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Special Economic Zones in India

Despite the overwhelming evidence of "immiserisation" due to displacement, numerous cases of resistance and the distortion of democratic processes, the neoliberal paradigm remains dominant in India.

COMMENTARYEconomic & Political Weekly EPW july 12, 200825The author would like to thank Neil Smith and David Harvey for critical inputs and Walter Fernandes for an opportunity to present this paper in March 2008 at the Annual Conference of the Society for Applied Anthropology at Memphis, Tennessee. Preeti Sampat ( is currently a doctoral scholar at the City University of New York, United States. Special Economic Zones in Indiapreeti sampatDespite the overwhelming evidence of “immiserisation” due to displacement, numerous cases of resistance and the distortion of democratic processes, the neoliberal paradigm remains dominant in India.In a large-scale effort transforming India’s competitiveness in the global market, the United Progressive Alli-ance (UPA) government currently in power enacted the Special Economic Zones (SEZ) Act in 2005. The gusto with which the state is approving special economic zones under the SEZ Act (404 formally approved SEZs so far, comprising 54,280 hectares of land [GoI 2007]) is indicative of a new mantra of growth and development in elite national discourse much in keeping with the global neoliberal discourse. The increasing role of the state as the promoter of corporate-led economic growth is underlined by the acquisition of land for SEZs and the transfer of ownership of this land to “developers”. Displacement thus gets pushed to a private arena with com-pensation potentially negotiated by the market and without the state’s responsi-bility for rehabilitation. Considering that these SEZs will acquire thousands of hectares of land with little regard to land ceiling provisions, with up to a minimum of 1,000 hectares for multi-product and 100 for service sector SEZs, the displacement and disruption of liveli-hoods to be caused bySEZs and their grave implications are emerging even as the countrywitnesses steadfast resistance by peasants; and state violence and repres-sion in West Bengal, Orissa, Andhra Pradesh or Maharashtra. Further, with an inherent bias towards “neoliberal urban-ism” [Smith 2002], only 50 per cent1 of the land reserved for a multi-product and sec-tor specific SEZ is to be used for productive purposes. The rest can be used for “devel-opment” of real estate, potentially creat-ing speculative real estate bubbles effec-tively for the “absorption of surplus value” [Harvey 2007] – in other words, reinvesting surplus corporate profit for further capital growth. These emerging configurations are throwing open contests over land, develop-ment and economic growth; configuring new legal entitlementsfortransnational capital; and shifting the wayinternally displaced persons (IDPs) are conceptua-lised and treated in a neoliberal era.In this article I explore some strands in the political schema of SEZs in India with specific reference to one immediate fallout of serious concern and contestation – the imminent displacement of thousands of people and livelihoods in the countryside where these SEZs are slated to come up. It is worth noting that while a factsheet on SEZs on the government of India web site gives details of the number of approved and proposedSEZs, their land require-ments as well as export and employment potential, there is no mention of the number of people to be displaced by these zones, leave alone how the government intends to attend to the issues of displace-ment. Indeed, the entire web site dedicat-ed toSEZs by the ministry of commerce and industry makes no mention of this necessary “first step” for the establishment of anSEZ. In fact, in a special issue of Seminar magazine dedicated to SEZs in February this year, the minister for
COMMENTARYjuly 12, 2008 EPW Economic & Political Weekly26commerce, Kamal Nath, has gone so far asto say in an interview that SEZs have nothing to do with displacement [Gopalakrishnan and Shrivastava 2008]. This silence, as we shall see below, is in keeping with the discourse of independent India’s development “for the greater com-mon good”. It is a silence, however, that in fact has been bitterly contested in the country especially since the 1980s with the emergence of people’s struggles for justice against large-scale development induced displacement. SEZs – Legislating for GrowthExport-led economic growth has been an important part of the economic strategy prescribed to and subscribed by southern countries in their path to progress and de-velopment especially since the 1970s. While the first export processing zone (EPZ) was set up in Ireland in 1959, the first Asian zone was the KandlaEPZ estab-lished by the Indian government in 1965. Originally conceived as zones of experi-ments with the free market in an other-wise protected economy, these zones were implemented with increasing intensity and varying results in Asia since the 1970s [Amirahmadi et al 1995; Yuan et al 1992]. After the break-up of the Soviet Union, India opened up its economy in 1992 and intensified its move towards export-led growth, but it was only in 2000 that the first SEZ policy was drafted and in June2005the SEZ Act now in place was approved in a near unanimous decision in the Parliament. The justifications of this large-scale, un-precedented establishment of SEZs despite severe reservations and resistance from several quarters, are located to a large extent in the neoliberal discourse on eco-nomic growth dominant in political estab-lishments across the globe today. Working closely with neoliberal capital, the threat of “competition” in a free market seems to work like magic in policy arenas with the unequal premise of that “competition” itself going largely unchallenged within domi-nant institutions. As a result, countries find themselves pitted against transnational