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Though this appears a more attractive option than a private sale for the seller, then why the angst? Possibly, as not all stake-holders are legally entitled to compensation. More importantly, "market price" is neither properly defined nor regulated,
and therefore, very often not justified. There is a serious lack of coordination between the various arms of the government in this exercise - rehabilitation, commerce and industry, and rural development. And it's important not to lose sight of the 234 SEZs cleared without acquisition issues, the investments and jobs involved.

The total number of SEZ to come up in the near future in India is about 234 wherein there will be a total investment of Rs. 3,00,000 Crore till December 2009. A total of 87 SEZs have been sanctioned in the country which has attracted investment to the tune of Rs. 60,000 Crore. If all the 234 SEZs were allowed to be cleared, it may employ about 40,00,000 people in India by the end of December 2009. However, on the other hand, the proposed SEZs may require maximum of about 1750 Square Km. land when the total land in India constitutes 29,73,190 Square Km., out of which 15,34,166 Square Km. is being used as the agricultural land.

SEZs and Land Acquisition are inter-connected and SEZs have picked up speed in India since the Indian government has encouraged the setting up of SEZs in the country. Acquiring the land is the biggest incentive held out to private SEZ developers by the state governments. The state involvement becomes more apparent in the larger zones that are in the land acquisition phase. Governments, increasingly challenged over their roles in acquiring land for private development, argue that SEZs are needed for the 'development' of their states, and that they need to do everything possible to attract the promoters of these zones to their own state. Whether SEZs will bring in the promised benefits is an entirely different discussion. What is examined here is the injustice of using the colonial land acquisition law that has become such a favourite instrument in the hands of state governments.

A second pertinent question relates to the economic philosophy behind SEZs. In the last two decades, we have witnessed a profusion of support for 'free markets'. The Prime Minister is hailed routinely as the primary architect of pro-market 'reforms' during this period. But SEZs challenge that reading of recent history, and prompts us to ask whether 'pro-business' rather than 'pro-market' is a more accurate description of attitudes to the economy within government since the early 90s. In the case of SEZs, governments are practically over-ruling market forces in determining the price of land being acquired. The additional irony is that the private industry that is usually vocal against the 'license and permit raj' desires, may need the state governments to acquire land.

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Dr. Gursharan Singh Kainth started his career as Lecturer at Post Graduate Dept. of Economics, Government College, Gurdaspur, and later at Khalsa College; Amritsar, specializes in Quantitative & Development Economics. Has the distinction of serving Punjab Agricultural Univ, Ludhiana, for more than 2 decades and remained Director-Principal of Saint Soldier Management & Technical Institute, Jalandhar. Currently, heading GAD Institute of Development Studies, Amritsar, a self-financed research institute. Has been honoured with various awards, including Guru Draunacharya Samman, Vijay Rattan Award, etc.
Article posted on January 17, 2009.