Tuesday, April 20, 2010

Interim Observations of the National People's Audit of SEZ s Panel Members

National People's Audit of SEZs

April 19-20, Auditorium, Nehru Memorial Museum and Library

Preliminary Observations by the National Panel


1.      SEZs across the country have entailed serious violations of the constitution, laws, and procedures laid down by the government itself, and of peoples’ rights. This includes:

                                i.            Several have taken over irrigated lands, despite a policy statement that this will not be allowed.

                              ii.            Most have entailed forcible acquisition of land, using the Land Acquisition Act where the State has intervened on behalf of the developer, or strong-arm tactics where the developer has carried out acquisition directly.

                            iii.            Many have violated environmental laws, such as the Forest Conservation Act, the Forest Rights Act, and the CRZ and EIA notifications of the Environment Protection Act.

                            iv.            Many have obtained approval by providing false or misleading information, e.g. misrepresentation of the purpose for which the SEZ is proposed, the legal status of lands involved, the extent of local community rights and dependence on the area.

                              v.            Most have involved violations, in letter and/or spirit, of constitutional guarantees for adivasis or other disprivileged sections; this includes alienation of supposedly non-alienable lands, taking back of lands given to landless, and many others.


2.      Promises of employment to local people have almost never materialized, either at all, or in the numbers that were promised. Figures provided by the government or developers on this have often been found to be significantly exaggerated. Even where some employment has been generated, it is very minimally to local people, and is often in extremely exploitative and poor working conditions, with particularly terrible effects on women. At the same time, considerable local livelihood loss (of farming, forest-based, fishery-based, and local industrial jobs) has taken place, with no estimate available with the government.

3.      The State has done everything possible to help private developers bidding for SEZs: easy passage through the permission stage, intervening to acquire lands when local people have resisted (using the Land Acquisition Act or more draconian state level laws), providing lands previously acquired for other purposes, providing developers administrative and police help, intimidating or imprisoning people who object or protest, allowing officials to take leave to work for the developers, distorting census figures and fabricating land records to benefit developers, providing infrastructure created through public funds and for public purpose, and in other ways colluding with developers. Political parties have mostly played a typically opportunistic role, siding with affected communities before elections and then abandoning them. Even the judiciary has often failed the victims of this process, siding with the State or with developers, not exercising due diligence in unquestioningly accepting figures and arguments given by them, and not upholding the constitutional rights of people.

4.      Almost all lands taken by SEZs are those on which local communities are dependent. Tens of thousands of acres of fertile rainfed or irrigated lands, wetlands, pastures, forests, and coastal stretches have been taken over. Even the so-called ‘wastelands’ that governments claim have been used, are crucial common property resources for the poor. There is no estimate of the number of people who have thus been dispossessed and deprived, but it would run into several million.

5.      These are also lands that are crucial for ecological security and wildlife/biodiversity. Many of the SEZs for instance are in coastal areas, and entail destruction or alteration of mangroves, mudflats, creeks, and beaches that are ecologically fragile and important.

6.      Environmental and labour laws or procedures, already inadequate, have been further weakened for SEZs.

7.      Landless people who were assigned lands under land reforms legislation, have been deprived once again by ‘resuming’ these lands, in states that have mandated this in the name of ‘public purpose’.

8.      In most cases, there is a serious lack of information with affected populations; very little advance notice is given, and even then, very little if any information is provided on the extent, rationale, and other aspects of the proposed SEZ. Even RTI applications have routinely been frustrated by willful delays and inadequate information. There is therefore no time for people to prepare a response, provide informed objections, or in other ways ensure their rights to a fair hearing.

9.      Due to lack of knowledge of the implications, farmers at many sites have also accepted compensation; only subsequently have they realized the implications of losing their lands or the extent to which they have been duped. It is understandable that they have in many cases subsequently demanded their lands back, or better compensation in tune with the full value of their land as realized by the developer or government agency that is acting as intermediary. Any ‘agreement’ where free and informed consent has not been ensured, where the agreement has been reached under fraud, duress, or coercion, is not acceptable.

10.  All SEZs entail dispossession and displacement not only of communities directly within the boundaries, but also in surrounding areas, e.g. through excessive withdrawal of water, breakage of economic ties, loss of access, pollution, and so on.

11.  While rationalized in the name of export-oriented production, most SEZs seem to be more about real estate speculation, as clear from the size of the lands being acquired (far more than required for the industry per se), the kinds of companies that are acquiring them or partnering with the developers, the growing interest of real estate companies (Indian and foreign), the connection between land acquisition and the stock values of the acquiring companies, and so on.

