The Lament Of Bengal's Luddites

In the whole debate over the need for SEZs (Special Economic Zones), the snake pit of politics has found a new opening. Instead of answering to the need of the hour, which is, to re-examine our policies of economic growth and development, the political parties have resorted to the worst form of disruptive politics. The issue is not helped by the media, running on the steam of tabloid populism, feeding the existing prejudice against the notion of globalization and liberalization as being anti-thetical to the growth and development of indigenous (read agrarian) economy. No where has the issue opened a can of worms as in Bengal poised between the hope of resurgence and the reality of stagnation.

Before going into the scenario in Bengal, I think it is important to first state what a SEZ actually entails. Introduced on March31, 2000 by the then Union Commerce and Industry Minister Murasoli Maran, the policy of SEZ was intended as an enabling mechanism to speed up economic growth, exports and employment by creating a conducive environment. It envisioned an enclave within a country that is treated as a foreign territory for the purpose of duties and tariffs and has liberal laws in relation to labour and foreign investment. The added incentive to investors was the promise of a 10-year tax holiday, as Indian SEZs would not have to pay income tax for the first five years and pay only half their tax liability for the next two. Certain conditions were laid: First, multi-product SEZs would be at least 1000 hectares. However, SEZs for IT, bio-technology, gems and jewellery could be as small as 10 hectares. Second, at least, 35% of the area of multi-product SEZ should be used for export purposes. The rest could be used for service sector and educational institutions,etc. Thus, it was also viewed as a means to the creation of social and physical infrastructure.

According to a report by the Indian magazine, The Week, April 1,2007, SEZs in India are expected to generate 15-17 lakh new jobs in 5 years and attract around INR 2,50,000 crore and boost exports by 25 % in 10 years.

Used extensively in countries like the USA, Puerto Rico, Poland, Kazakhstan, China, Iran and Jordan, the concept of SEZ was nothing new in India but a repackaged version of the 1965 experiment of the Export Processing Zones that was first envisaged for Kandla in Gujarat. In 2000, the new Exim policy also allowed for SEZs to be set up in private and joint sectors. Since then 255 SEZs have obtained either formal approvals and 162 in-principle approvals. While the proponents of SEZ in India point enthusiastically to the shining examples of SEZs like Shenzhen, Pudong and other booming towns of China, there are some legitimate grounds of concern on its impact when it is applied to the Indian context. First, it may adversely affect the balanced and overall economic growth of India as it might divert industrial units that would have come up in other areas, to tariff-free zones, thus limiting government’s revenues without adding to employment or output. As with everything, our government went overboard in giving permission to hundreds of SEZs and should have been more circumspect. Second, land acquisition is a thorny issue in India, where around 54% of the populace is engaged in agriculture. It is not just a source of income: the peasants harbour a deep emotional attachment to their land. The government has to provide the dispossessed farmers with proper compensation. The second concern is what is precisely plaguing the SEZ policy in Bengal.

The image of Bengal’s Arcadia painted by intellectuals and used by the CPI (M) to bolster their image of being the mouth-piece of the "people" endowed the Left Front’s policy of spurning foreign investments and continuing with moribund PSUs, a sanctimoniousness that few dared to question. The strong-hold of the CPI (M) cadres in villages across the state obviously did not figure in the whole picture! The Party, blessed with acting on the right side of History, could stride in its moral high horse avoiding the depressing walk through the grimy roads of squalor.

But Buddhadeb Bhattacharya, the Chief Minister since 2001, played spoil-sport and burst the romantic image with his revisionist economics. He sent overtures to India Inc. and foreign investors. The Buddha-nomics that was popularised by the mainstream media to counter the hoary ideological rhetoric of the Marxists was, however, undone by the very fact that the edifice of progress he tried to build had labile foundations.

Keshpur, Chhoto Angaria, Nanur, Singur and Nandigram showed that prosperity cannot be fast-tracked by decanting people and forcefully acquiring agricultural lands. The zealousness of the new convert is as damning as that of the old ideologue: both blindly follow their doctrinaire certitudes without a thought to anything else. Buddhadeb babu erred in arrogantly imposing his diktat. He should have first favourably oriented the people who were going to be affected by his SEZ policy and prepared a point-by-point strategy that would include doing away with archaic land laws and straightening land records, which would have helped in land mapping, verification and identification of possible lands for SEZ , for example, lands which are fallow or infertile. Further, his government had not worked out an adequate compensation package that would allow the owner/tiller who had lost land, an alternative and a sustainable livelihood option.

