SEZ nos don't add up

How the SEZ numbers don't add up
For labour and for industry in Goa, SEZs will hinder, not help

Why would you want to swap the engine in your car for one that costs more, uses more petrol per kilometre, is more expensive to maintain, and takes up more space in your car? Such a swap wouldn't make sense to the careful motorist, and it shouldn't make sense to the CEO of a state either. That swap is just what the state of Goa is setting out to do by promoting special economic zones (SEZs) at the cost of existing manufacturing units.

The government of Goa - both currently headed by Digambar Kamat and previously by Pratapsingh Rane - has not shared at all with the people of Goa why it believes that SEZs are necessary and required for our state. It is not alone in this behaviour, for other states have not done so either, which is why so many campaigns against such zones have erupted all over the country.

What engine do we have? It is the engine of manufacturing, which accounts for 27 per cent of the Goan domestic product. (In economic weight, the 'transport, storage and communications' category comes next with 12.9 per cent, and 'trade, hotels and restaurants' is third with close to 11.8 per cent.) Manufacturing does not include mining (4.2 per cent) and agriculture (5.6 per cent) and is the sector which soaks up the most available employment.

This is worth looking at carefully, because it was about a year ago that the Info Tech Corporation of Goa (through the information and technology minister, Dayanand Narvekar) spoke incessantly about the employment that was waiting to be generated if only the IT park at Socorro would be set up without objection and without interference. Right now, both the IT zones being pushed by the Info Tech Corporation of Goa are still at the "forwarded to Government of India for approval" stage. However, six other proposals are also in the same stage, making a total of eight pending, while seven have been approved by the SEZ Board of Approval (19 members drawn from various ministries). Three more proposals have yet to be forwarded. And that makes a total of 18 SEZs that the government of Goa has considered since the SEZ Act of 2005 came into operation.

Remember that we already have in Goa 20 industrial estates. For these, the government's own literature (Economic Survey 2005-06) explains: "Infrastructure facilities such as water supply system, asphalted roads, street light (sic), drainage, besides common facilities like canteen, ESI, housing tenements, post offices, telephone exchange, public pay phone, banking facilities, warehousing facilities have been created." In short, remarkably like the operating environment of an SEZ. The 2,458 plots developed in these industrial estates house a variety of activity including pharmaceuticals, info-tech and electronics and food processing - sectors the 'new, improved' SEZ engine claims to be encouraging.

Rewind to 1965, when the only operating zone in India was the Kandla SEZ (the Santa Cruz Electronics Export Processing Zone - SEEPZ - in Mumbai came next in 1975). At the start it employed just 70 workers! By 1998 there were eight SEZs in India (including those at Noida and Chennai). As a result, the level of employment also increased to around 95,000 by 1999. After the 2005 Act there has certainly been rapid expansion in employment in the SEZ sector with all-India employment being over 178,000 in November 2006. However - and this is important - their share of total all-India manufacturing employment is no more than 1.1 per cent.

For those that do find employment in SEZs, are they better off monetarily? A recent study on Indian SEZs by the Indian Council for Research on International Economic Relations found tha this is not so. "Average wages in the zones are not very different from the factory sector average in the respective state (except Maharashtra)," says the report. "This is despite the fact that the factory sector covers large enterprises also [which generally pay better than small scale units]." Do SEZs spur industrial activity in the districts and regions around them? Business case studies indicate that this is not so, as in the export processing zones set up before the 2005 Act, units procured an average of only 8 percent of their inputs locally. This means that the SSIs and manufacturing units in Goa that exist today will not benefit from the SEZs being planned - whether any industrial linkages have at all been studied by the state government is unknown.

What we do know is that the 7,095 small scale units in Goa employ close to 50,000 people and that the 209 medium and large industrial units employ another 25,600 (Economic Survey 2006-07). Aside from the merits and demerits of the industrialisation of Goa, these units, industrial estates and factories have emerged over a period of 25 years. They have evolved from the needs and demands of entrepreneurs and local and regional investors who have made use of the state and its geographic advantage and human resources. Those working in these small and large units have made critical decisions about their families and homes based on their employment, and social service ecosystems have also evolved as a result.

Into an environment that is crowded for space, short on infrastructure and struggling to meet health and education needs, the approved and pending SEZs could impose another 642,000 persons - if the claims of the SEZ developers are to be believed. For tacitly accepting this number alone the government of Goa should be interrogated. It is a ludicrous number for our state. Why so? For it is more than the total number of all people employed in Goa! The 2001 Census told us that 274,000 people were employed in rural Goa and 248,000 in urban which together is 522,000 workers. Even accounting for legitimate growth in employment since 2001, this figure would not match the numbers claimed by the SEZs. This alone reveals the recklessness of this administration in even considering the SEZ engine as one that is good for Goa.

- Rahul Goswami (Gomantak times, 8 Oct 2007)