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Whose Development! The Political Economy Of Land Grab
Under SEZ And Associated Costs

By Srestha Banerjee

15 April, 2010
Countercurrents.org

The discourse of development in recent decades have increasingly been confronted with a dilemma, what exactly should we perceive as development and for whom! The question is not limited to any particular region or culture, though certain nation-states, their people and bio-regions feel this dilemma more gravely than others. It holds especially for developing countries such as India, that are trying to gain a competitive edge in the global economy, and where the path towards development in recent years has been marred by injustice and inequality. This article attempts to critically analyze the political and economic dynamics of land grab incidents in the name of development, and the effects they have on our environment and social structures.

In recent years, land grab incidents in many other parts of India, has much to do with the propensity and outlook for development of the nation as well as the influence of global economic and political forces. Under macroeconomic pressure, India started to implement structural reform through structural adjustment programs in 1991. The IMF/World Bank policy package that came with the promise of improvement of economic conditions, also brought with it several conditions: significant reduction in government spending which included expenditure on healthcare, education and social-welfare programs combined with wage reduction; increasing privatization of state enterprises; attracting foreign investments through removing restrictions on industries, banking and other financial services; concentrating on a more export-driven economy in order to earn the foreign exchange required for servicing the debt; and cutting tariffs, quotas, and other restrictions on imports for the purpose of better global integration (Bello,1996). Thus government controls were gradually removed and the economy was opened up to foreign goods, capital and services (Dasgupta, 1998). Not all sections of Indian entrepreneurs were initially enthusiastic about inviting such foreign competition. But as neo-liberal economic doctrine became globally ascendant and competition in the economic sphere became stiffer, it seemed increasingly difficult to prosper remaining outside the competitive market.

Despite opening up doors for foreign investment and agreeing to the clauses attached to the Structural Adjustment Program package, the 1991 reforms did not seem to live up to the expectations of growth in manufacturing with periods of actual slow-downs. It was believed that there were still enough bureaucratic controls, improper administrative procedures, rigid labor laws and poor infrastructure that were responsible for the adverse effects on the investment climate and the manufacturing sector. As a solution to this, development of Special Economic Zone (SEZ) was proposed in 2000. As described by the Government, the Special Economic Zone Policy was intended to make SEZs an engine for economic growth supported by quality infrastructure complemented by an attractive fiscal package, both at the Centre and the State level, with the minimum possible regulations”(Government of India, 2009). It was also assumed that if remained separate from the rest of the economy and the laws applicable to them, the SEZs could serve as engines of growth (Aggarwal, 2006). Allocating lands for the development of such “zones” was the function of both the Central and/ or the State Government(s) and was intended to be largely done using the clauses of the nation’s Land Acquisition Act (Gupta, 2008).

Since its proposition, the Special Economic Zone Policy (as well as the Act), has been a topic of much controversy. Land acquisition, often done forcefully, has emerged as the most serious problem from the implementation of SEZ policy, which many scholars and historians have pointed out to be the biggest move for land-grab in the nation. With little consideration, agricultural lands are being converted into industrial and other developmental enclaves with the argument that the state/ country needs to continue with such activities for economic growth. Such land conversion not only has a negative impact on agriculture and food security, it also involves important social issues such as problems of displacement and rehabilitation, inadequate compensation etc (Aggarwal, 2006).

Displacement has often remained an inevitable consequence of development. Large projects with profit-making as the central goal and short-sighted planning ignores the long-term effects of such activities on the livelihoods of people who bear the brunt of such development. Though promises are made to provide some “monetary compensation”, and to accommodate them into the new economic structure, past experience in India and elsewhere indicates that the compensation process in neither adequate nor reliable. Both from a theoretical and practical standpoint, people not only lose their livelihoods, but also the use of their traditional knowledge, which makes them incompetent in the economic structure they are forced to function in and the vagrant laborers become market refugees (Sarkar, 2007).

The claim about industrial prosperity from setting up of SEZs to offset such problems remains unsatisfactory. As of the fiscal year 2004-05, share of SEZs in exports was a mere 5%, and they accounted for only 1 per cent of factory sector employment in the same year. Moreover, the sectoral break-up of SEZ approvals shows that the largest number of approvals (nearly 61 per cent) has been in the IT sector. The manufacturing sector accounts for only one-third of total approvals (Aggarwal, 2006).