12.  The governance of SEZs is completely contrary to the constitution, and opposed to the stated aim of the government to enhance decentralization. It concentrates enormous power in the hands of an unaccountable, tiny administrative body, and leaves no space for the powers and functions of panchayats or urban wards to be carried out. The SEZ Act even subverts the sovereign functions of the State, e.g. by giving judicial powers to a designated court set up by the central government, for adjudication on civil disputes as also prosecution of a schedule of offences that has been left unspecified in the Act. The Act even extends the protection normally given to public servants, to all those in the SEZ authority, which would include people from private corporations.

13.  SEZs are also a classic example of the anti-people misuse of the State’s powers under ‘eminent domain’, and ‘public purpose’.

14.  There is no clarity on even whether the purely financial objectives of SEZs are being met, since cost-benefit analyses are not carried out. Evidence from several of them suggest huge losses that the government is incurring, in terms of taxes and duties foregone, as a result of the violation or sidestepping of the Customs and Income Tax Acts. The CAG has even questioned whether the exports objective is being met, since produce from SEZs are often being sold inside India.

15.  Most SEZs have faced and are increasingly facing resistance and protest; in many cases this has meant a complete or partial failure to acquire land, or a withdrawal of the developer from the project. While some movements have been for better compensation and relief packages, very many have been in the nature of outright opposition, with farmers or fishers or pastoralists unwilling to trade their land/water based security for money. Unfortunately, the response of governments to peaceful protests has been intimidation, repression, and the forced criminalization of legitimate activism.

16.  At its root, the SEZ phenomenon is an outcome of the model of ‘development’, with its current epitome in financial globalisation, that India has adopted. This model treats nature and local communities as raw material or labour, to be exploited and abused in the raw pursuit of profits, and justifies itself using outmoded and false indicators like percentage of economic growth. It depends on increasing exports regardless of consequences. It increasingly privatizes public assets, and the SEZ phenomenon is a classic example of how the ‘commons’ are being enclosed for private profit.

17.  Various official agencies have raised serious doubts about the wisdom and validity of the SEZ approach; these include the Finance Ministry, Labour Ministry, a Committee set up by the Rural Development Ministry, the CAG, the RBI, and the Parliamentary Standing Committee on Commerce.

18.  While the routine obfuscation by the government is disturbing, there is a tacit, convenient, and sometimes open collusion of much of the media in propagating the false claims and image of SEZs.


Given the above, our main conclusion is: India’s current SEZ policy and practice are fundamentally unconstitutional, anti-people, ecologically destructive, financially reckless, and unsustainable; it is a thinly disguised attempt at making available huge areas of land for real estate speculation by both Indian and foreign companies. It holds little if any benefit for the poor people of the country, and only increases the growing inequities between the rich and the poor. It runs completely contradictory to the government’s stated commitment to ‘sustainable and equitable development’.


It is also clear that people, so far protesting peacefully, are losing patience; a recipe for possible violence and public disruption in the future. If this happens, it will only be the State which is to blame.



In view of the above, we recommend:


1.      The SEZ Act should be immediately repealed.

2.      All consideration of pending applications should be stopped forthwith.

3.      All SEZs given approval so far (notified or in principle), should be reviewed through a participatory public process. Where local community consent is not obtained, they should be withdrawn. Where they are to continue, they should be subject to all environmental, labour, tax and other laws of the country, converting them to normal industrial estates, and taking back the excess lands.

4.      Farmers, fishers, and other local communities who have been displaced should be urgently rehabilitated, back into the areas they were displaced from, with clear tenurial rights (especially community rights) to the land, within a year.

5.      Farmers, fishers, and other local communities who have been deprived of their lands and/or resources (without being physically displaced) should be given back their lands and/or access to resources, as far as possible in their original state, with clear tenurial rights (especially community rights) to the land and/or resources, within a year.

6.      Developers must be made to remedy the ecological damage, and health hazards, created by their activities.

7.      A full investigation, with public involvement and full transparency, should be conducted into allegations of malpractice, illegality, and misbehaviour on part of corporations, agencies, and officials; and appropriate punishments given to those found guilty.

8.      In place of SEZs, the government must facilitate the security of livelihoods of communities living off the land, helping them enhance agricultural, forestry, fisheries, rural industrial, or other means of livelihoods. Several innovative initiatives of decentralised economic and political democracy (including on people’s economic zones, sustainable agriculture, rural industries, renewable energy, and so on), that are being led by communities and civil society organizations, should be supported and encouraged.

9.      The State’s power of eminent domain over land and natural resources should be brought in line with the mandatory consent of local communities; this would include the replacement of the Land Acquisition Act or other such laws of the centre and the states with laws that are more democratic.


We were greatly inspired by the voices, knowledge and resolve of the many people from local communities who gave testimonies at the National Audit. This provides hope that change can be peacefully brought about for a more equitable, sustainable India.


Jury members : Kuldip Nayar, Admiral (Retd.) Ramdas, K B Saxena, Ashish Kothari, Meher Engineer, Vrinda Grover, Devaki Jain and Rahul Bose



New Delhi, April 20 2010


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