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Article Special Economic Zone, Emerging Economy Studies 2(2) 223–239
Land Acquisition, and Impact © 2016 International Management Institute on Rural India SAGE Publications sagepub.in/home.nav DOI: 10.1177/2394901516661104 http://emi.sagepub.com Sazzad Parwez1 Vinod Sen2 Abstract
This article examines the dimensions of land acquisition with respect to establishment of economic
zones across India. The enactment of Special Economic Zone (SEZ) Act 2005 allows the government to
transfer the land acquired for public purpose under the Land Acquisition Act to the private companies
for development. For private firms, land turning into most significant incentive for being part of SEZ
scheme and profit maximization. It has been observed that large part of acquired land ends up in the
hands of the real estate companies rather than intended productive sectors of industry and infrastruc-
ture. Land is the principal source of livelihood in an agrarian economy. Forcible acquisition and transfer
of land to corporates leads to large-scale unemployment and displacement, especially when large part
of tract remains unutilized. It raises many questions on objective and process of establishment of SEZs.
The absence of land use the policy is primarily culprit for faulty diversion of land agriculture along with
underutilization of available land. The extreme nature of these SEZs needs to be analyzed through proper policy making. Keywords
Land acquisition, special-economic zone, development, farmer, livelihood Introduction
Decisions concerning land allocation and land use
pattern comprise diverse array of issues that can go
Land, the basic and long-lasting source for produc- beyond the considerations of economic growth.
tion as well as for human inhabitation, is one of the The matter of land use is predominantly important
most disputed issues in the public policies in India. due to large agrarian population in economies such
1 Assistant Professor, School of Rural Management, Indian Institute of Health Management Research, Jaipur, Rajasthan, India.
2 Assistant Professor, Centre for Studies in Economics and Planning, School of Social Sciences, Central University of Gujarat, Gandhinagar, Gujarat, India. Corresponding author:
Sazzad Parwez, Assistant Professor, School of Rural Management, Indian Institute of Health Management Research, Jaipur-302029, Rajasthan, India.
E-mail: sazzad.parwez@gmail.com 224
Emerging Economy Studies 2(2)
as India, where access to land, in absence of alter- ambiguous implementation processes generally
native employment-income opportunities and result in diversion of large tract of land, often more
social security, provide economic security, and fertile, than what is actually required. It has been
therefore, is rendered high in terms of social status also observed that large part of acquired land ends
(Bhagwati & Panagariya, 2013; Patnaik, 2008). up in the hands of the real estate companies rather
Ideally, diversion of land from agricultural to non- than intended productive sectors of industry and
agricultural sectors should be preceded by a con- infrastructure. The absence of inclusive land use,
siderable shift of workforce and local population the policy and federal structure of governance
(National Commission to Review the Working of where land is primarily a state subject has been the
the Constitution, 2001; Shah, Nandani, & Joshi, main culprit for faulty conversion or diversion of
2012). In the absence such provision, diversion to land from the agricultural and allied sector. The
non-agriculture use is most likely to invite resist- most critical issue is that of the nexus between the
ance from farmers and local communities.
state and the private sector (Patnaik, 2008).
The situation gets further stressed when the
Objective of the article is to assess the SEZ
government, being a custodian of land, tends to inspired land acquisition and utilization pattern to
play the role of a trader as it has come out from the evaluate that the gravity of issue. This article is
real on ground practices under the Land Acquisition based on literature review and analysis of
Act (LAA) LAA has been used to take away the secondary data and information. Data have been
land for public use without the owner’s consent collected from reports of the Government of India,
has been practiced since the colonial rule. Growing international agencies, and journals with repute.
spatial inequality with economic growth same
time only few livelihood opportunities for the rural
poor likely to turn issue of land more concerning Special Economic Zone, Land (Pasinetti, 1981).
Acquisition, and Dynamics
The enactment of Special Economic Zone The socio-legal issues of land with dimensions
(SEZ) Act 2005 goes a few steps ahead by allowing such as acquisition, displacement, resettlement
the government to transfer the land acquired for and rehabilitation, and compensation have been
public purpose under LAA to the private companies the complex subject to deal with. Same time real
for development. Application of LAA to acquire estate development and land speculation has been
land often go along with various kinds of pressure the threat along with apprehension that already
tactics by the corporate and by the state to get established units from other parts of country may
consent of the land owner, because of the low move to SEZ to take advantage of taxation policy
bargaining power of the later. It has been observed and incentives will result in loss of income and
that the process of land acquisition and conversion rise in regional inequality (Kurian, 2000; World
of agricultural land reflects failure of the state and Bank, 2008).
the market; in fact largely both of these form a
Gifting the thousands of acres of valuable land
nexus to indulge in “primitive accumulation” by to developers in insignificant amount to conduct
the state (Chandrashekhar, 2006; Patnaik, 2008).
business by relaxing the laws of the land, including
Question is being asked on processes of those meant for welfare of labor, environmental
obtaining the land rather than the need of acquiring protection, taxation, and so on, in the hope that it
agricultural to promote industrial economic will automatically encourage industrialization and
activities such as manufacturing units and solve the prevailing problem of unemployment.
infrastructure (Shah et al., 2012; World Bank,
It has been extensively reported that the farmers
2008). It is also evident from the experience that are protesting against the forced acquisition of Parwez and Sen 225
agricultural land in the name of public purposes. Gender Inequality & Poor
Farmers and peasants in various states such as West Labour Standard
Bengal, Uttar Pradesh, Maharashtra, Uttarakhand,
Odhisa, Punjab, and many more have opposed to the Women and Working Impact on Conditions Environment
land acquisition for establishment of SEZ is a major
growing issue across the country (Aggarwal, 2006;
Ghosh, 2006). Literature also suggests that the Employment Social Aspects
establishment of SEZs countrywide may lead to Creation
livelihood losses for farmers and dependent. In Figure 1. SEZ’s Impact on Society
reality little job may be created as use of advanced Source: Conceptualized by the author, 2015.
technology can impact negatively (Aggarwal, 2006).
