A stake for farmers in SEZs A must, says Dr. JP

Hyderabad, Mar. 22 - Though belated, the Government of India's plan to make farmers stakeholders in special economic zones (SEZs) is welcome, said Lok Satta Party President Dr. Jayaprakash Narayan here today.

The Lok Satta Party, he recalled, has all along maintained that mere monetary 'compensation' at current market prices is insufficient to farmers who part with their lands for SEZs. A depreciating asset like money can never adequately compensate for the loss of land, which is an appreciating asset. Land losers experience relative deprivation as land values skyrocket following SEZ development, and their neighbors benefit from their sacrifice.

The Lok Satta has suggested that in addition to the normal compensation, the land owner be allotted a part of the developed land in the SEZ. This could be about 10% in industrial projects, and 20% in infrastructure projects. With huge real estate boom, even 10-20% of the land would fetch the owner multiple returns relative to the original compensation. Such equity stakes will make SEZs attractive to the land losers.

Dr. JP said that displaced persons should be imparted skills and absorbed in projects coming up in SEZs as far as practicable. In 1985-86, 8000 youngsters from families displaced by the Visakhapatnam Steel Project were trained and absorbed in the steel plant. A national program of skilling unemployed youth is overdue in any case, and SEZs should be the starting point. Once SEZs provide local employment, much of the resistance will disappear.

Dr. JP said SEZs can be integrated in local governments, even as their autonomy is assured. He pointed out that the Andhra Pradesh Industrial Infrastructure Corporation in 1996 handed over the management of industrial estates to local entrepreneurs, with the right to collect service charges. The industrial estate, in turn, transferred 30% of the charges raised to the municipality. In effect, the industrial township subsidized the municipality while quality of services and local autonomy were protected. Such an innovation would be ideal for SEZs.

Dr. JP said that although the law permitted the Government to acquire land for a public purpose like the promotion of a SEZ, it is preferable to encourage private purchase through market mechanisms including negotiations and bidding. The State should intervene only as a last resort.