The Maths behind SEZs

I always wonder if creating umpteen number of SEZs in India a decision of which general public in India can be proud of or are they just being carved out for the purpose of providing the few lucky-ones with an ample opportunity to make money on the cost of hundred and thousands of those who cannot afford to even earn their daily bread. Are SEZs really that great as promised and proclaimed or is it just that the media inputs only that much information in the public mind which the government & those few chosen-ones want the public to know. While searching for these questions, I luckily got my hands on a great article which not only discusses the pros & cons or rather only cons of SEZs but also compares the Chinese and the Indian model. After reading this article I realized what a SEZ really is but unfortunately, I am sure, such articles and the brutal truth won't reach the general public of India. Some excerpts from the article:

All these exemptions will mean a revenue loss of more than Rupees 1.75 lakh crores to the state exchequer after five years. Although this staggering amount is enough to feed the country's 320 million people who go to bed hungry stomach for a number of years, or provide guaranteed employment to at least two members of each of the rural families for the next five years, this is a 'small price' that the nation must pay to keep for the royalty tag for the rich and beautiful.
You may call it 'the biggest land-grab of the century' or term it as 'open-loot'; the powers that be are simply not deterred. Prime Minister Manmohan Singh has repeatedly said that the SEZs are the need of the day. No wonder, agricultural land, which is a scarce commodity, is suddenly available in abundance. Unmindful of the fact that the per capita land holding is already at an abysmally low of 0.25 acre, the government is using the draconian Land Acquisition Act 1854 to further purchase any land that it sets its eyes on. In the first phase of clearances accorded by the government, a total of 1.25 lakh hectares of prime agricultural land are in the process of being acquired. In the second phase too, almost an equal area would be obtained.
One of the biggest SEZs is coming up near Mumbai. Spread over 14,000 hectares, it is coming up predominantly on double-cropped land.
Another major SEZ proposed in Jhajjar adjoining New Delhi is spread across 10,000 hectares and is again gobbling double-cropped land. Interestingly, both these SEZs, proposed to occupy a landmass larger than the suburb of Gurgaon, are yet to be officially approved. In Mangalore, one of the promoters is the government-owned ONGC and 2,200 hectares of double- and even triple-cropped land is being acquired for setting up a SEZ.
The CPM government in West Bengal has acquired some 400 hectares of fertile land for the Tatas to set up an automobile factory at Singur, near Kolkata. Technically speaking Singur is not a SEZ , but what makes the deal politically significant is that the State government has actually acquired the land at cost of Rs.140 crores. It has then been made available to the Tatas for a mere Rs.20 crores, one-seventh of the cost price. Even that can be treated as a loan for 5 years.
The setting up of the princely estates is being primarily justified on account of employment generation. The premise is that it will create 5 lakhs job opportunities. Does this kind of employment generation mean anything for India? This question has been conveniently ducked, and for obvious reasons. Now let us examine the ground realities. It was at the beginning of this century that some 75 lakh people, more than the population of Switzerland, had applied for a mere 28,000 lowly paid jobs in the Indian Railways. For a country, which is on a fast track information highway, this does not mean anything significant except for statistics. Even if you were to employ five lakh out of these 75 lakh, isn't that a mere drop in the ocean? Millions of assured jobs can be created if the total amount of revenue loss - Rs 1.75 lakh crore - and the several times higher public sector investment to follow is used for employment generation.
Food security too is no longer the national priority. Otherwise, no sensible government would have at any cost tinkered with the country's dwindling ability to produce food for its own population. Our own conservative estimate shows that the nation will suffer a loss of Rs. 250 to 400 crores from the reduction in area under cultivation of food grains alone. Foodgrain production is expected to drop by at least 4 to 5 lakh tonnes a year. I remember these are only conservative estimates. In case of land under high value crops, the losses would be much higher.
Take the case of Pepsico's entry into Punjab in the 1980s. The multinational giant promised to create 50,000 jobs. In reply to a 1991 parliamentary question, the Ministry of Food Processing in acknowledged that the company had created only 482 jobs, of which 210 were unskilled workers.
It is therefore a free-for-all activity. If you can mobilize political support by hook or by crook, you can rest assured that you are on the right path to royalty. Whether you finally deliver what you promise is something that you can leave to the consultants to take care of. What is more significant is that nowhere else in the world will you find such a pliable government and a supporting bureaucracy like in India.
In China, from where India drew inspiration, only six SEZs - at Shenzhen, Shantou, Xiamen, Zhuhai, Hainan and Pudong - have been set up so far. These economic zones, all in the public sector, came after a lot of debate and deliberation, and all of them are situated along the coast. Faced with shrinking cultivable land, the Chinese SEZs have come up only in wastelands. In India, all these norms have been thrown to the wind. World over, there are only some 400 special economic zones. If it was such a productive and useful activity, why hasn't the world woken up to the promises that Dr Manmohan Singh's government has been making? The SEZs cannot, and will not, create economic magic, but this has not been the reason for setting them up. They are essentially aimed to create a series of affluent islands amidst the cesspool of poverty, hunger and deprivation. Oases, or pockets of effluence for the rich and elite, who find the poor an eyesore.