Criticality of the situation can be understood
Land is the principal source of livelihood in any from that fact that SEZs regulations and guidelines
agrarian economy. Land acquisition via LAA has say that a multi-product SEZ is needed to have
become the most obvious medium for forcible 1,000 hectares while the single product SEZ can be
acquisition and then transfer of resources from established in as little 100 hectares of land. Thus,
average and poor people to private business SEZs may incorporate a single manufacturing unit,
corporations could destroy livelihood and lead to or a cluster of multi-product industrial units.
large-scale displacement of local population. In Guidelines also suggest that 35 percent of land
this kind of developmental process, always the have to be assigned for the industrial or processing
beneficiaries are the big corporations and losers purposes; rest of land can be used for housing
are the ordinary people and farmer community purpose, services, institutions, parks, and so on.
dependent to land in several ways, the peasants Only units approved under the SEZ scheme are to
and tenants, agricultural laborers, tribals, and establish units in premises of SEZ (Department of fishing community.
Commerce, GoI, 2015). The question is that from
SEZ is fast becoming and representing the most where land will come for hundreds (more than 500)
outrageous symbol of pro-corporate, anti-people, of SEZ are being established and in future many
anti-labor establishment as model of more to come with requirement of unprecedented
industrialization (Banerjee, 2006; Nielsen, 2010; amount of land across India.
Roy, 2007; Shah et al., 2012). Suppression from
There are guidelines by the central government
government and corporate houses has created a to the state governments for peaceful land
perception that only popular and mass resistance acquisition process for setting up of SEZs, the first
could make the government to re-think and to have targeted land for acquisition should be of waste and
a moderate stand in this regard. Difference between barren and, if necessary, single-crop agricultural
acquisition of land for setting up production land could be acquired for the SEZs through lawful
industry, and land for mining is very little, so far it acquisition machinery but forceful land acquisition
is evident that due to inadequate industrial policy is reality. It has been said that only if essential, than
and land reform has led to destruction of social a portion of double-cropped agricultural land can to
auditing, people’s livelihoods and displacement be taken to fulfill the minimum land requirements,
(Banerjee, 2006; Patnaik, 2008).
especially for the setting up of multi-product SEZ,
To understand the impact of SEZ on society and and acquired land area should not be more than 10
environment following Figure 1 reflects the five percent of the total land required for the
different types of impact SEZ can cause at various establishment of SEZ (Dev, 2008).
level and how all these effects are interacting with
The Supreme Court (SC) of India recently
each other and creating overall impact.
ruled, “If the project taken as a whole is an attempt 226
Emerging Economy Studies 2(2)
in the direction of bringing in foreign exchange, acquisitions by central and state governments for
generating employment opportunities and securing establishment of industries. India’s public sector
economic benefits to the state and public at large, enterprise has been acquiring land for expansion
it will serve public purpose.” However, in a still of production since independence. The expansion
another judgment (May 2010), the SC of India venture of several central and state public units, as
sternly criticized the abuse of the LAA and well as the development of new townships (e.g.,
proposed for development of pro-people land Chandigarh, Bhubaneswar, Bokaro, Bhilai, and
acquisition policy (International Labour Office, Durgapur) based on large-scale land acquisitions
2012). It has clearly stated that the state must act as and rehabilitation of local populations. Several
a benevolent trustee of people’s land. It directed past and present land acquisitions have been done
the government to develop laws supporting those under the umbrage of “public purpose” clause of whose land is being taken. the LAA of 1894.
Situation is critical and it can be observed from
the assessment of International Labour Office
(Mansingh et al., 2012), the number of people What is “Public Purpose”?
likely to be displaced by the land acquisition for The LAA 1894 has been criticized from long time
already notified SEZs is approximately 1.14 for being an outdated legislation in modern India
million, which is 18 times higher than the number even with recent amendments. This is, nevertheless,
of people officially claimed to get direct a relatively recent criticism emerging in response
employment in these notified zones. Additionally, to establishment of SEZs. There is no clear
the Department of Commerce (Government of explanation why the LAA 1894 was not
India) estimates suggest that 1 million new direct controversial topic when India’s public sector
jobs and while 1.4 million persons get indirect enterprise was on an acquiring splurge. One
employment by creation of an SEZ. This estimate clarification could be that “public purpose”—the
lead us to the conclusive numbers as total apparent basis of land acquisition for government
employment created from SEZs to be just about agencies is sanctified by the LAA—was never
one-eighth of the loss signified by displacement controversial as long as the land remained with the
for land acquisition. It raises many questions on public sector firms. The same “public purpose”
objective and process of land acquisition for became point of contention when land being establishment of SEZs.
allocated to private firms for development of
SEZs. As state agencies acquired large tract of Land Acquisition Act
contiguous land under the clause of “public
purpose” and being allocated to private developers,
Since inception SEZs has been versed with various the debate created a critical question that “can
kind of controversies which has put question mark states acquire land in ‘public purpose’ for use of
on the SEZ Act and the government policy. Land private firms.”
