India's central bank, RBI today flagged red for SEZ policies. Earlier I had reported about RBIs concern over real estate bubble in India. At first it was the Finance Ministry which crying over loss of revenues because of industrial relocation to SEZs and now RBI has made it clear that it is not in favor of the SEZ policy in its current state.
RBI in its report has expressed concerns over "uneven pattern of development as they may pull out resources from less developed areas". We had emphasised on the same in our blog post and our exact wordings from the post are "...They had a much better policy in place on developing under served regions by attracting foreign investments..."
RBI also points out that revenue implications have to be factored in. The Finance Ministry has estimated that SEZs could run up a revenue loss of Rs 1,75,000 crore in direct taxes, custom and excise duties over the next five years to the exchequer. However, Commerce Ministry is defending that SEZs will generate Rs44,000 crores to the government.
SEZs still have a long way to go and the policies that exist today are not in the overall interest of the Indian economy but only in the interest of the rich.
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