Grounding growth

Inertia is often the last resort of the truly confused, and the government8217;s decision to hold in abeyance the clearance procedure for Special Economic Zones reflects nothing more than a policy muddle. Look where it began, and consider the results it will beget. At Nandigram in West Bengal, unchecked rumour and the CPM cadres8217; reputation for bullying local communities led to a most absurd standoff. In New Delhi, with political parties finding themselves ill-informed about the specifics of SEZs and thereby unable to articulate counters to a loud but small anti-SEZ campaign, the reaction was quick. The government announced a freeze on all new notification, and the empowered group of ministers met a week ago, merely to announce that they had arrived at no decision on how to next move forward.

What8217;s the cost of this indecision? By one estimate, as our special series 8216;Who8217;s afraid of the SEZ8217; highlights, Rs 288,000 crore in investment and 35 lakh jobs. And who would have got the bulk of these jobs? Lakhs of people situated outside of the main metros, areas so far untouched by the growth in the services sector that has in large part sustained India8217;s high GDP growth. Those who would be content with the way things are moving should consider this. China employs more persons in the services sector, but services8217; share of GDP is just 33 per cent, compared to 50 per cent in India. As figures put up for comparison in the latest issue of The Economist show, India has to make manufacturing count for a lot more. SEZs are a way of getting past traditional constraints like labour laws and lack of infrastructure. It is manufacturing and a more geographic dispersal of opportunities in the services sector that would pull ever more Indians out of poverty. Agriculture alone cannot sustain the kind of returns per working person to do that. So when SEZs are put on hold, critics should be obliged to tell us what alternative they have to take economic opportunities to the countryside.

The point of contention in some proposed SEZs is land acquisition, getting the right price for the landholder. This is a micro-issue, and must be sorted out, site by site. It need not hold up work on SEZs where land acquisition is without dispute.