emerged as the most important element of SEZs
The SEZ policy of the Government of India has
policy as it is evident by the ambiguous use of the two apparently irreconcilable facets. It depends
LAA 1894, diversion of land for other purposes largely on the active involvement of private and impact on stockholders.
enterprises for development zones. The SEZ
The aspect of land acquisition has been core to policy empowers state governments to be
the controversies on SEZs. Though, SEZs were “facilitators” in land acquisitions on behalf of
not the first instances which became base of land developers. Implication of such expectation is Parwez and Sen 227
based on realization that land markets suffer from
owners for PPP projects and 80 percent for
inefficient market-based transactions due to
private entities. However, the amendment,
information asymmetry. Thus, state governments
brought in by government recently removed
are expected to play role of mediator between
this provision of “consent” for acquiring
landowners and SEZ developers.
lands for five purposes—Industrial corri-
The LAA defines “public purpose” in an
dors, Public Private Partnership projects,
extensive modus. An amendment made in 1984
Rural Infrastructure, Affordable housing
(68th amendment of 1984) prolonged the original and Defence.
definition to accommodate the requirements of
2. Return of unutilized land: According to the
industrial projects of private firms. While central
Act 2013, if the land remains unutilized for
and state governments have been traditionally
five years, then it needs to be returned to the
employing “public purpose” clause of LAA to
owner. But according to the ordinance prom-
acquire land for social welfare and public sector
ulgated by the government, the period after
purposes. But the utilization of state machinery to
which unutilized land needs to be returned
acquire land for SEZs has provoked the criticism
will be five years, or any period specified at
that “public purpose” is being misused for the
the time of setting up the project.
benefit of private companies at the expense of
3. According to the 2013 Act, land can be
actual owner of land (Levien, 2011; Sarkar, 2007).
acquired by any private company. But
The inclusion of infrastructure projects in list of
according the recent ordinance, land can be
public purposes in 2007 amendment is understood
acquired by any private entity which does
for justifying SEZs development. The main
not define it properly and allow scope of
criticism is mainly due to the government’s misuse.
“overtly” proactive role in the land acquisition
4. As per the new law, if any government offi-
process (Chandrashekhar, 2006; Patnaik, 2008).
cial commits an offence during the process of
Indeed, contentious cases of land acquisition occur
acquisition, he/she cannot be prosecuted
when some small number of landowner offer
without prior sanction from the government.
resistance and prevent developers from acquiring
5. The amendments propose to include 13 leg- large contiguous land.
islations that are currently exempted under
Until 2013, the land acquisition in India was
the purview of the Act in the compensation,
governed by The LAA1984. In 2013, the
rehabilitation and resettlement provisions.
government passed the Right to Fair Compensation
This is, however, seen as a pro-farmer move
and Transparency in Land Acquisition, Resettlement
as there was no uniform central policy of
and Rehabilitation (RFCTLARR) Act to repeal the
rehabilitation and resettlement.
nineteenth century act. The government was aiming
Present government has been vigorously
at ensure the land acquisition limited to public campaigning for the “Make in India” vision which
welfare projects and land owners are adequately aims to boost the domestic manufacturing. Though
compensated and rehabilitated. The concerns were government is trying to woo the foreign companies
raised after new government in 2015 decided to to invest in India, land acquisition is a major
introduce following amendments to the RFCTLARR problem for these firms with many of them Act (Madhavan, 2015).
dropping their investment plan over the past few
1. Removal of “consent” clause: The new Act years (Madhavan, 2015).
in 2013 says that land could be acquired
Though there are suggestions from some cor-
only with approval of 70 percent of land ners that the industrial enterprises should purchase 228
Emerging Economy Studies 2(2)
land directly from farmers, it does not seem feasi- not voluntary but forceful in nature and without
ble in India as the records of land holding cannot any consent (Basu, 2007; Chandrashekhar, 2009).
be easily verified in the country. This may open the
The major point of the problem is that the estab-
possibility of disputes after the purchase. However, lishment of an SEZ generally requires the forceful
the government mediation in the transfer of land land acquisition and the eviction of its previous
has not proved fully successful to compensate and users and local people. This is very possible and
rehabilitate the displace people. The draft of the being implemented by the states governments
government’s National Policy for Rehabilitation under the LAA of 1894 for public purposes. The
states that figures around 75 percent of the dis- states in which the SEZs to be allocated land and
placed people since 1951 are still awaiting have been approved are facing intense protests rehabilitation.
against the land acquisition, from the local popula-
tion particularly from the farming community, and
The Land Acquisition Issues
being accused by the land owners that the govern-
ment of snatching there fertile land forcibly, at
Land is the most significant natural resource, upon much lower prices than the prevailing market
which almost all human activities are based since prices in the real estate sector (Chandrashekhar,
ancient time. Land continues to have enormous 2006; Levien, 2011; Parwez, 2015). There has
social, economic, and symbolic relevance, particu- been many incident in recent year of massive pro-
larly in case of India where affiliation with land is test by the land owners for against the forceful
not only source of livelihood and same time emo- acquisition their land in the name of public pur-
tional one too. Access to land, ownership of land pose for development.