corporations (TNCs) who are the drivers of this economic growth and possess the ad-vantages of scale, technology, mobility and wealth, while countries with large popula-tions of uneducated poor and/or educated unemployed people have the advantage of poor people willing to work at low, in other words, “competitive” wages [Sampat 2003]. The profit earned by corporations as they compete in the global market is thus drawn out of these low, competitive work-ers’ wages. A fact that is so obvious, that in a classic Lefebvrean “blind field”, it escapes the established mainstream [Lefebvre 2003]. Add to these competitive wages tax and tariff rebates, fiscal incentives, infra-structure developed by private developers on lands of people acquired by the state for “public purpose” and we have SEZs. ‘The Urban Revolution’ A major part of the growth envisaged in theSEZs is through real estate and infra-structure development for which private developers are being given many incen-tives. The requirement of surplus capital or profit to regenerate itself through fresh investment given the coercive laws of competition thus gets met through real estate and infrastructure development. These “improvements” of an otherwise “underdeveloped” countryside further create the environment for investment and fuel economic growth. Along with industrialising the country-side, this serves to urbanise or modernise the countryside as well. Smith (2002) has pointed out that urban real-estate (re)development or gentrification writ large has become a central motive force of urban economic expansion in the age of neoliberal urbanism through urban redevelopment and regeneration plans. One may extend this argument to make the claim that another aspect of this neoliberal urbanism is real estate development in these enclaves, with an inherent gentrifica-tion process in the SEZs’ gated townships where only persons carrying approved identification are to be allowed entry. This real-estate-led urban revolution of the countryside then, has been envisaged in the “legal” transfer of land for “development” as an SEZ – to private developers who are also being offered incentives parallel to corporations setting up units in the SEZs. Eminent DomainFundamentally linked to this discourse on growth and urbanity is the idea of moder-nity, progress and development associated with the technological superiority and the wealth of northern capitalist countries. These ahistorical renditions of modernity and progress on the one hand fail to grasp the realpolitik of the road to progress of the north, and on the other, in their very real enactments of the road to modernity, continue to dispossess and exploit larger numbers of people, while claiming, in a tragic-irony, their ultimate upliftment. The Indian state is an old hat at displace-ment for the “greater common good”, that Conferenceon “Empirical Issues in International Trade & Finance” Organized by Indian Institute of Foreign Trade - Kolkata Call for PapersThe Indian Institute of Foreign Trade, Kolkata Campus, will organize a conference on the above theme during December 23-24, 2008 in Kolkata, India. Any unpublished empirical paper on international economics (Journal of Economic Literature (JEL) classification F) is solicited. An abstract of about 500 words must precede the papers. All unsolicited submissions will be refereed. IIFT will be paying local hospitality including accommodation to all outstation presenters. However travel expenses will have to be borne by the presenters.The submission deadline for abstracts is August 20, 2008. Last date of submission of Full Papers is September 30, 2008. Please send your abstract/paper to: Dr. Bibek Roychoudhury, Indian Institute of Foreign Trade, J-1/14, EP and GP Block, Sector V, Salt Lake City, Kolkata 700091, India (email: Submission by email is encouraged. For more information see or mail to:
COMMENTARYEconomic & Political Weekly EPW july 12, 200827phrase enshrined in the developmental state’s history by independent India’s first prime minister, Jawaharlal Nehru, as he charted his vision of progress and moderni-ty for India. Exercising the powers of emi-nent domain as articulated by the colonial government, the state has dispossessed at least 50 million people of their land and livelihoods under the colonial Land Acquisition Act 1894. Most of these people are now untraceable and they or their descendants form the millions living in urban shanty towns across the country. Years of popular and mature agitation on the issue however, have not translated into a law on the issue of displacement, resettlement and rehabilitation (R&R) in the country; the first central policy on R&R was put in place in 2004 and the newest one, National Rehabilitation and Resettle-ment Policy (NRRP), more recently towards the end of 2007.Predictably, the NRRP 2007 states:…There should be a clear perception, through a careful quantification of the costs and bene-fits that will accrue to society at large, of the desirability and justifiability of each [devel-opment] project. The adverse impact on af-fected families – economic, environmental, social and cultural – needs to be assessed in a participatory and transparent manner. …The aim should be to minimise large-scale displacement, as far as possible. Only the minimum area of land commensurate with the purpose of the project may be acquired. Also, as far as possible, projects may be set up on wasteland, degraded land or un- irrigated land. Acquisition of agricultural land for non-agricultural use in the project may be kept to the minimum; multi-cropped land may be avoided to the extent possible for such purposes, and acquisition of irrigated land, if unavoidable, may be kept to the minimum.Despite these caveats of concern for the displaced and democratic process however, nowhere is the right to informed consent legalised in the policy or in any other relat-ed law such as the LAA 1894. Iyer (2007), outlining some basic principles