Special Correspondent

"Multiplicity of controls, lack of infrastructure undermined EPZs"

NEW DELHI: The Economic Survey has said the recent debate over Special Economic Zones (SEZs) illustrates the kind of considerations that have to be taken into account in the formulation of policies. Many of the apprehensions could be addressed through appropriate policies and safeguards, it said.

Describing SEZs as testing grounds for implementation of liberal market economy principles, the survey noted some of the apprehensions against them: generation of little new activity because industries might relocate, large scale land acquisition which may lead to displacement of farmers with meagre compensation, misuse of land for real estate, acquisition of prime agricultural land having serious implications for food security and uneven growth aggravating regional inequalities.

It defended the setting up of SEZs as they promoted value-addition to exports, generated employment and mobilised foreign exchange. ``The challenge ahead lies in appropriately sequencing to sustain the popular support for reforms and reconciling the conflicting interests of the various forms of constituencies.''

Taking stock of the SEZ experience around the world, the survey found India was the first in Asia to recognise the effectiveness of the export processing zone (EPZ) model but EPZs were not able to emerge as effective instruments for export promotion due to multiplicity of controls and clearances, absence of world-class infrastructure and unstable fiscal regime.