and its documentation are issues essential to the
It has been observed that emergence of a trend
livelihoods of the large population of India, par- wherein developers approached the government
ticularly in the rural and tribal areas (Levien, 2011; for allotment/purchase of vast areas of land in the
Pandey & Tewari, 1996). Land policy and manage- name of SEZ. Till January 2015 approximately
ment are serious determinants of the transactions 491 SEZs have been formally approved, notified
costs connected with accessing and transferring SEZs are 352, in-principle approvals are 33, and
land, both for commercial and residential purpose. operation SEZ are 196 with 3,864 approved units
Land continues to be a major source of the govern- which in India which covers 51,055.73 hectares of
ment revenue and is a key element in implementa- land. Total area (including IP approvals) covered
tion of wide range of government schemes. Land by SEZs is 0.058 percent of total land area and
policies and institutions restructuring is going to 0.317 percent of agricultural land (Department of
have far-reaching effect on the country’s capability Commerce, GoI, 2015).
to sustain economic growth and development, on
India’s adoption of the SEZ model was moti-
the degree that it will benefits the poor (Bhagwati vated by the achievement of China’s SEZs, which & Panagariya, 2013).
turned rural remote place like Shenzhen into global
Land acquisition refers to the process by which manufacturing destination within two decades.
the government forcibly acquires private land for a But, India’s SEZ policy is so unusually different
public purpose with or without the consent of the from the Chinese SEZ model. In China, the stress
owner of the land, which could be different from a was on big sites—industrial town, whereas Indian
market price of the land. It has been experienced SEZs can be established in meagre 10 hectares of
from the recent land acquisition attempt of land area. In the lack of larger scale, it is challenging to
acquisition for establishment of SEZ in India, is retrieve the costs of establishment of standard Parwez and Sen 229
infrastructure (Mukhopadhya and Pradhan, 2009; acquisition because they have witnessed in past
Astarita, 2013). Further, without a huge cluster of that failure of government to provide adequate
firms in a given sector, the collaborations arising compensation with appropriate R&R mechanism.
from “clustering” are lost. More considerably, For local resident and farmers, land has symbolic
China’s SEZs were built on land own by the state, as well as economic value.
and developed by Chinese government agencies in
expectation of rental space and facilities to private
companies, but in case of India, the policy charter Current Status of SEZ and Disparity
relies mainly on private developers to develop, and State government and corporations ventures
operate the SEZs (Astarita, 2013; Tantri, 2012).
account for over 20,893 hectares of tract. In these
Even though there is a unanimity that no devel- cases, the land already available with the state gov-
opment activity can be accepted at the cost of social ernments or state development corporations or with
equity, but the drive of the setting up of SEZs cre- private companies has been used for establishment
ates contradictory perception and implementation of SEZ.
of scheme has created several serious problems.
The land allotted for the 352 notified SEZs
The most important issue emerged among all is the where operations have since commenced comprise
rehabilitation of those displaced population. approximately over 43,258.42 hectares (Department
Displaced people holding agricultural land lose of Commerce, GoI, 2014). Out of the total land area
their livelihood provider, which was the only occu- of 297,319,000 hectares in India, total agricultural
pation and source of income to them. Further, land is of the order of 162,038,800 hectares (54.5
compensation given for acquired land is meagre percent). Out of this total land area, the land in cus-
compared to the present market rate (Desai, 2011; tody of the 352 SEZs notified amounts to approxi-
Ghatak & Dilip, 2011; Sharma, 2007). Displacement mately over 43,258 hectares only. The formal
from the land leads to act of search for new job to approvals granted to 32 SEZs have also worked out
earn livelihood, only knowledge of agricultural to only around 9,981.16 hectares.
activities makes it difficult for them, and they end
Table 1 shows total SEZs approved and noti-
up becoming casual unskilled labor in some kind of fied in different states in India. The Maharashtra
industrial unit because they have been displace has highest number of SEZ approvals (69) and
from their own land (Ghatak & Dilip, 2011). operational (52), followed by Telangna and
Further, there has been many cases reported which Karnataka. It is visible that the less economically
suggest that affected people have to struggle longer developed states which lacks adequate physical
period of time even to get their compensation and infrastructure has less SEZ approvals in India. But
promised employment opportunity.
total land allotment in-principle approval and for-
Currant scenario and past records suggest that mal approval to SEZ in Maharashtra and Gujarat
the all Indian states have a dire track record at is maximum in country with 7,653 and 13,812
resettlement and rehabilitation (R&R) process for hectares, respectively, which is 28.23 and 27.04
people affected by the land acquisition. Even percent, respectively, out of total land allocated
though SC and other state’s High Courts have also for SEZ and being closely followed by Andhra
mandated and directed that government authorities Pradesh and Haryana. The share of India’s biggest
take specific measures to compensate people and most populated state Uttar Pradesh (UP) in
affected by these projects, but implementation has allocation of land in-principle approval and for-
been appalling (Parwez, 2015; Sarkar, 2007). It is mal approval to SEZ has been just 0.41 and 1.31
not surprising that people against any kind of land percent, respectively. 230
Emerging Economy Studies 2(2)
Table 1. Land Allocation to SEZ as Approvals, Granted under the SEZ Act, 2005 (in Hectares) as on 21.01.2015 In-principle Approvals Formal Approvals Granted under the Share Granted under the Share Sl. No. States SEZ Act, 2005 (%) SEZ Act, 2005 (%) 1 Andhra Pradesh 477 1.76 11,253 22.03 2 Chhattisgarh 29 0.11 111 0.22 3 Gujarat 7,198 26.55 13,812 27.04 4 Haryana 6,199 22.86 840 1.64 5 Karnataka 0 0.00 2,789 5.46 6 Madhya Pradesh 2,000 7.38 900 1.76 7 Maharashtra 7,653 28.23 7,344 14.38 8 Orissa 1,620 5.97 1,923 3.76 9 Puducherry 243 0.90 346 0.68 10 Rajasthan 220 0.81 442 0.87 11 Tamil Nadu 1,191 4.39 5,534 10.83 12 Uttar Pradesh 112 0.41 671 1.31 13 West Bengal 200 0.74 324 0.63 14 Chandigarh 0 0.00 57 0.11 15 Goa 0 0.00 367 0.72 16 Jharkhand 0 0.00 16 0.03 17 Kerala 0 0.00 1,197 2.34 18 Manipur 0 0.00 10 0.02 19 Telangana 0 0.00 2,700 5.29 20 Uttarakhand 0 0.00 440 0.86 21 Total 27,113 100.00 51,076 100.00
Source: Computed by the author from data of Department of Commerce, GoI, 2015.