Both in Singur and Nandigram, the government used strong-arm tactics to forcefully acquire around 1000 acres and 1500 acres of land, respectively. But why give fertile tracts to Tata Motors in Singur or convert the lush farmlands in Nandigram into a mega chemical hub? Why not mechanize agriculture and provide alternate sites to SEZ investors instead of giving them prime farmland? I do not believe in the zero-sum equation of agriculture and industry. All that was needed for the government of West Bengal was to plan their development strategy. But they did not. To give an instance, in Singur, the Tatas got land acquired by the obliging state government at a price of INR 150 crore to set up their small car factory. Now will the government get back this money? No. Tata’s 90 year lease, got without any downpayment, will be paid over for the first five years in INR 1 crore, the next 25 years, this will increase by 25% in 5 year intervals and next 30 years, it will increase by 35% in 5 year intervals and for the last 20 years, the rent will be only INR 20 crore/year. The discounted present value of what the Tatas have agreed to pay will hardly exceed INR 50 crore. This deal does not factor in the increase in real estate values. Plus, the proceeds of the Value Added Tax for the first 10 years of the sale of their car will go to the Tatas at a nominal interest rate of 1 %. What the Tatas have assured in return is unclear. Ashok Mitra (Santa Claus visits the Tatas, Page 14, The Telegraph,Kolkata, Friday,March 30, 2007) has rightly pointed out that it is obscene that a government, carrying a debt-burden of INR 150,000 crore, would offer a freebie of INR 850 crore (if one adds up the above mentioned benefits) to an industrial group without an equal or beneficial reciprocation on its part.

But these valid objections are dismissed as anti-development. One thing is to be clearly noted: the critics of change and those of SEZ are not one and the same. The second could be won over by reasonable arguments, not the first. But the government, already on the backfoot due to the dissensions within the Left Front and jittery over investment opportunities being snatched from their gasp by rival states, embarked on a campaign of depredation that would destroy Buddhadeb’s carefully put together house of cards.

The carnage in Nandigram by the police and CPI (M)’s Red Brigades or hired thugs in response to the opposition posed by the Bhoomi Uchched Pratirodhi and Krishi Jomi Raksha committees that had cordoned off the area and had not allowed the government operatives in for more than two months was the height of mismanagement and indurateness of the government. Moreover, it provided ammunition to the rival political parties to target the government and cloud the SEZ issue with slander and political attacks. But the greatest casualty could be the development and economic growth of a state that badly needs it. Remedial actions like recalling the police and allowing inquiry by the CBI is too little, too late. The killing fields of Nandigram, echoing with the jeremiads of Bengal’s Luddites, may well prove the Gotterdammerung of a resurgent Bengal.

But there is still a glimmer of hope: the strong statements of the CPI (M)’s Politburo and the Prime Minister that the SEZ policy will not be revoked or retarded. The Centre has also put the onus of providing compensation to the aggrieved parties on the SEZ investors. Buddhadeb might have stopped the SEZ exercise in Nandigram as he should have done a long time back, but he has given his support for three more SEZs in the state, which, thankfully, are not in fertile agricultural lands.

Hoping that he has learnt his lesson, as his counterpart in Orissa had done after the Kalinganagar fiasco, I ask Mr. CM not to muzzle all opposition, but give them a hearing as well as, not to cower before the reactionary critics and instead, to draw up a measured plan of action that would allow investors (not of dubious antecedents like the Salim group) to set up manufacturing units in West Bengal guaranteeing huge employment opportunities. The government must also boost agriculture by educating the farmers on the optimum use of land and helping them to market their produce. There must be transparency and accountability throughout, and they cannot be sacrificed for the sake of expediency. At the Centre, the SEZ policy must be reviewed and its misuse checked. Maharashtra, Tamil Nadu and Gujarat have shown that it can work well when it is judiciously implemented. But it is not a magic key to prosperity. It needs to be contextualized and suited to local needs and conditions. Above all, confrontationist politics must not be allowed to fudge the debate over SEZ. Only the criteria of welfare and good economics have the right to enter into any discussion on this issue.