for a policy and law regarding displacement emerging from the struggles of the people displaced by large dam projects has argued, “Where the LAA 1894 is used for acquiring land, the acquisition needs to be made (a) contesta-ble (not merely in regard to compensation, but also in relation to the public purpose which is the justification for displacement); (b) procedurally more humane and equitable; and (c) juster in terms of compensation, with due regard to the amount needed for buying land or property (house, shop) in the resettlement area”. He adds, “There is a cruel irony in describing the involuntary and helpless victims of a project as stakeholders, and this is com-pounded when they are put on the same footing as those who stand to benefit from the project. Let us not forget that while in the case of the former existing rights (i e, natural and often centuries-old rights of access and livelihoods) are taken away, in the case of the latter the project, by divert-ing river waters through canals, confers new rights not earlier enjoyed. The former are stake-losers, whereas the latter are stake-gainers”. What is interesting to note here is that according to the SEZ Act, SEZs are also interpreted as “public facility or infrastruc-ture” where in fact they are enclaves for transnational capital to flourish in the “free market” competition inherently skewed to capitalist advantage. While in thedecades following independence, land was ac-quired mostly by the state for develop-ment projects and deemed the property of the state, hence public, the shift that the SEZ Act in 2005 marks is the acquisition of land by the state for “public purpose” and the transfer of the ownership of this land to private developers. The trajectory of neo-liberal corporate growth through accu-mulation by dispossession2 thus becomes clearer in this land-acquisition process. Consent and the Right to Land Estimates of numbers of people to be displaced by the approved SEZs are as yet unavailable. People’s struggles against dis-placement to be caused by SEZs however, are already intense and in some cases, vio-lent. The violence witnessed in Nandigram in the state of West Bengal (a Communist Party of India (Marxist) ruled state) is a case in point. In March 2007, 14 people died in police firing when protesting notifi-cation of land acquisition of 25,000 acres of land under the LAA 1894 for an SEZ towards a chemical hub slated for the Salim group of Indonesia. None of the local residents whose lands were to be acquired had been consulted or informed prior to this notifica-tion by the concerned authorities and the people of the area organised themselves by blocking access to their area only to encounter violent state retaliation. The government backed out of its claim of ap-proval for the SEZ in the aftermath of state- and nation-wide protests and inquiry by concerned citizens’ groups and the media, and even as the violence subsided in the following months, people organised under the banner of the Bhumi Uchhed Pratirodh Committee (BUPC) to resist any further land acquisition moves by the state. Things reached a violent climax again in November 2007 as political factions and the BUPC struggled to assert control over the area and the entire region became a battlefield of sorts when a non-violent pro-test march of around 15,000 people by the BUPC was met with violence by ruling party and other political party cadres; many peo-ple died (reported estimates vary between 7 and 100) and around a thousand houses were damaged or burnt down. Even as in-vestigations and fact-finding missions to Nandigram were underway, the govern-ment, under enormous pressure, promised to move the controversial SEZ to Nayachar, a less fertile and cultivated stretch of land. As this controversial project along with others is borne out, what must be noted is that there is little regard for the democratic right of citizens todisagree; to determine their own course of development; or man-datory prior informed consent instituted in the land acquisition process [for details on the Nandigram episode see Basu 2007; Chenoy 2007; EPW 2007; Gandhi 2007; People’s Tribunal on Nandigram 2007; Patnaik 2007; NHRC 2008]. Interestingly, one of the most progres-sive legislations in the country for decen-tralised rule, the Panchayati Raj 73rd Amendment Act of 1992 entitles the right of the residents of a panchayat (the ad-ministrative village unit) to determine their own course of development, levy their own taxes and make decisions based on the local village meetings called the gram sabhas. In the scheduled indigenous areas, the Panchayat Extension to the Scheduled Areas Act 1996 further empow-ers the rights of the indigenous people for self-rule. The concept of eminent domain, however, bearing down in the form of the colonial land acquisition legislation of 1894, supersedes this right of the people to determine their own future and development, ironically, in independent

As Harvey (2005) has described, accumulation by dispossession includes “the commodification and privatisation of land and the forceful expulsion of peasant populations…; conversion of various forms of property rights (common, collective, state, etc) into exclusive private property rights…; suppression of the rights to the commons; commodification of labour power and the suppression of alternative (indigenous) forms of production and consumption; colonial, neocolonial, and imperial processes of appropriation of assets (including natural resources); monetisation of exchange and taxation, particularly of land; the slave trade (which continues particularly in the sex industry); and usury, the national debt and, most devastating of all, the use of the credit system as a radical means of accumulation by dispossession. The state, with its monopoly of violence and definitions of legality, plays a crucial role in both backing and promoting these processes….”

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