The acquirement of agricultural land for setting million tons of food grains. The policy with
up SEZs is one of the most serious and vital agricultural land acquisition drive may lead India’s
implications of the SEZ policy of the Indian toward food security risk in near future.
government, and price being paid by the poor
To play the political brokerage role visualized
farmers. Findings of the Committee on State for state governments, they will have to devise a
Agrarian Relations and Unfinished Task in Land way to be proactive, vigilant and reformative for
Reforms (Government of India, 2009) raise many fulfilling on their promises. State government
questions on India’s SEZ policy as the report need to apply context-sensitive approaches to
highlighted that the total area of land under SEZs compensating appropriately the affected popula-
is expected to be over 200,000 hectares next few tion. All action of the state government should
years and this much of land on current production incorporate transparency, accountability, and
capacity is capable of producing more than 1 citizen-friendly mechanisms, if they are to be Parwez and Sen 231
credible and trustworthy. One reason why even hectares of land notified in the country for SEZ
apparently attractive offers of compensation are activities, but functional area is only 28,488.49 hec-
declined by affected people is the lack of credibil- tares (62.42 percent) of acquired land. Furthermore,
ity and responses. State government should create it can be observed that a pattern in which developers
institutions for better implementation and coordi- approached the government for allotment/purchase/
nation between government and citizens.
acquisition of huge amount of land in the name of
It is an open question whether SEZs will establishing a SEZ.
develop into islands of docile modernity amongst
Though, only a portion of the land so far
a bundles of undefined dysfunctional mechanism, acquired has been notified for development of SEZ
which symbolize the beset India’s democratic and later on denotification was also resorted within
experiment, or whether SEZs can create new and a few years of profit from price appreciation. In
responsible model of governance that the rest of terms of land area diverted to commercial use, out
Indian economic and industrial establishment will of 39,245.56 hectares of land notified in the six
emulate to create quality it democratically pro- major states, 5,402.22 hectares (14 percent) of land
cesses as modern as its inclusiveness.
was denotified and diverted for other profitable
The land acquisition mechanism under the SEZ purposes (not related to SEZ see Table 2). A lot of
scheme has been contentious in nature across the area of these lands was acquired in the name of the
country. The result was most of the approved SEZs “public purpose” clause of LAA 1894 (Comptroller
never became operational. It was also suspected General of India, 2014). It is evident that land
that some of the SEZ acquired more land than need acquisition is not meeting the core objectives of the
to while some tried to divert the acquired SEZ SEZ Act.
purpose land to some other more profitable
According to the SEZ Act 2005, land for setting commercial uses.
up SEZs necessities to be contiguous and the
All these in the name of economic development developer firm needs to have irrevocable privileges
raises many questions on SEZ policy and its over the land. As land and its development are
implementation mechanism with state governments marked in state subject, acquisition of land is on
is allowed to violate their own land use plans for the Concurrent List, so both central and state
establishment of SEZs, without inviting public governments are authorized to make law as per
interest litigation. Another serious issue is need. Land is acquired and being allocated by the
government allowing the acquisition of prime state government directly or through agencies
agricultural land from farmers for industrial such as land banks depending upon the proposals
purposes in the name of development of public made by the developers. Acquisition of land is
purpose. A major issue is that state is not doing based on vide Section 4 read with Section 6 of the
enough to encourage industry to develop and LAA 1894 legislation. In past and also in recent
establish their unit in the more than 20 percent times, the issue of land acquisition for SEZs has
(680,000 sq. km) of the country’s land area that is faced gradually increasing instances of widespread
officially declared as wasteland. These are very protest across the country. The huge amount of
serious questions marks on India’s SEZs and land land tracts have been acquired in the process of
acquisition policy, which need to be addressed.
