India's industrialisation efforts do not take into account the fact that land is a scarce resource. The recent rush to set up special economic zones (SEZs), with the government having cleared over 40 proposals, affirms this trend.
Governments of Haryana and Uttar Pradesh have cleared the decks for acquisition of over a lakh acres of land for SEZs. A similar appetite for land is visible in the Mumbai-Pune region, and reports of unrest have come to light.
State governments and private players concerned should come clean on terms of land acquisition, at least to ensure that industrialisation efforts are not derailed by political and social opposition.
The problem of underestimating land values is not confined to SEZs it extends to industrial complexes such as Kalinga Nagar in Orissa, the Bangalore Mysore Infrastructure Corridor and Devanahalli international airport.
It would be simplistic, if not self-defeating, to dub opposition to these projects as anti-reform. The government should devise a transparent and standard method to assess the value of land being acquired.
It should also spell out its uses, to dispel apprehensions on property speculation. An appropriate compensation would have to take into consideration not only the current productive capacity of land but also the stream of returns a new enterprise can generate from it.
The latter aspect can be addressed by making land-sellers stakeholders in a new project. This move would be as pragmatic as it is just, since the current pattern of capital-intensive manufacturing tends to restrict jobs on offer.
SEZs are flawed in principle. There is no reason why those servicing one set of consumers should enjoy substantial privileges over another.
SEZ units will pay no direct and indirect taxes for the first five years and stand to enjoy a 50 per cent exemption in the next five. The government claims to be committed to removing exemptions in direct and indirect taxes, in an effort to improve tax collections and widen the tax base.
Sops for SEZs run counter to this thrust. The government should commit itself to a liberal, uniform tax regime for all enterprise. Hidden, selective subsidies whether in the form of land values or otherwise reward the inefficient.
Governments of Haryana and Uttar Pradesh have cleared the decks for acquisition of over a lakh acres of land for SEZs. A similar appetite for land is visible in the Mumbai-Pune region, and reports of unrest have come to light.
State governments and private players concerned should come clean on terms of land acquisition, at least to ensure that industrialisation efforts are not derailed by political and social opposition.
The problem of underestimating land values is not confined to SEZs it extends to industrial complexes such as Kalinga Nagar in Orissa, the Bangalore Mysore Infrastructure Corridor and Devanahalli international airport.
It would be simplistic, if not self-defeating, to dub opposition to these projects as anti-reform. The government should devise a transparent and standard method to assess the value of land being acquired.
It should also spell out its uses, to dispel apprehensions on property speculation. An appropriate compensation would have to take into consideration not only the current productive capacity of land but also the stream of returns a new enterprise can generate from it.
The latter aspect can be addressed by making land-sellers stakeholders in a new project. This move would be as pragmatic as it is just, since the current pattern of capital-intensive manufacturing tends to restrict jobs on offer.
SEZs are flawed in principle. There is no reason why those servicing one set of consumers should enjoy substantial privileges over another.
SEZ units will pay no direct and indirect taxes for the first five years and stand to enjoy a 50 per cent exemption in the next five. The government claims to be committed to removing exemptions in direct and indirect taxes, in an effort to improve tax collections and widen the tax base.
Sops for SEZs run counter to this thrust. The government should commit itself to a liberal, uniform tax regime for all enterprise. Hidden, selective subsidies whether in the form of land values or otherwise reward the inefficient.