GOANS EXPLAIN DECISION TO SCRAP SPECIAL ECONOMIC ZONES

UNCLAS MUMBAI 000544 E.O. 12958: N/A TAGS: ECON EIND EINV PGOV SOCI IN SUBJECT: GOANS EXPLAIN DECISION TO SCRAP SPECIAL ECONOMIC ZONES REF: New Delhi 644 ¶1. Summary: In early 2008, the Government of Goa scrapped plans to construct Special Economic Zones (SEZ) after months of protest from various local stakeholders. On a recent visit to Goa, political, religious, and business leaders in Goa described the cancellation of the SEZs in much the same way: as a swift and well-received government response to grassroots public pressure, and viewed the government's prompt action as a positive development for the state. Overall, SEZ opponents were concerned about the diversion of productive agricultural land for questionable SEZ projects, the influence of overzealous property developers in politics, and the erosion of "Goan culture" by unplanned development. While the diversion of agricultural land for industrial purposes is seen as a controversial issue between farmers and industry almost everywhere in India, this episode demonstrates that diverse local factors and interest groups can also play an important role. End Summary. ¶2. In December 2007, Goa Chief Minister Digambar Kamat announced plans to scrap 15 SEZ projects that were either already approved or at different stages in the approvals process. In June 2008, 12 SEZs were finally cancelled after some wrangling with the central government Board of Approvals (BoA) for SEZs. The status of the remaining three SEZs, which had already received final approval and cannot be withdrawn retroactively, is still to be settled. The BoA is not willing to cancel these three SEZs for fear that it would send a negative signal to investors; however, the Goan government remains persistent in its demand to scrap these three SEZs as well. ¶3. In a meeting with the Consul General and the Deputy Chief of Mission, the Chief Secretary of Goa J.P. Singh admitted that mounting public pressure at the grassroots level forced the government to withdraw approval for all SEZ projects. He said that Goan residents viewed the SEZs as "land scams" in which outside (non-Goan) buyers could purchase land at concessional/non-market prices, with no real intent of developing them as industrial parks. Goans were also concerned that the existing infrastructure -- such as power, water, and sewage -- was not sufficient to support the planned SEZ projects. Overall, the SEZs were deemed to have a negative environmental impact on Goa, he continued. In such a situation, Singh does not forsee future SEZ development in Goa. The Chief Secretary pointed out that not much work had started on the approved SEZ projects. Only leveling and road development work had begun before the projects were halted, he claimed. ¶4. Goan Archbishop Filipe Ferrao agreed with the Chief Secretary's assessment that the SEZs were cancelled after widespread public opposition. He praised the current government, led by Kamath, for being responsive to widespread local sentiments, and addressing concerns that developers were paving over large parts of Goa which was destroying the local culture. Aside from this concern, Ferrao said that once the SEZ plans became clearer, people questioned whether the locals who had sold their land would find suitable employment to replace their lost livelihoods. The Archbishop also agreed that the opposition to the SEZs was largely at a grassroots level, as locals opposed what Goans perceived as a "real estate mafia." These developers had been allowed to use power and money to pursue uncoordinated, unplanned, and sometimes illegal building projects. In a separate meeting, the Bharatiya Janata Party (BJP) leader of the opposition, Manohar Parrikar, agreed with this assessment, acknowledging that widespread local opposition - and not just one or two aggressive NGOs - prompted the government to cancel the SEZ projects. ¶5. Interlocutors from the Goa Chamber of Commerce claimed that Goan residents did not "trust" the decisions of the previous BJP-led government to approve SEZ projects. The national SEZ policy allows developers to set aside only 35 percent of the land for industrial activity, while the remaining 65 percent of the land can be used for infrastructure or housing. Local residents and displaced farmers were, therefore, concerned that the SEZ projects would devote much more space to residential housing and commercial real estate, limiting the creation of industrial jobs. Chamber of Commerce leaders - who also expressed opposition to the SEZ projects - argued that had developers focused on job creation and attracting industry, the projects would not have been so controversial. Chamber of Commerce leaders told the DCM that since the land had already been purchased from farmers in case of the three projects not yet scrapped, the state government would re-christen the SEZs as industrial parks aimed at job creation. ¶6. Comment: In contrast to SEZ politics elsewhere in India, where political leaders attempt to represent farmer concerns and grievances - real or fictitious - for political gain, there appears to have been widespread concern about the development of SEZs in Goa from diverse interest groups, including the business community. After decades of unplanned growth in the tourist and real-estate sectors, many Goans are concerned about the balance between increased prosperity and the preservation of a cherished, if perhaps imagined, lifestyle. After analyzing the economic and social impact of the SEZs on Goa's tight knit communities, policy-makers paid heed to their concern that SEZs as currently structured and administered were not right for Goa. End Comment. FOLMSBEE