industrial development and establishment of SEZs
across the country. The government acquiring the
SEZ and Utilization Pattern of Land land from the public is turning into a major issue
and transfer of wealth from the rural population to
Land appeared to be the utmost decisive and attrac- the corporate firms whom are largely motivated
tive element of the scheme. In total 45,635.63 by profit. 232
Emerging Economy Studies 2(2)
Table 2. State-wise Notified/Utilized/Vacant in Processing Area of Special Economic Zones in
India (as on December 3, 2014) (in Hectares) Sl. Area Lying Vacant in No. States/UT
Total Area Notified Total Area Utilized Processing Area 1 Andhra Pradesh 11,203.52 4,493.96 2,229.89 2 Chandigarh 58.46 23.62 34.84 3 Chhattisgarh 101.28 22.04 79.24 4 Goa 249.48 0.00 249.48 5 Gujarat 12,501.74 6,818.59 4,902.11 6 Haryana 415.49 36.57 293.69 7 Jharkhand 16.42 0.00 16.42 8 Karnataka 2,296.07 841.83 1,039.12 9 Kerala 961.16 390.38 455.99 10 Madhya Pradesh 1,581.89 209.93 757.72 11 Maharashtra 6,712.15 1,754.51 3,235.06 12 Manipur 10.85 0.00 10.85 13 Nagaland 340.00 0.00 340.00 14 Odisha 491.08 300.06 191.01 15 Punjab 46.12 8.39 30.92 16 Rajasthan 773.30 136.78 636.51 17 Tamil Nadu 5,288.00 2,223.00 2,805.03 18 Telangana 2,048.96 1,957.22 469.51 19 Uttar Pradesh 753.92 219.20 476.77 20 West Bengal 235.84 190.71 45.13 India 46,085.55 19,626.64 18,299.29
Source: Computed by the author from data of Ministry of Commerce, GoI, 2015.
Table 3 reflects the present scenario of land Vishakhapatnam Special Economic Zone (12,168.68
area notified and area lying unused in premises of hectares) are top two SEZs in terms of notified land
the central government-owned SEZs across India. area and same time they have highest number vacant
It says that 21,310.03 hectares of land out of land area in terms of 5,172.89 and 4,425.854 hec-
47,803.77 notified land lying vacant all over the tares, respectively. On the other hand, in terms of
India and unused notified land represent up to percentage of land utilized and unutilized these two
44.57 percent of land. It also suggests that Kandla SEZs perform better than the rest of government
Special Economic Zone (12,889.99 hectares) and owned SEZs in India. Parwez and Sen 233
Table 3. Central Government SEZ Land Details
Zone-wise Notified Land Area Details (as on January 23, 2014) (in %) (Area in Hectares) Area Lying Area Lying
Name of the No. of Notified Area Total Utilized Vacant in Vacant in Sl. No Zone SEZ’s Notified
Total Area Processing Area Processing Area Cochin Special 1 65 3,192.49 1,298.04 1,534.00 48.05 Economic Zone Madras Special 2 58 5,380.42 2,202.64 2,738.562 50.89 Economic Zone Noida Special 3 82 4,671.53 671.50 1,288.083 27.57 Economic Zone Vishakhapatnam 4 Special Economic 80 12,168.68 4,172.01 4,425.854 36.37 Zone Kandla Special 5 33 12,889.99 6,880.26 5,172.89 40.13 Economic Zone Falta Special 6 20 1,264.64 571.13 774.25 61.22 Economic Zone SEEPZ Special 7 70 8,236.02 1,893.48 5,376.40 65.27 Economic Zone Total 408 47,803.77 17,689.06 21,310.03 44.57
Source: Computed by the author, 2015 on the basis of data from Department of Commerce, GoI, 2014.
Concerns have already been raised on loss of Table 4. Underutilized Land in Processing Area
revenue and the adverse impact on agriculture of SEZ in Major States
production. The Planning Commission had also Processing Processing Area
raised questions on unchecked benefits being Area Underutilized
provided to SEZs. More than 53,000.00 hectares State Underutilized (%)
or around 215 sq. km of tract is lying vacant in Andhra Pradesh 2823.55 89.23
SEZs across the country even as industry is Chandigarh 27.00 87.10
complaining of problems regarding land
acquisitions to set up factories and plants. (Expert Gujarat 5639.09 87.11
Group, Planning Commission, 2014). The land Maharashtra 98.52 30.70
remains vacant in premises of SEZ despite of Odisha 21.24 30.70
reports that several firms cancelling plans to set up Rajasthan 23.38 52.88
industrial units due to their inability to acquire Karnataka 319.79 71.70
land. According to available data, maximum Tamil Nadu 9372.52 81.01
amount of vacant land in SEZs is in Maharashtra, Total 18325.09 83.71
followed closely by Gujarat (see Table 4).
Source: Computed by the author, 2015 on the basis of data from CAG Audit report, 2014. 234
Emerging Economy Studies 2(2)
There are major 17 SEZs even though were menced investment activity in the proposed projects
notified as early as 2006 with unused land lying and the land had been lying idle in their custody for
empty is up to 18325.09 hectares (83.71 percent) 2–10 years.
of total processing area earmarked. In case of one
Further, considering that agricultural land was
of biggest economic zone, Adani Ports notified in acquired in many cases in the midst of protest and
2009 with area of 6472.86 hectares but only 833.77 controversies, yet persistence of acquiring vast
hectares has been operational and remaining tracts of land without any real economic activity
5639.09 hectares (87.11 percent) still unused so far is a matter of serious social and economic concern,
(see Table 4). It has also been observed that some demanding a cautious approach toward policy of
activities of the units in SEZs were not related to allocation agricultural land for industrial purposes.
the sector specific in allotted land (see Figure 2).
