by Mathew Andrews:
The planned Eon Free Zone outside the city of Pune, India, looks more earthily sprung than deliberately created. Four petal-shaped wings encompass this one million square foot area in Maharastra state, surrounded by expanses of green and blue landscaping. During the day the sun glints off the windowed walls and metallic panels of each cluster, leaving a white sheen over the area. More distinct than its appearance, however, are the laws that govern this land.
The Eon Free Zone is one of India’s Special Economic Zones (SEZs)—legally defined regions that have more liberal economic laws than the rest of the country. Within this zone, companies are given land for facilities, exemptions from many or all taxes, and subsidized or free utilities such as water and electricity. The Indian government has opened 237 SEZs since beginning the program eight years ago, and another 165 are in development. Yet as the government moves to construct SEZs near Delhi, a closer look at existing zones reveals that the road to their creation has been less smooth than their perfect exteriors.
The SEZs are supposed to catalyze a wave of investment into the national economy, generating much-needed economic activity and employment opportunities. Outside of the zones, foreign investors face a maze of regulations compounded by poor road conditions, electricity use, and water management. The tax- and regulation-free SEZs, however, as well as the employment they provide, are supposed to rehabilitate the agriculture sector and promote wider infrastructural development. “SEZs lead to the creation of industrial, social, as well as commercial infrastructure in that place,” l.B. Singhal, director general for the Export Promotion Council for Export Oriented Units (EOUs) and SEZs, explained to the Globalist. “The process of connecting SEZs to the rest of India will create roads, spread electricity, and—as has already been the case—greatly enhance economic growth.”
But SEZs have not been met with overwhelming support. The projects are massive, requiring real estate developers to gain the consent of entire towns before petitioning the Indian government to grant SEZ status. According to the New Trade Union Initiative (NTUI), a coalition of 200 unions established in 2006 to represent workers’ rights in India, consent is hardly ever involved. In January 2007, the state government of West Bengal decided to transform 10,000 acres of farmland in the town of Nandigram into a SEZ to host a hub of chemical industries. When the inhabitants refused, the NTUI claims, the government responded with an economic blockade, mandated expulsion, and violence.
Claims of such abuse go beyond hearsay. According to confidential interviews conducted by Aradhna Aggarwal, head professor of the Department of Business Economics at the University of Delhi, evidence of unfair compensation comes from discrepancies in land prices. Farmers have insisted that these zones stand on unlawfully appropriated land, bought against their wills at prices far below the market level. The NTUI further contends that for every landowner who is compensated, 10 landless workers become unemployed. These include the agricultural labourers, cart-drivers, and merchants who are all necessary for agriculture to function. And when the displaced flee to cities in search of work, surplus labor forces down wages, and slums become overcrowded, leaving countless families living on below subsistence wages.
The Ministry of Commerce denies any wrongdoing during land acquisition for SEZs. “Only when there is consent from seller and buyer will permission for an SEZ be given,” explained Anil Mukim, joint secretary of the Ministry. “Questions of compulsory acquisition are more hearsay than truth.”
As the Indian government begins constructing SEZs near Delhi, Singhal insists that they will provide job opportunities and ensure that displaced workers do not move to already crowded slums. Yet some remain wary of the plan. Minister of State and Finance Shri Bansal explained the government’s challenge—and mistake—when planning SEZs: “The question is how to balance the needs of the people dislocated and economic growth. Someone needs to better regulate these things.”
But who will do so? So far, no entity has indicated it will take on such responsibility, and risk curbing the economic boom that draws foreign investors to India today. If the development of SEZs—and the resulting growth of urban slums—goes unregulated, the capital of India may find itself in a worse situation than before. Unless India looks for new solutions to monitor the growth of SEZs, such as compensating displaced farmers and encouraging companies to hire farm workers, the capital city might find more protests than business in the years to come.
Mathew Andrews is a sophomore Economics major in Branford College.