National Situation

Globalization, and its impact in India: Some dimensions

Kunal Chattopadhyay


Reading the English language press in India, as well as writings in the international media, one would have to believe that till 1991, there was a socialist economy in the country. This is what Wikipedia has to say on the subject. Not that it is the most serious academic resource, but for millions of people checking the internet, this is the first thing that they will see on the subject. “ The economy of India was under socialism-based policies for an entire generation from the 1950s until the 1980s. The economy was characterized by extensive regulation, protectionism, and public ownership, leading to pervasive corruption and slow growth. Since 1991, the ongoing economic liberalization has moved India towards a capitalist market economy. It has created millions of better paying jobs and a fast-growing middle class” .

This is an ideological posturing, in order to attack all state control in favour of all out privatization with no controls. In order to cut through the myth, let me briefly discuss the nature of the Indian economy between independence and 1991.

The nationalist movement in India had won hegemony in the struggles by arguing that with the exception of a few small layers, like the big landlords and the bureaucrats, who were the collaborators of the British rulers, all classes stood to benefit by first uniting to remove British rule from India. So independence, from an early stage, meant a socio-economic agenda, not just the substitution of a particular set of rulers. As a part of this promise, there was much talk of planning. However, this was not entirely something that Indian capitalists opposed. In 1944, with India on the verge of independence, a group of industrialists that included Tata, Birla and other notables such as Purshottamdas Thakurdas, A.D. Shroff and Kasturbhai Lalbhai came up with a document called A Brief Memorandum Outlining a Plan of Economic Development for India—also known, famously, as the Bombay Plan. In this, instead of arguing for free markets, they made a case for massive state involvement in the economy.  In 1948, immediately after Independence, Government introduced the Industrial Policy Resolution. This outlined the approach to industrial growth and development. It emphasized the importance to the economy of securing a continuous increase in production and ensuring its equitable distribution. The Industrial Policy Resolution of 1948 was followed by the Industrial Policy Resolution of 1956 which had as its objective the acceleration of the rate of economic growth and the speeding up of industrialization. In 1956, capital was scarce and the base of entrepreneurship not strong enough. Hence, the 1956 Industrial Policy Resolution gave primacy to the role of the State to assume a predominant and direct responsibility for industrial development.

In other words, the growth of the public sector was designed to ensure that wherever private capital did not have the resources, the state would step in. During the 1970s, the nationalization of private Indian banks resulted in deeper penetration of banking capital into the countryside, leading to tapping hitherto untouched rural wealth.  The state sector built infrastructure, low profit heavy industry, at a time when private capital did not have the ability, and kept out foreign capital by its protectionist wall. At the same time, the development of a Public Distribution System meant some amount of subsidies on one hand for peasants, from whom food grain was purchased at a relatively higher procurement price, as well as for the urban poor and middle classes, who got the food grain at a lower price. State subsidized fertilizer, pesticide, and transport also played an important role, so that by the late 1980s, per capita food grain production had gone up to about 180 kilogrammes. This did not mean that poverty had disappeared from India, but famines, that had stalked rural India throughout the colonial era, did disappear for some time.

However, by the early 1980s, Indian capitalism had become stronger, thanks to the policies that had been pursued. The Indian big bourgeoisie now wanted privatization, the opening up of the economy to international trade, and at the same time, in order to compete with powerful international capital, the gutting of the limited laws that protected labour and the environment. The existence of powerful trade unions in both blue collar and white collar sectors made this a difficult project, as did, at the political level, the existence of sizeable left wing parties and a federal structure that meant provincial governments had a degree of autonomy. The Rajiv Gandhi government in the mid-1980s began the process of economic liberalization , but despite the vast majority won by the Congress party in the elections, the early years, which also saw a variety of movements by intermediate castes, regional aspirations, as well as the most oppressed castes, all demanding more state action, were not very good for rapid liberalization. However, a number of changes had begun earlier. The defeat of the railway general strike, crushed by brute power in 1974, defeats of jute mill general strikes in West Bengal in the 1970s and 1980s, and the defeat of the Bombay textile strike of 1980-81, considerably weakened the blue collar workers movements and organizations. In textiles, the shift away from Bombay’s traditional mills to new mills in smaller towns, to mills in Ahmedabad, meant a restructuring of the workforce. The white collar unions did remain strong, which is a major factor behind the slow privatization of the finance sectors.

