Geography Reference
In-Depth Information
minister for environment and forests, was slowing down projects by rejecting or overturn-
ing environmental clearances in his attempt to clean up the ministry's operations.
The SEZs, Tata Motors and Posco stories, along with Odisha, show how development
opportunities have been wasted in India's complex and often corrupt political and business
environment. In all four examples, the losers have been the people living on the land be-
cause of the potential economic wealth that has not been realized, while India has lost out
on growth.
SEZs
Kamal Nath, an energetic and engaging Congress politician famous for his handling of far-
flung business and political connections since he worked with Sanjay Gandhi at the end of
the 1970s, pushed the SEZ idea as minister for commerce and industry. He announced new
tax breaks plus substantial investment, planning and labour law concessions. The idea was
to emulate China's big and successful zones, such as Shenzhen adjacent to Hong Kong,
which have become cities and have driven the country's growth. But he did nothing to en-
sure that the zones would be firmly based on manufacturing industry, which had provided
the early Chinese zones with their foundations, as I saw when I lived in Hong Kong and
visited Shenzhen and other areas in the late 1980s. He also did nothing to prepare for the
social and human side of his SEZ dreams. His plans brought industrialists and real estate
speculators rushing to his Delhi office, eager to demonstrate their enthusiasm and sign up
for vast tracts of land. He built up the hype and encouraged international and domestic in-
terest by unrealistically declaring that the zones would account for $5-6 billion foreign dir-
ect investment by the end of 2007.
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When the SEZ Act was passed in February 2005 and introduced with SEZ Rules in Janu-
ary 2006, there was a flood of applications for over 400 zones. Some 230 quickly received
initial approval and over 60 were formally notified to go ahead, even though no plans had
been drawn up to control acquisition and compensation for the land that would be needed.
in the first couple of years and there are now only about 170, including 19 that existed be-
fore 2005. Businessmen paid low prices for agricultural land, whose values quickly rose,
benefiting developers, politicians and bureaucrats who were often involved in land scams,
but leaving behind the poor, frustrated previous owners. Companies frequently asked for
far more land than they needed, so that they could hoard it and later sell or use it for other
purposes at massive profits.
ward foreign investment and exports, but there was concern about large projects that looked
