In a strange way, you know Special Economic Zones will be part of our lives for some time to come when the issue gets to be as heatedly debated as the composition of the Indian cricket team. To that extent it has probably taken its place with some of the most famous economic debates India has dealt with after reforms were initiated in 1991. Politicians claim that such arguments are essential to build a consensus for reforms in the economy. But as the Deputy Chairman of the Planning Commission Montek Singh Ahluwalia remarked, “The process can be aptly described as creating a strong consensus for weak reforms.”

That has actually been the case with a few celebrated episodes, post-1991. After the NDA government at the Centre decided to nudge states towards value added tax (VAT) to replace sales tax and other levies, Congress-ruled states decided to give the inaugural date of April 1, 2004 a miss. The deadline had to be relaxed, the fifth time in ten years. Disappointed, West Bengal Finance Minister Asim Dasgupta, chairman of the empowered committee of chief ministers, also commented on it. The streets of Delhi and other north Indian cities saw bandhs and protest marches; and for some time many were convinced that the step was just a ruse to wipe out retail traders.

So the next year, when the current UPA government decided to back the VAT model, the BJP-ruled states paid back the compliment. There wasn’t any dispute over the necessity of moving to the new taxation system, though the entire debate was clothed in economic terms. But off camera, state ministers candidly acknowledged that it was a political issue.

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