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Home > Business > Business Headline > Report

SEZs can act as development vehicles: ICRIER

Rituparna Bhuyan in New Delhi | August 20, 2007 12:04 IST

Even as the special economic zone policy remains mired in controversy on issues related to possible revenue loss as well as land acquisition, a study by the economic thinktank Indian Council for Research on International Economic Relations has found that the zones have enough potential to be an instrument of poverty elimination, job creation as well as human capital development through the backward and forward linkages it forges with the economy.

The report, prepared after a United Nations Development Programme funded, a two-month-long study by ICRIER visiting faculty and Delhi University reader, Aradhna Aggarwal, found that the wages in the zones were not lower than those prevailing outside.

It was also found that the social security benefits, transport facilities, food arrangements, working environment and working space in the zones were better than those in the same jobs in domestic tariff area.

"Though the study was done in zones that existed before the SEZ Act, the findings are also relevant to the new up coming zones. In fact, the conditions are much better in the new zones," Aggarwal said.

According to Aggarwal, the zones would help alleviate poverty because of the gainful nature of the employment. The study also concluded that even though the contribution of existing SEZs, set up before the enforcement of the SEZ Act in 2006, to employment generation at the national level was limited, they have created large number jobs at the regional level.

"With the new SEZ Act in place, there has been a surge of investments in the zones, which is likely to generate huge employment potential in the country," the report said.

In another study, commissioned by the finance ministry and carried out by Aggarwal, it was estimated that an additional 500,000 jobs would be created in the SEZs by the end of 2009.

"In the finance ministry commissioned study, we found that the revenue loss to the government in the next three years, in case there is no diversion of investments from DTA, would not be more than Rs 19,000 crore (Rs 190 billion), against the earlier estimates of Rs 90,000 crore (Rs 900 billion). In the long run, the additional economic activity created by the zones would far out weigh any concerns about revenue loss," added Aggarwal.

The findings of the report is in line with the stance of the commerce and industry department, that the SEZs are going to be one of the biggest sources of employment generation and will lead to inclusive growth.

India's great rush for SEZs

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