Continue....Mr Gopal Pillai's Interview
---->As you know, concept of SEZ is being seriously contested. The finance ministry has said that there will be an actual loss of more than Rs 1 lakh crore (Rs 1 trillion). Businessmen are not coming here for free. . . you are giving them a lot of concessions. Are you not worried that regular tax structure will be hit hard if you give so many tax concessions to a select few?
Let me put it this way. A lot of loss of revenue that is estimated due to SEZs is reimbursable for exports. In terms of export income, we will continue earning. Even for 100 per cent export-oriented units (EOUs) and software technology parks, you already have a tax holiday up to 2009-10.
----->Businessmen in SEZs will have to pay tax if they sell it in the domestic market. Loss of tax is on the profit. So assume what would be the profit if Rs 100,000 crore is loss on profit? Unless the profit is Rs 300,000 crore (Rs 3 trillion) you can't get the Rs 100,000 crore of tax loss. And, if your profit could be Rs 300,000 crore, what would be your turnover?
Assuming that you make 20 per cent profit on your actual turnover. . . nobody makes 20 per cent profit on exports, but even if we take that estimate it means that Rs 15,00,000 crore (Rs 15 trillion) should be the turnover inside the SEZ.
Do you know the turnover of current SEZs which is giving jobs to 1 lakh people? Total turnover is Rs 23,000 crore (Rs 230 billion). If I can increase the economic activity from Rs 23,000 crore to Rs 15,00,000 crore in India, it will generate Rs 150,000 crore (Rs 1.5 trillion) of indirect taxes.
----->Critics are wary of your statistics. Your concept and the thrust behind SEZ have divided India. You are killing one type of livelihood for another type of livelihood. You are turning owners of farmland into labourers in an SEZ factory. Why?
I think it's a misnomer. What you are not seeing is the overall effect. Let me give you a simple example of Sriperumbudur near Chennai. 700 hectares were acquired in 2002, much before SEZs came. Farmers who were displaced were paid Rs 5 lakh (Rs 500,000) per acre of land as per the market price at that time.
Their land which was Rs 5 lakh an acre is now fetching them Rs 80 lakh (Rs 8 million) per acre. I have generated wealth for 15,000 farmers by doing nothing. By bringing an SEZ, overall growth of area is evident.
Tell me, when is he going to get Rs 80 lakh? This benefit that has gone outside the SEZ is not noted by anybody. I have created wealth apart from the investment of $3 billion.
--->But a fundamental question is regarding the government's way of thinking vis-�-vis India's development. As a wing of the government, you are out to acquire land belonging to a private citizen, with the help of an archaic weapon named Land Acquisition Act, to help private people who are going to make huge personal profit. Why is government helping private people in making money at the cost of the government and the farmers?
This is not something that has happened because of SEZs! Since Independence, all the State governments are acquiring land for industries. In fact, in the first 235 SEZs not a single farmer has been displaced! All the land -- measuring 35,410 hectares in the 235 SEZs -- is land that was acquired by various Industrial Development Corporations.
About 162 SEZs have been given the formal go-ahead, besides the 235 SEZs. These 162 SEZs will need another 60,000 hectares of land. The next lot will need a bigger chunk of land because it is a multi-product SEZ. The Maharashtra Industrial Development Corporation still has 15,000 acres of land in its possession, which can be used for industries. Maharashtra has been acquiring land since the last 40 years.
--->You haven't answered my question. Isn't it wrong to acquire land by use of laws and government machinery for the private people to facilitate them to make profit.
Sitting here, you know who makes profit and how. Let me put it this way. First, the question is whether farmers are getting the right compensation or not. Kakinada SEZ is one of the 162 SEZs which are only approved in-principle. 5,000 hectares of land is acquired by private developers. In fact, I feel that the State need not acquire the land for the industries because industry can go directly to purchase the land from farmers.
In my opinion, the State should intervene only in such cases where small bits of land are yet to be integrated. Reliance in Jhajhar bought 6,000 acres directly from farmers. There is no opposition. Prima facie, yes, acquisition should be only the last step. But I am only saying that for the first 235 SEZ, whether you like it or not, the acquisition was done prior to the SEZ Act coming into force.
