Is SEZ all about real estate business?

By Vijay Kumar

For once the very articulate FM is not on a strong wicket. His politically more articulate colleague in the commerce ministry seems to be having an upper hand. The FM’s view that more and more SEZs will only drain the state finance is not well received in the commerce ministry. For now KamalNath seems to have an upper hand over the FM and if the FM is serious about the fiscal conditions of the country, he may end up losing his job.

However he has support from another articulate intellectual though from the left – Mr. SitaramYechuri.

Mr. Yechurisaid:-

++ The issue of sanctioning SEZs must be seriously considered by the government.

++ The government will lose Rs.970 billion in tax revenues as it is giving high tax incentives to the SEZs

++ a report compiled by the National Institute of Public Finance and Policy (NIPFP) projected a loss of more than Rs.970 billion during 2005-10 because of SEZs.

++ only 25 percent of the land allotted for the SEZs would be used for manufacturing.

++ The rest would be used for commercial purposes, which means the SEZs are essentially for real estate business.

++ the government had already sanctioned 150 SEZs across the country and there were demands and proposals to set up more than 200 zones. It shows that how lucrative the offer is.

On the other hand, the Commerce Minister KamlaNath told the RajyaSabha that

++ the net revenue gain to the government as a result of Special Economic Zones (SEZs) resulting in increased economic activity would be Rs 44,400 crores.

++ computations of revenue losses were fallacious

++ there would, in fact, be a huge net gain of incremental taxes due to increase in economic activity, rather than revenue loss

++ The SEZ policy of the government had generated tremendous interest among investors, both in India and abroad

++ it was the states which were pushing for SEZs as they recognised the potential of the Zones to generate employment opportunities and boost economic activities in the states.( as in real estates)

++ the Centre was neither setting up any SEZs nor acquiring any land.

++ State governments forwarding the proposals for SEZs acquire the land or the developers acquire the land with the approval of the state governments.

++ As on date, 150 formal approvals have been given for setting up SEZs, involving total area of 26,800 hectares. Of this, 37 approvals are for projects proposed by state industrial development corporations over an area of 9140 hectares. In all these cases, the land was already in the possession of these corporations…. Even in other cases, the applicants were holding the land at the time of applications and there are hardly any cases involving fresh land acquisition

++ in the last three years, exports from the SEZs had increased from Rs. 13,854 crores to Rs 22,510 crores, an increase of 63 %.

++ Presently, SEZs were providing employment to about 1.23 lakh persons. With the increase in the number of operational SEZs, after notification of the SEZ Rules, the increase in employment in the SEZs would get further accelerated

It’s clash of the Titans, but ultimately who’s the winner? The real estate broker?

If you want to make a quick buck, buy a plot in an SEZ or somewhere near one. Also see our editorial.