Informative Discussion of SEZ Land Issues

Demonstrating once again that it has some of the most creative editorial minds in India's business and economics press, LiveMint.com has had a series of articles on issues related to SEZ land acquisition. These have been produced in connection with the release of a report by Infrastructure Development Finance Co. (IDFC) entitled India Infrastructure 2009. The first is called 'The politics of land acquisition', and asks 'Why do some industrial projects face opposition and not others?'. This is one of the key questions that the indiaSEZpolitics research project (affiliated with this blog) has sought to address through its field studies in 12 states (currently in progress). LiveMint.com editors discussed this with the IDFC report's authors.

The discussion in this case included some very incisive points about the various aspects of India's Resettlement and Rehabilitation policy, of which compensation (to the individuals whose physical assets are being acquired) is just one part. The social dimensions (rebuilding the social fabric) and the question of sustainable livelihoods (for all project affected people) were also touched upon.

But there was, in fact, very little by way of an answer to the question posed above -- as to why opposition arises in some cases and not others. The obliquely supplied answer was that when private companies acquire land on their own they have been more attentive to these complex issues than when government does the acquiring on their behalf. A contrast was drawn between the Tata Nano (Singur) project (which, incidentally, was NOT an SEZ), where the West Bengal government acquired the land (or sought to), and the Jindal Steel plant (where the firms purchased land directly, placing some of the funds in reserve rather than paying out all at once). Whether this pattern (state bad, corporate good) is discernable among a larger set of cases is open to question. Especially given that many corporate land acquirers do not in fact attend to the multiple dimensions of rehabilitation mentioned above.

The second article in the series, 'Land acquisition and legislative lapses', looks at the legal issues involved in land acquisition for SEZs. Among other things, the discussion with LiveMint.com's editors included this striking opinion from CEO and Managing Director of IDFC, Rajiv Lall:

'What has happened in our country is that starting with that concept [SEZs], by the time you’ve got to the legislation [The SEZ Act 2005], you’ve completely distorted the notion of SEZ.

So along the way, because of interventions of a lot of vested interests, what you have created is legislation that allows for, technically, the creation of SEZs that have nothing to do with the original concept. Hence, the allegations or the suggestions that “Oh, this is just a scheme either to avoid taxes”—because one of the fiscal benefits associated with getting that status is a whole bunch of tax exemptions—or that it is a land grab in which you effectively change the land use and hence enhance the land value....

I think the allegation that the legislation has been completely distorted to undermine the original noble purpose of the initiative is the correct interpretation. So I don’t think I am a particular fan of the existing legislation.'

The launch of the report, where among the speakers was Kamal Nath (former Commerce Minister, now in charge of infrastructure -- a smooth transition thematically, if nevertheless viewed as a demotion, politically), was also covered on LiveMint.com. It includes video extracts which are quite revealing, not least about the Government of India's current intentions regarding reform/amendment of the Land Acquisition Act and reintroduction of the Resettlement and Rehabilitation Act. The former has run into some trouble, in the form of opposition from Mamata Banerjee, who led the anti-Nandigram agitations and whose Trinamul Congress is a member of the UPA.