One of the common allegations against SEZ is that industrialists are padding up demand to get land. There is an allegation against Tata that in Singur they need much less than 1,000 acres. How can you take away land that has great emotional value for people under the pretext of designer swimming pools and artificial landscapes?
--->There is a study that shows that most farmers whose land is being acquired are subsistence farmers. I am not denying that they have an attachment to land and all that. But do you want them to continue to be a subsistence farmer and earn $1 a day? Or you want to give them an opportunity to move out of it?
No country in the world where 65 per cent of the population is dependent on agriculture can be helped to raise their income.
There is a limit to how much you can improve their income by tilling one acre of land. Industrial development takes place not only for these 650 million farmers, but everybody.
Near Pune, Bharat Forge is acquiring 7,000 acres. They have gone about it systematically. They have gone to villages. They have mapped the area. They have kept residential areas out of it. Each family has been contacted individually. They have taken two ITIs from the State government. They are training the family members of affected families.
Earlier, farmers whose land was taken were given jobs of security officers or peons or gardeners. . . now their jobs have been upgraded. Because of the skill, instead of the Rs 2,000 salary as a gardener, he now stands to command a salary of Rs 15,000 as a skilled worker.
We have brought the percentage of agriculture in the nation's GDP to 20 per cent, but 65 per cent Indians still depend on farming. In most countries, with 20 per cent of GDP from agriculture, not more than 25 per cent people are dependent on it. As a long-term strategy, if I want to take off 100 million people from agriculture, I need SEZs.
----->This is the commerce secretary speaking. The agriculture department is struggling to maintain stocks of produce. If you take out such a big chunk of land, in the next ten years what will be the impact on food security?
If you consider the percentage of arable and cultivable land and what percentage of it is going to SEZs, you will realize that only 0.000012 per cent of cultivable land is going to SEZs! And, you should know that out of the total acquisition done by the State government only 10 per cent is going to SEZs.
States are doing it anyway to build irrigation projects, ports, airports, national highways, irrigation channels, schools and colleges. State governments are acquiring land all over. I think the SEZ controversy has been blown out of proportion. I think a part of the fault is ours. We didn't anticipate that the SEZ thing will come up as a major issue.
---->In that case, why do think has this controversy erupted?
I think it is because of a few major industrial houses which have presence in these areas. . . and the rivalry between these business houses has blown up the whole issue. Even the issue of processing area and non-processing area has been blown out of proportion.
Once I notify the SEZ, the developer cannot sell the land. People say he will develop it and create real estate and then make money out of it. He can't do that.
Second, if you look at the urban development guidelines for industrial townships, the processing area is 10 to 12 per cent: but I am putting it at 35 per cent. Then, 40 per cent of area will remain green.
---->Some NGOs have come and told me that if a murder is committed in an SEZ, you will have to file a complaint with the Interpol!
You have seen the articles stating that Jamaat-e-Islami thinks that 'SEZs are against Muslims.' In Gujarat, people are saying that SEZs will increase the flow of liquor. Someone else said that you are bringing back the East India Company. All these allegations are not true.
Every single law of India will apply there (in SEZs). After getting SEZ land, the developer will have to get environment clearance. He has to do the Environment Impact Assessment. A gate pass is required only in the processing area, the rest of the area will be open for the public. Hospitals and schools in SEZs will be partly used by people outside the SEZs too.
--->Tell us, in black and white, aren't SEZs an excuse for land-grabbing by people with a profit-motive?
SEZs is not land-grabbing. If you think that setting up of industries which provide employment is land-grabbing, then it is one interpretation. . . in some cases, land has been given on lease to the party by the State. Like in Mundra, in Gujarat, 7,000 acres of land has been given on a 30 year lease to the Adanis.
Do you know that barren land costing Rs 20,000 per acre and now the land outside the SEZ is Rs 1 crore (Rs 10 million) an acre! In that distant corner, you should go and see how poor people have become millionaires. In that totally barren land, there is a port, there is a railway line, there is an airport and all that due to development of the SEZ.