It is fact that land in SEZs also remain vacant Agricultural and Livelihood
due to non-setting up of unit for years which also
reflect on gestation period leads to loss of revenue Implications
and employment due to absence of economic SEZs are noted for their ability to create new
activities. It must be noted that investment in SEZs employment opportunity. India being the country
depends on many factors like change of govern- with a labor surplus, consequently employment
ment policies, market conditions, on-going global creation is a policy priority. SEZs have a dualistic
recession, industry-specific reasons, domestic employment-generation effect. SEZs create direct factors, and so on.
employment for individuals employed in units
It has been observed that out of 392 notified operating within the SEZ. It create indirect
zones, only 152 zones are at functional capacity employment for individuals engaged in industries
(28,488.49 hectares). The land allocated to the rest and services which support the activity within
of 424 SEZs (31,886.27 hectares) has been laying SEZs, such as trucking of goods to SEZs. In all,
unused (52.81 percent of total approved SEZs) even SEZs have generated substantial employment and
though in more than 54 cases the approvals and are predicted to continue generating employment
notifications date back to 2006. It was also observed in increasing volumes.
that out of the total 392 notified SEZs, in 30 SEZs
But on the other side of coin, India’s SEZ pol-
(1,858.17 hectares) in Gujarat, Maharashtra, Andhra icy bases their contentions on few unwanted con-
Pradesh, and Odisha, the developers had not com- sequences of the policy. SEZ development leads to
unjust and inequitable seizure of agrarian land.
SEZ land lying unused in Major States (%)
Figure 2. SEZ Land Lying in Across the Country in Some Major States
Source: Concetualized by the author basis of data from CAG Audit report, 2014. Parwez and Sen 235
Second, land acquisition for SEZs promotes under- farmers largely belong to the small and marginal
handed real estate dealing. India may suffer huge category (84 percent of the farmer households
socio-economic loss on the SEZ policy, which has belong to this group), which are characterized by
been ignored, it is well supported by the estimates extremely low levels of income and involved in
of ministry of rural development (2010), which subsistence cultivation. Moreover, with rising
reveals that close to 114,000 farming households costs of cultivation, low remunerations, high risks
(each household on an average comprising five with crop failure occurring frequently, declining
members) and an additional 82,000 farm worker agricultural growth, and mounting debts have led
families who are dependent upon these farms for the farmer to a distress-like situation of the kind
their livelihoods, will be displaced due to estab- mentioned earlier (Parwez, 2015).
lishment of SEZ all over India. In other words, at
SEZ has been established in either in outer part
least 10 lakh people who primarily depend upon of cities or interiors of states, which attract mostly,
agriculture for their survival will face eviction. displace local population, agricultural labor and
Experts calculate that the total loss of income to farmers as prospective manpower, which does lead
the farming and the farm worker families is at least to creation of few jobs but may destroy thousands
Rs. 212 crores a year. This does not include other of livelihood opportunities. Individual do get
income lost (for instance of artisans) due to the attracted to SEZ-related employment opportunities,
demise of local rural economies. The government mainly not due to a better earning opportunity but
promises “humane” displacement followed by main reason has been less productive nature of
relief and rehabilitation. However, the historical farming in the country and lack better options.
practices does not offer much hope on this count:
When land is acquired from the farmers, the
an estimated 40 million people (of which nearly 40 farmers and agricultural laborers lose their employ-
percent are scheduled tribes and 25 percent sched- ment, as they are not skilled laborers to relocate
uled castes) have lost their land since 1950 on them to other jobs. The problem of displacement
account of displacement due to large development and rehabilitation of farmers and agricultural labor-
projects. At least 75 percent of them still await ers also comes to the fore. Indian farmers are mostly
rehabilitation. Almost 80 percent of the agricul- uneducated, so they cannot get high-rank jobs in
tural population owns only about 17 percent of the SEZs, they can work only as casual laborers in
total agriculture land, making them near landless SEZs. Farmers and agricultural laborers are suffer-
farmers. Far more families and communities ing dismal situation of productivity, low price, and
depend on a piece of land (agricultural labor, for survival issue. Land acquisition of farmers will lead
work, grazing) than those who simply own it. to worsening of their socioeconomic condition.
However, compensation is being discussed only
However in reality, land as livelihood generates
for those who hold titles to land. No compensation much more complex security and lifestyles, than
has been planned for those who do not own the what the money can offer. Besides the main crop,
land but highly depend on the land for their land provides certain foods, environmental livelihood.
services, wild fodder, and medicinal plants. Thus
Another interesting concept emerged from those entirely dependent on the land, say artisans,
special survey conducted by the National Sample pastoral communities will be at loss. Even today in
Survey Organisation (NSSO, 2003) on farmer’s the villages the common practice is to share grain
reflects on the other side of farming activities. with the black smith, the potters, and pastoralists.
Nearly, 40 percent of the farmer households In fact the ones worst affected will be the share-
disliked farming and wanted to give up the croppers and laborers, the petty traders and service
profession due to its unprofitable nature. These providers. These landless people do not even have 236
Emerging Economy Studies 2(2)
a legal basis for compensation. The rehabilitation change. The effective direction is not always
package offers one job per displaced family, and unambiguous: labor markets determine structural
that also requires the member to have a certain change and vice versa. Labor allocation decisions
basic educational qualification. For land-acquired are driven by economic incentives such as wage
households, higher likelihood of engaging in differentials, but non-economic motives may also
salaried or self-employed activities could explain play a decisive role (Swaminathan, 2005).
their lower participation rate within SEZ.
