The establishment of new Special Economic Zones faces another hurdle, this time from unexpected quarters. It comes from the prime minister’s suggestion that they be put on hold till a rehabilitation policy for displaced people is formulated. The empowered Group of Ministers is scheduled to meet on Monday in this regard. Reports also suggest that the government is working on a proposal that only vacant land be acquired for SEZs.

One of the reasons for the difficulties in the SEZ policy is said to be the use of arable land. But is arable land a constraint? Reports suggest that up to 0.2 million hectares have been sanctioned for over 200 SEZs. India has a land area of 297 million hectares, out of which 162 million hectares are arable. The land sanctioned for SEZs thus constitutes a minuscule 0.12 per cent of India’s total arable land. Even if the allocation of land to SEZs went up eight times, it would constitute a mere 1 per cent of the country’s total arable land.

Claims about loss of India’s self-reliance in food production owing to SEZs are nonsense. Yields in India are so low, that even minor improvement in productivity would overwhelm the loss of 1 per cent of land. For India to become a developed country, the area under agriculture has to shrink; urban and industrial land development has to take place; and about a 100 million workers have to move out from agriculture into industry and services. This is the only way forward for bringing prosperity to the rural population. Every developed country in the world has undergone this process, and a clear-headed appreciation of India’s path in the next 10 years is required. Urban development gives rural landowners extremely good deals when their land is sold; the government should be supporting voluntary transactions, instead of preventing them.

... contd.