New Delhi, Sep 25 (IANS) Farmlands will no longer be available for setting up new special economic zones (SEZs) in the country, Commerce Minister Kamal Nath Monday announced here Monday following a directive by Congress president Sonia Gandhi.
'The Board of Approval on SEZs has made it mandatory that no proposal for SEZs on prime agricultural land should be cleared,' Kamal Nath told reporters here, two days after Gandhi called for caution on the issue.
Gandhi had told a conclave of the chief ministers of the Congress-led states in Nainital Saturday that while industry needed land for setting up SEZs, agricultural land should not be diverted to them.
'Farmers must get proper compensation when their land is purchased. Can't the farmers become stakeholders in the projects that come up on the land acquired from them?' the Congress president had asked.
But the opposition still called it a flawed policy that encouraged unscrupulous grabbing of farmland on the pretext of development. 'It is the biggest real estate scam in India,' alleged Janata Dal-United president Sharad Yadav Monday.
Around 150 SEZs are coming up in the country on 26,800 hectares of land and over 225 more proposals are pending with the government and will cover another 75,000 hectares, according to officials of the commerce ministry.
The SEZs are expected to employ 500,000 people by end-2007 and invest some Rs.1,000 billion, including Rs.250 billion from overseas. The 18 operational SEZs have so far exported Rs.225 billion worth of products and employed 123,000 people.
A strong votary for SEZs in the country, Kamal Nath also said that the Reserve Bank of India (RBI) must keep its promise of treating such projects as engines of India's economic growth for the purpose of extending term finances to them.
'The RBI must ensure that it does not contradict itself,' he said referring to a report tabled by the apex bank last month where it praised the SEZ scheme even while cautioning on the potential revenue loss on account of fiscal sops.
The central bank had also recently asked commercial banks to treat SEZs on par with real estate projects for the purpose of loans, which industry complained would increase the cost of such financing.