Land acquisition has resulted in the disruption
As such, the gains generated by SEZs in terms of the livelihoods of affected households, lasting
of employment have not been viewed upon as long several years. Unemployment was a direct result
term. According to a study conducted by Society of loss of land, and also of the absence of wage
for Participatory Research (PRIA, 2000) on the labor in neighbors’ farms. Increased unemploy-
workers plight of SEZ in India, only few workers ment was also due to the large scale conversion of
have been provided with long-term employment farmland into non-farmland also reduced the scope
contracts. Short-term contracts are used for flexible for work in common lands such as the collection of
hiring and firing and for avoiding costs such as fruits and fodder for domestic as well as commer-
maternity and redundancy pay (Swaminathan, cial ends. Households engaged in offering services
2007). Further, with regard to the impact of SEZs (barbers, washer men, artisans, molla, etc.) lost
on local livelihoods, the opinion is not positive as employment with the decline in the economic
it has been argued that the SEZs will not create status of the farmers who were their patrons
employment for local population but will instead (Venugopal, 2005).
lead to distress migration of locals since the jobs
The impact of SEZ on rural employment can be
created will need education and skill levels considered as negative in the sense that it may gen-
unreachable for most of the people. Therefore, the erate a labor shortage and deprive rural areas of the
communities such as those of the fisher folks, youngest and best-educated people. The impacts,
farmers, landless laborers, women, Dalits and whether positive or negative, vary greatly and
other marginalized will remain untouched by all depend on a number of factors and variables,
new employment opportunities arising out of the which policy makers and development practition- SEZs (Agarwal, 1994).
ers need to address. SEZ is hiding behind myths of
Given arguments does raise several questions “trickle-down” growth to give itself license to
such as, are the SEZs in the interest of the farmers, strengthen the hand of corporate elites, thereby
agricultural and non-agricultural communities who contributing at once to accelerated growth for the
are living off the land. Is the land acquired in the already enriched and growing poverty for the
name of “compelling and overriding national inter- impoverished (Parwez, 2015). It is thus contribut-
est” is really for the masses? Actually, in the name ing to rapidly rising economic inequality. Only
of “development,” we are only creating disparities when the goals and processes of the SEZs, policy
with wealth in a fewer hands and nowhere near are aligned, when evaluation of proposals are
making growth “inclusive” which would be based based on hard economic criteria and when the gov-
on the concepts of sustainability, ecological sensi- ernment tries to partner with the local community
tivity, and an ingrained understanding of the rather than forcing against their will.
cultural roots of a people (Levien, 2011). Besides
Therefore, in addition to suitable financial com-
farm size distribution, tenure systems and changing pensation, the displaced farm labor and allied
farm types, developments in terms of diversification workers are given preference in employment by the
and pluriactivity, that is, labor allocation changes, SEZ developer or in the business units in the SEZ.
are attributed to the phenomenon of structural There should be a provision for their subsequent Parwez and Sen 237
absorption in employment in the SEZ establish-
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Indian Journal of Industrial Relations, 50(3), 386–396. Parwez and Sen 239 Author’s Biography
Dr. Sazzad Parwez is presently working as Assistant Professor at Indian Institute of Health
Management Research University (IIHMR), Jaipur. Sazzad Parwez holds Ph.D degree from
Central University of Gujarat (CUG), Gandhinagar. Academically he has also done M.Phil
(Economics) from Central University of Gujarat, Gandhinagar and MBA from Birsa
Agricultural University, Ranchi. He also possesses Diploma in Entrepreneurship Management
from Entrepreneurship Development Institute (EDI), Gandhinagar. He has previously taught
as Assistant Professor in National Institute of Social Work and Social Sciences, Bhubaneswar.
He also possesses research experience as Programme Officer for KCG, Department of Higher
Education, Government of Gujarat, Ahmedabad. He has worked on few UGC and ICSSR
sponsored projects. His research is evident by the publication of more than 17 peer- reviewed research papers in
referred national, international journal and publishing houses. He has presented research papers in more than 11
national and international conferences. His area of interest is Social Entrepreneurship, Labour Welfare, Agribusiness,
Corporate Social Responsibility and Microfinance. He is member of Indian Association of Agriculture Economics.
He is also recipient of Maulana Azad National fellowship.
Dr. Vinod Sen at present working as a faculty of Economics at the Department of Economics,
Indira Gandhi National Tribal University, Amarkantak, Madhya Pradesh Since July 5, 2016. Dr.
Sen have Ph.D. in Economics from Jawaharlal Nehru University, New Delhi. Prior to this Dr.
Sen had been working at the Central University of Gujarat form August 6, 2010 to July 4, 2016.
He has also taught at various colleges of Delhi University. He has published 40 research papers
in national and international journals. He has written Four book titled "Labour in an Informal
Sector: A Study of Beedi Rolling Industry in Madhya Pradesh and Chhattisgarh" and
Contemporary Issues of Indian Economy, (eds., with Indira Dutta) by Segment Books another
one on Food Supply Chain Management in Indian Agriculture, (with Sazzad Parwez) New
Delhi, Excel India Publishers and Public Expenditure, Economic Growth and Inflation, (with Solanki, Mukesh
Kumar) New Delhi, Allied Publishers Pvt Ltd.
His major area of interest includes Labour Economics, Informal Sector, Macroeconomics, Tribal Economy. Research
Methodology and Economics of Growth and Development. Dr. Sen has also completed one foreign consultancy pro-
ject funded by Institute d’etudes politques et internationales Geopolis,Universite de Lausanne, Switzerland He is an
Executive Committee member of the Indian Society of Labour Economics, life member of the Indian Economic
Association, and Madhya Pradesh Economics Association. Under his supervision 1 Ph. D awarded and 2 Ph.D has
been submitted and 18 M.Phil degree have been awarded.