Special Economic Zones: Promise, Performance and Pending Issues

This set of four CPR Occasional Papers addresses different facets of what continues to be a contentious subject. The first paper, by S N Menon and SoumyaKantiMitra, provides an overview of the rationale underpinning the SEZ policy. It points out the benefits of an export-led growth strategy and argues that the SEZ policy is driven by the objectives of increasing (a) economic activity, (b) exports, (c) investment, (d) employment and (e) infrastructure. The second paper by ParthaMukhopadhyay, which appeared in the Seminar of January 2008, raises a number of questions about this approach and questions the seriousness and rigour of the approval process. It examines the structure of fiscal concessions, the compensation policy adopted and the credibility of the projected figures, based on the variation across different projects of a similar type and finds them lacking.The location of SEZs is more fully explored in the third paper by ParthaMukhopadhyay and KanhuCharan Pradhan. The paper examines the district wise location of SEZs and relates them to the characteristics of districts as available in the census. It finds that most of the SEZs, especially the tiny (less than 100 hectares or 1 sq. km. in size) SEZs are concentrated in districts in the top quartile of urbanisation.The fourth paper by Sivaramakrishnan focuses on a hitherto little examined aspect of the Special Economic Zone policy, namely its implication for urban growth and the governance of the SEZs.