:· generation of little new activity as there may be relocation of industries to take advantage of tax concessions,
· revenue loss,
· large-scale land acquisition by the developers which may lead to displacement of farmers with meager compensation,
- acquisition of prime agricultural land having serious implications for food security,
- misuse of land by the developers for real estate and
- uneven growth aggravating regional inequalities.
The Survey highlights that SEZs have been established in many countries as testing grounds for implementation of liberal market economy principles. They are viewed as instruments to enhance the acceptability and credibility of transformation process, to attract domestic and foreign investment, and generally, for the opening up of the economy. With its genesis in the Export Processing Zones (EPZ), the SEZs in India seek to promote value addition component in exports, generate employment and mobilize foreign exchange. EPZs and SEZs were employed with considerable success by China and other ASEAN countries in the 1970s and 1980s to create regional islands, where export oriented manufacturing could be undertaken. While EPZs in some countries had their share of early difficulties, they provided scope for cultivating manufacturing competitiveness when licensing, labour rigidities and high import duties and taxes acted as a disincentive for investment in the rest of the areas. However, in India, the EPZ experiment was much less of an unequivocal success; and since 1965, when the first EPZ in Kandla was set up, a total of 11 such zones have come to existence. The Exim Policy of 1997-2002 then introduced the more comprehensive and liberal SEZ concept, after which a Bill was drafted and passed by the Parliament in the form of SEZ Act, 2005.
Year-on-Year, the industrial growth of 10.6 percent in the first nine months of 2006-07 was the highest recorded since 1995-96. In seven of the eight months of the current year, the Year-on-Year growth of the manufacturing sector was in the double digits.
The growth of industrial sector touched 10.0 percent in 2006-07.According to the Survey, the industrial growth would have been even higher, had it not been for a relatively disappointing performance of the two sub sectors, namely, mining and quarrying; and electricity, gas and water supply.
The continuing broad based growth in the services sector, especially the three sub-sectors of services, trade, hotels, transport and communication services, has continued to boost the sector by growing at double digit rates for the fourth successive year. Impressive progress in Information Technology (IT) enabled services has also given a boost to the sector.
The expected overall annual growth of industry ,the Eleventh Plan (2007-2012) target of 10 percent annual industrial growth appears achievable. As the country enters into the first year of the Eleventh Plan, the sustained growth of the industrial sector is crucially dependent on removing the infrastructural impediments, especially, in the power sector.
The investment scenario looks quite optimistic , particularly with rising domestic savings rates and FDI inflows. Sustained economic growth, fiscal consolidation and an enabling policy environment will continue to provide incentive to capacity addition in industry and sustaining its high growth according to survey.
The Survey feels that the paramount need is for making rapid strides in living standards, health, education, general justice, welfare and the development of scheduled castes, scheduled tribes and other backward classes.
The Survey pointed out that the Central Government expenditure on social services including rural development has gone up consistently over the years, increasing to Rs. 87,607 crore in 2006-07 (BE). ( Click here for full Economic Survey 2006-2007 )
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