The administrative reforms commission has called for fewer special economic zones (SEZs), shorter tax holidays and sought a relook into the SEZ Act saying that the establishment of SEZs has become a source of conflict frequently leading to violence.
The commission goes further to propose income-sharing strategy to compensate oustees from SEZs to make them primary stakeholder partners rather than one-time beneficiaries or spectators of the SEZ development.
It also wants reconsideration of the "extremely liberal tax holidays provided both for export units and to developers".
The latest report, which deals with conflict resolution, identifies the SEZ policy and the consequent displacement, loss of agricultural land and the potential for real estate speculation as an area of conflict.
It also notes that all the negative points in the Chinese SEZ policy that led to negative consequences have been included in the Indian policy. "It is, therefore, necessary to be vigilant about the social costs and consequences of the SEZ policy since it may lead to conflicts," it adds. It seconds the recommendation of the group of ministers on SEZs that the state governments should not normally acquire the bulk of the lands for the SEZs.
This is a good decision because establishing SEZs to allocate land to private companies cannot be termed as furtherance of a public purpose.
The commission says that a better approach would be to have a limited number of SEZs preferably in backward areas so that they lead to infrastructure creation. It also says that the proportion of land allowed to be used for non-processing activities should be minimised.
The commission notes that the rehabilitation packages unveiled by the SEZs are far from satisfactory and the formula of the group of ministers that at least a person in the family is given a job is not adequate.
The commission also says that the SEZs should specify establishment of vocational training centres and provision of water, sanitation and health facilities in the vicinity should precede SEZ development.
Noting that a scramble has been generated among developers to grab cheap agricultural land in order to make quick profits or evade taxes, the commission says that to prevent conflict situations, industrial activities and SEZs should be located in areas where least displacement is caused and do not usurp agricultural lands.
For the purpose, the commission says that comprehensive land use plans should be prepared which indicate where industrial activities and SEZs should be located. These plans, it adds, should be finalised after public consultations.