Dr. Bimal Jalan on SEZ

I am not in favour of the idea of setting up of hundreds of SEZs with substantial concessions on capital and other taxes, says, Dr. Bimal Jalan , who was Governor of the Reserve Bank of India from 1997 to 2003 and currently a Rajya Sabha Member. H e has served as Chief Economic Adviser to the Government, Banking Secretary, Finance Secretary, Member-Secretary of the Planning Commission, and Chairman of the Economic Advisory Council to the Prime Minister.

Dear Mr. Satpathy,

Thank you for your message. Please accept my congratulations for the awards and recognition given to you by several institutions.

I am sorry I have not studied the POSCO project. As such, I am not able to comment on the issues raised by you in relation to this particular project.

However, as a general proposition, I am not in favour of the idea of setting up of hundreds of SEZs with substantial concessions on capital and other taxes. The reason is that the provision of special benefits to projects in SEZs, with permission to sell a substantial part of output in domestic areas, may put ongoing domestic projects in non-SEZ areas at a disadvantage and make them unviable.

So far as land acquisition is concerned, it is not desirable for a state government to get directly involved in the purchase of land for a private company—unless there is an overwhelming public interest in doing so. The "net" public interest has to be evaluated in concrete terms after taking both the costs (including social costs) and benefits (over and above financial outlays) into account.

With best wishes,

Bimal Jalan