People,
SEZs are just another scam to make slush money much like many other fantastic mega projects that are coming in with minimal planning with the future in mind.
You might think that I only speak doom and gloom whenever I post. But I do have my reasons.
Arin is generally right. But there are anecdotal reasons why SEZs will go the Singur way!
First. The SEZs that were supposed to make money in China are all huge loss-making enterprises. But for China they serve as a strategic mechanism and therefore no one dissents - anyways, in China there IS no dissent .
Special Economic Zones are specifically setup to provide economic incentives to make (our export sector) globally competitive. Basically, its a hidden subsidy. Apparently the cost borne by the Govt (people) will be offset by the increase in revenue, jobs and the downstream secondary effects on the domestic economy. Or so they hope!!!
There are some fundamental problems with this approach. If you remember, the main reason for the IT outsourcing boom was a genuine cost and competency advantage that our IT/ITES sector had over the West.
But that was when our IT people were relatively low paid and we were getting to do jobs that the West did not want to do anyway. So it was party time. But now, we are getting bigger and bigger and swallowing up their core work and they are starting to get hurt. Around a decade ago we had unbeatable competitive advantage. That is fast receding from 3 angles:
1. With the mega bust in the West, people will soon be willing to work for HALF current pay or less in the US. When Obama comes to power we may see REAL and significant pullback of work from India back to US. This may actually become a permanent problem for us over the medium term.
2. In the last 2 years India has slipped from first position to 6th in desirability for outsourcing in the BPO segment. There are many other countries that do the job cheaper, if not better. Basically, clients are fed up with the traffic, infrastructure woes and constant churn (attrition) of people jumping jobs constantly. REAL ESTATE segment contributed its share by the unimaginable greed with which shoddy and unplanned buildings came up in rapid succession and were priced at exorbitant prices, making our offering cost-ineffective. We thought they had no choice but to put up with it. They found others instead
3. Technology is fast emerging to slash and burn vast chunks of low-end BPO work (voice, text conversion from scanned images, etc). Technology will continue to put strong pressure on the ITES segment for many years to come.
The moment the Govt ot any organised movement jumps in, they mess it up by doing precisely the wrong things. So, when ITES needed to be prodded to become MORE competitive, Govt idea of making people more competitive is to give tax breaks and land sops. Its like feeding an athlete all kinds of fatty foods in order to make him more athletic and competitive. It only makes him fatter, lazier and most unfit. Of course, in the short term it seems to work as profits (actually unpaid taxes) seems to be growing. Over time (as you can see by how hugely overpaid our IT executives have become relative to their capability and skills) it only leads to sloth and incompetence.
Corporate greed has risen to new heights where the money has become so huge that any kind of sense, sensitivity to our weaker sections as well as sense of balance is fast disappearing. The blunders of Singur is a pointer to what may come up in other areas also.
There is no doubt that a one-time and significant move is being seen with people moving from Rural to Urban India. Hundreds of millions are going to end up in Urban India and this can be either hugely beneficial or catastrophic, depending on how we manage it.
I believe only a more India-specific and Farmer-sensitive approach to growing our comparitive advantage in many other areas like pharma, gems & jewellery, textiles, etc, rather than gifting away vast amounts of land at dirt-cheap prices to our greedy business leaders will eventually enable our exports sector to remain strong. As usual we will make mistakes first before learning from it and doing it right
This "American" fixation on making money without effort (their main Industry today is the Financial Speculation Industry where money i made out of nothing) is catching on fast in India where people just want to buy land cheap anywhere, weave a story about how its going to shoot up, find a sucker and dump it on him for a fortune. This is being done even by the Real Estate Industry by way of "Land Banks". Same wine, different bottle. This must go and people must start going back to fundamentals of working and creating something real to make their fortunes gradually.
cheers