Paying SEZ promoters is not a good idea

This first appeared in the Herald

Just over two months ago, in April, when it began to get clear that the Special Economic Zone promoters had indeed sought that they be paid the amount they had spent to buy the land so as to free up the property that has been locked since the SEZ policy of the State government was scrapped, Herald had termed this as ‘nothing short of a farce’ that ‘must be rejected by the government, for the interest of the State’. We now learn that the government has not rejected this proposal of the SEZ promoters, but has in fact decided to go ahead and make the payment.

Goa Industrial Development Corporation (GIDC) chairman Glen Ticlo has announced that the Corporation at a board meeting has agreed to pay the SEZ promoters around Rs 300 crore to unlock the 38 lakh square meters of land that had been allotted to them more than a decade ago. The GIDC chairman said that the corporation has agreed to pay the promoters an interest of 9 percent as against their demand for 15 percent, as this is the interest it has earned. This decision of the GIDC will be conveyed to the Supreme Court during the next hearing in July, as the matter currently stands in court.

We cannot deny that this deal of the government with the SEZ promoters will free up some much-required land for industrial purposes in the State. Over the past few years the State has been struggling to make available suitable area for industries, and has even decided to reduce the open spaces in industrial estates to free up some of the land, but should Rs 300 crore of public money be paid out to the SEZ promoters to get back the 38 lakh square meters? Especially since the promoters paid the State approximately Rs 108 crore for the land? What the State will be paying back is close to three time the amount it was paid by the promoters.

Before answering the questions above, we need to look back at the allotment of the land as even a decade after the SEZs have been scrapped, the State is yet to be free from them. The then Congress government, following massive public protests, had scrapped all the SEZs and withdrawn the State SEZ Policy in 2008, though three of the seven SEZs had already been notified by the Union Trade and Commerce Ministry. The promoters had approached the High Court that in 2010 set aside land allotments to all SEZ promoters and said the allotment had been ‘illegal’. The latter then approached the Supreme Court that stayed the High Court decision and directed the State government and the SEZ promoters to find a solution. That is when the promoters of the SEZs put up the proposal, which GIDC has now agreed to meet.

Herald, in this column in April had also said, “If unlocking means getting back land illegally allotted, by paying the allottees Rs 200 plus which included over Rs 100 crore of interest payments, when the State is reeling under a financial crunch, then it is not a good deal.” It reiterates this now by stating unequivocally that this is not a good deal and GIDC should reconsider its decision. There is still time for GIDC to change its decision.