manufacture and induction of big capital into this last bastion of petty production. The small producers are being pushed into being contract labour for the big business houses , indigenous as well as foreign. Eventually, their dependence on the big houses will be total and they will be pauperised, as the government has already virtually withdrawn or is fast doing so, from its erstwhile role of protecting the small producers’ and peasants’ rights and providing credit, marketing and price support to them. What is more, the total employment that the SEZs will provide will fall far short of the displacement that they will cause in the rural hinterland. In the absence of a sound, people- centric strategy for the absorption of the vast labour force so displaced, the ongoing process will only lead to social turbulence of an unprecedented scale. The unrest being witnessed now in Dadri or Pen-Uran is only a beginning.

SEZs recall to mind the establishment of “factories” and acquisition of rights to customs-free trade in India by the English East India Company in the 17th century or the race amongst the European Powers for the establishment of extra-territorial enclaves in China in the last decade of the 18th century . The “factories” and the “enclaves” were the ancient ancestors of the SEZs, although the phenomenon now is largely self-inflicted and has “indigenous” as well as trans-national elements participating in the process.

We, therefore, demand a national moratorium for six months, an immediate halt to the process of any further land acquisition, dispossession, demolition and displacement pending the constitution of a high level commission of eminent persons which should lay down a new comprehensive policy and set up an effective mechanism to ensure the protection of the rights and interests of the affected people not as a post-facto formality but as a necessary precondition to the initiation / resumption of work on projects including those related to urban renewal and development. The proposed commission should also be asked to look into and recommend amendments to the Land Acquisition Act/s and review the whole concept behind the SEZ Act .

Thanking you,

With warm regards.

Yours Sincerely,

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