March 19, 2007	Monday	Safar 29, 1428

INDIA’S ambitious special economic zones (SEZs) policy, which promised to generate hundreds of thousands of new jobs in exclusive industrial and service enclaves around the country — besides attracting billions of dollars in foreign and domestic investments — will finally be laid to rest.

Last week’s violence in West Bengal, in which 14 people were killed in police firing in Nandigram, threatens to bring a premature end to the government’s SEZ policy. Sadly, the losers include thousands of poor farmers — the value of whose marginal land holdings have crashed in recent weeks following the uncertainties facing the SEZ sector — and tens of thousands of jobless youth who will have to remain satisfied with low-paying, exploitative jobs in the unorganised sector.

Well-heeled investors, including both Indian and international, will find dozens of attractive alternatives, in countries in South East Asia (Vietnam, Cambodia, Indonesia), Central and Eastern Europe, Latin America and even in Africa.

But in India, none of the two major parties who can be expected to rule the country — through alliances with smaller partners - alternatively over the next few years can be expected to revive the contentious SEZ policy. The Congress, a party that has reluctantly adopted economic reforms, is shell-shocked in the aftermath of the Nandigram killings, and can be expected to give a quiet burial to the concept of SEZs.

The BJP, an opportunistic party — which has been pushing for SEZs in states ruled by it, including Gujarat and Rajasthan — has smelt blood and can be expected to exploit the Nandigram incident in the crucial elections to the Uttar Pradesh assembly, due to be held next month.

But this is not the first time that sound economic policy is being hijacked by political considerations, nor is it going to be the last time. The BJP’s chief minister in the western state of Gujarat, Narendra Modi, tom-toms the billions of dollars in investments that the state government has attracted from international investors, but in the UP election campaign, the party would focus on the ‘anti-labour, anti-farmer’ policies of the Congress in the eastern state of West Bengal.

WHAT happened in Nandigram in West Bengal last week — when the police opened fire on a mob armed with bombs and other weapons, and was far from peaceful — was unfortunate. The police in India, including in states ruled by the Marxists, tend to be brutal, and when faced by a violent mob respond in the only manner they know — retaliating, even firing from point-blank range.

There have been countless commissions that have condemned the police for firing on demonstrators, but despite clear-cut rules and warnings from the government, many police officers have failed to control their men, who open fire when faced with unruly mobs. (Incidentally, a senior intelligence official had been lynched in Nandigram last month, and the police had been prevented from entering the village).

West Bengal’s pragmatic Marxist chief minister Buddhadeb Bhattacharjee, who has been trying to revive the moribund industrial sector in the state — following the disastrous policies pursued by his predecessors, which have driven away entrepreneurs — is now facing a dilemma, thanks to the trigger-happy men in his police force.

Though the Communist Party of India (Marxist) (CPM) dominates the West Bengal government, its allies — including the Communist Party of India (CPI) and the All India Forward Block (AIFB) — have been critical of Bhattacharjee’s overtures to industrialists and international investors.

A.B. Bardhan, an old-time CPI leader and an orthodox communist, flayed the West Bengal government for the firing in Nandigram. According to him, there can be no industrial development based “on the corpses of peasants.” The AIFB, which along with the CPI is opposed to Bhattacharjee’s laying of the red carpet for prominent businessmen, dubbed the action as “anti-people.”

While supporters of the Marxist regime in West Bengal have been extremely critical of the government, its opponents — including the Congress, the Trinamool Congress and the BJP — have lambasted the Bhattacharjee government, purely out of guile and even envy. The BJP’s Modi in Gujarat, or the Congress chief minister of Maharashtra, Vilasrao Deshmukh, are doing exactly what Bhattacharjee is doing — acquiring land from farmers (worse, they pay far less than what West Bengal offers farmers) and developing special economic zones, to attract global investments.

West Bengal has for decades faced a major crisis on the industrial and economic fronts, and Bhattacharjee has embarked on an ambitious programme, attracting investors from around the globe and within India to the state, urging them to set up industries. And investors, from India’s leading business group, the Tatas, to international majors, have responded to his pleas.

Ratan Tata, the chairman of the eponymous group, decided to set up his small-car project (which would sell automobiles for less than Rs100,000) in Singur in West Bengal. The Salim group of Indonesia has been another major investor in West Bengal, and was keen on setting up a chemical hub in Nandigram.

Mamata Bannerjee, the Trinamool Congress chief — whose party was trounced in assembly elections in the state last year — launched a high-profile hunger strike against the Singur project of the Tatas a few months ago, roping in ‘professional, celebrity protestors’ (who automatically attract television networks) and projected herself as a defender of farmers.

But despite the high-decibel protests, a majority of landowners in Singur sold their farmland to the Tatas, attracted by the hefty price that was offered. According to Bhattacharjee, 960 acres of a total of 997 acres have already been handed over by the farmers to the Tatas.

According to the West Bengal chief minister, landowners were being paid unheard of compensation of Rs900,000 an acre of single-crop land, and Rs1.2 million for multi-crop land. In most other SEZs that are coming up in India, farmers have been paid a fraction of the sum.

Bhattacharjee is now willing to relocate the chemical hub from Nandigram if the people there do not want new industries to come up. But in India, it is easy to mislead a few vocal local leaders and organise demonstrations against major projects — some from the underworld have also infiltrated such agitations, demanding extortion from promoters — and then project it internationally as a cause celebre, with the aid of ever-willing ‘celebrities’ out to grab a few minutes of fame on television.

BUT chief ministers like Bhattacharjee, M. Karunanidhi of the DMK in the southern state of Tamil Nadu, and even Y.S. Rajasekhara Reddy of the Congress in Andhra Pradesh, have been urging Prime Minister Manmohan Singh to remove the freeze on approving SEZs, imposed a few weeks earlier.

Many international majors have unveiled plans to invest millions of dollars in SEZs across India, and in some cases, the machinery and equipment has already started arriving. But following Mamata Bannerjee’s high-decibel opposition to the Singur SEZ of the Tatas, the weak, United Progressive Alliance (UPA) government in Delhi decided to freeze all new approvals for such zones.

The government had received applications for hundreds of SEZs from entrepreneurs — some of who included real estate developers, tired of getting clearances for acquiring land for developing townships from local authorities — but the old guard in the Congress warned the high command against aggressively pursuing the SEZ policy.

Though the federal government approved 235 SEZs, it has notified a mere 63. While the unwieldy coalition government in Delhi is unable to decide on the issue, international investors have been putting pressure on state governments. Tamil Nadu, for instance, is worried that investors like Nike — which planned to invest $300 million in the state — and US-based Velankani Communications (with plans for $600 million in investments) — would back out and head for other destinations in South East Asia.

The SEZs being planned by Nike and Velankani would alone have generated over 40,000 jobs in the state. Overall, the UPA government was hoping that 1.5 million new jobs would be churned out and investments worth nearly $15 billion be ploughed into the country by 2009, following the setting up of SEZs.

The next general elections are due to be held in 2009, and the Congress could have focussed on the success of the SEZs policy while seeking yet another term. But the party, which is facing an inner conflict between reformers and the old socialist warhorses, has been unable to reconcile the differences and is likely to dump a policy that would have resulted in jobs for the ‘aam aadmi’ (common man).