Besides socio-economic controversies, the SEZ Policy remains much contentious on the environmental front as well. The areas designated for SEZ are often located within and around sensitive ecosystems despite the fact that they clearly pose a threat to those systems. But the “SEZ Policy” remains outside the jurisdiction of the nation’s environment protection policies for ensuring the most conducive business climate. The SEZs are also exempted from public hearing under Environment Impact Assessment procedures and are free from labor laws. Within areas under the Coastal Zone Regulation, developmental projects that are apparently “non-polluting”, such as office parks, hotels, golf-courses etc. are granted permission to continue under the SEZ regulation. Disregarding the objections raised by many environmental and social organizations and activist groups, the state authorities and interested private parties continue to carry on with such activities holding to the argument that “more efficient use of local resources” for developmental purposes is desirable and permitted under the SEZ policy. Such uncontrolled development, as can be logically deduced, will only add to the already alarming problems of air and water pollution, and increase of impervious surfaces and dwindling of retention basins will worsen the problem of flooding (Gupta, 2008).
Despite such obvious shortcomings and costs associated with ill-conceived land grab measures, in the current frenzy of pursuit of the “development mantra”, few dare to oppose or even challenge the avenues that are claimed to be instrumental for such purpose, “industrialization” and “infrastructure development” (which is only restricted to certain kinds) being the central ones. The question of sustaining rural livelihoods and preserving the agricultural lands and sensitive eco-regions are considered to be mere nostalgia for rural society that in practical life lies in the way of economic prosperity.

It cannot be denied that the state needs industrial activities to boost the economy. But at the same time the fact cannot be ignored that the agents of “growth” have also surfaced as the ones contributing to the loss of ecological resources and livelihoods. But we cannot cherish the profits of industrialization at the cost of fertile agricultural lands and critical ecological habitats. The typical assumption that as long as impressive economic figures can be produced, other parameters that create the nexus for our sustenance can take a back-seat, needs serious reconsideration. Even from a very narrow viewpoint however profitable the SEZs might be, they cannot function in isolation being insulated from the broader societal context within which they function.

Development is not a condition that can be characterized just by economic growth, rather the measures should be largely qualitative, representing an overall wellbeing that includes social, economic as well as environmental indicators. The claim for development is only justified when deliberations of equity, justice and sustainability are taken into account. Moreover the sustenance of any developmental pursuit requires long term vision and planning instead of the somewhat “easy-way out” short-sightedness, because the latter leads to ecologically destructive processes, large-scale displacement (especially in a populous country like India), disempowerment and increasing poverty levels and social polarization. The process should also encourage democratic participation of various stakeholders in the decision making process that includes government authorities to members of civil society, irrespective of their economic and social status, especially the people whose lands are being considered for carrying out developmental activities. This will help to maintain a balance among the market, the government, and the people and their often competing socio-economical and ecological needs.

References:

Aggarwal, A. (2006). Special Economic Zone: Revisiting the policy debate. Economic and Political Weekly, 41(43) 4533-4536.

Bello, W. (1996). Structural adjustment programs: “Success” for whom?. In J. Mander & E. Goldsmith (Eds.), The case against the global economy (pp. 285-293).
San Francisco: Sierra Club Books.

Dasgupta, B. (1998). Structural adjustment, global trade and the new political economy of development. New York: Zed Books.

Government of India. (2009). Special Economic Zones in India. Ministry of Commerce and Industry, Department of Commerce. Retrieved October, 2009, from http://www.sezindia.nic.in/HTMLS/WBSEZAct.pdf

Gupta, R.K. (2008). Special Economic Zones. In R.K. Gupta (Ed.), Special Economic Zones: Issues, laws and procedures (1-53). New Delhi: Atlantic Publishers and Distributors.

Sarkar, A. (2007). Development and displacement. Economic and Political Weekly, 42(16), 1435-1442.

Srestha Banerjee recently completed my PhD in Environmental from University of Delaware, Center for Energy and Environmental Policy