The period 1989-1991 saw a sudden swing and the onset of a rapid transition to globalization. There were three factors involved. First, an increased pressure from the Indian capitalist class. In a seminar organized by the Centre for European Studies, Jadavpur University, in 2001, where I debated Tapan Bhowmick, the then spokesperson of the Confederation of Indian Industries, Mr. Bhowmick strongly argued that in the case of India, it would be wrong to speak of globalization being imposed from outside. The industrialists were keen to change the nature of the Indian economy. Secondly, the crisis of 1989-91, involving the Tien an Men Square massacre, the collapse of the Stalinist regimes in East Europe, and the crisis of the USSR, massively disoriented the Indian left and weakened its ability to fight for a period. This coincided with a massive balance of payments crisis, enabling governments, working in tandem with the IMF, to push through Structural Adjustment Programme. Finally, while a number of trade unions, peasant organizations, youth organizations, women’s organizations did unite to resist the onset of neoliberalism, this was brought to a halt by the end of 1992 using a line of political argument that is often called popular frontism. From 1987, a strongly Hindu sectarian rightwing party, the Bharatiya Janata Party, and the ultra-right current of which it is the electoral front (which is often called the Sangh family, after the ultimate authority, the Rashtriya Swayam Sevak Sangh) had been carrying out a strongly communal fanatic campaign.  The central slogan through which it was carrying out its mobilizations was the call to build a temple by destroying a historic mosque, claiming that the mosque had been built by destroying a temple that marked the birth place of the mythical Hindu hero Rama.  In 1992, this radical right mobilization did succeed in destroying the mosque. At this point, the left parties, the Communist party of India and the Communist Party of India (Marxist), and their smaller allies, who led those 56 mass organizations, declared that in the face of this fascist threat, the campaign against globalization must be suspended and an anti-fascist block built.  In other words, they saw the RSS as fascist, a designation that is widely accepted in India. But from this designation, they went on to draw the cfonclusion that the struggle against fascism had to be waged by blunting the struggle against neoliberalism.

As a result, the next years saw first, the Congress government, though in a minority, pushing through the first stages of the IMF-world Bank WTO programmes. Then came a United Front government, in which the CPI actually participated, while the CPI(M) lent support from outside. This government’s finance minister was P. Chidambaram, whose first budget was describerd by Indian industrialists as a “dream budget”. Among his measures were abolishing the top tier of the graded income tax (the 40%) level, reducing other direct taxes, and carrying out privatization, but at a slightly slower pace. In less than two years this government collapsed, as the Congress withdrew its support from outside. This was followed by the victory of the national Democratic Alliance led by the BJP. In other words, the chosen strategy of the left to halt the forward march of the BJP had failed, while its acceptance of  liberalization with small sops to the workers and peasants saw the logic of liberalization brush aside the “social policies”, and a disappointed worker and peasant mass voting in a disjointed manner. The NDA regime lasted till 2004. During this period, it adopted a bellicose foreign policy, testing nuclear weapons, and surviving the economic sanctions that followed by a greater opening of the markets.

In 2004, the NDA had a very aggressive neoliberal electoral campaign, entitled India Shining. It assumed that the upper and comfortably placed middle classes alone mattered. As a result, the popular verdict went against it. Interestingly, in those provinces, like Madhya Pradesh, where the Congress had been in power and had followed a neoliberal policy, it too suffered set backs. The left, not so much for what it did but for what it said – that it would oppose neoliberalism – received its highest ever number of seats in the parliament: 61 out of 542. After the elections, however, once more in the name of stopping fascism, the left agreed to support a Congress led government, the United Progressive Alliance, and it finally broke with the UPA not over its economic policies, but over the Indo-US nuclear deal.  

A. The Impact of Globalization
This background history shows that regardless of which party or group of parties have been in power in India, the main contours of economic policy have not changed. It is necessary to look at the general consequences of that, before I turn specifically to the SEZs.
The first point to note is that the neoliberal agenda called for cutting down subsidies. The drastic reduction of agricultural subsidies contrasts remarkably with the US paying farmers not to cultivate land, or with tax cuts, tax holidays, and other hand outs for the rich. Credit to agriculture declined. The state procurement was no longer as supportive as in the past. At the same time, the more prosperous farmers were encouraged to move away from foodgrain production, and go for cash crop production. This meant that food grain production dropped rapidly, till in 2008, the per capita production was around 155 kilogrammes, or barely what it was in 1947.

From the beginning, it was argued that free market capitalism would mean a trickle down effect so that as growth rates went up the poor too would enjoy prosperity. The reality has been very different. The Indian parliament committed the country to a reduction of the fiscal deficit to under 3% by 2009. Since tax rates have been lowered, and military expenditure has gone up, the plainest way to cut fiscal deficit was, from the start, cutting subsidies for the workers and peasants. An immediate action was to shift from general public distribution to targeted public distribution. The poor were divided into two arbitrary groups, those Below Poverty Line, (BPL) and those above the poverty line. The result is, 70% of the Indian population currently lives in food insecurity. As the wealthy have no wish to buy from PDS shops, sub standard food is being distributed to the poor. This has led to food riots of a minor type.

The crisis of 1997 had not affected India as much as it affected other countries, since the Indian economy had been less open to foreign capital. It is different now. In 1989, export and import accounted for about 10% of the GDP, while currently it is over 40%. This has not meant wealth trickling down below. But this has meant making India more dependent on international trade and the impact of the crisis in more powerful economies. It has meant the loss of 700,000 jobs in textiles and 200,000 in the diamond, gem and jewelry industry. Minister of Commerce and industry, Kamal Nath has warned that by the end of June, 1.5 million jobs could be lost in export oriented industries. Meanwhile the acting finance minister Pranab Mukherjee was advocating cutting wages and working hours as a “humane” alternative to cutting jobs. In recent years, the stock market has been taken as the best indicator of the economy. In that case, the collapse from a high of 20863 to the current 10,000 plus, after a recovery from its low of a little over 8000, shows the effect of over-reliance on foreign institutional investors, and the impact of their dollars being pulled out when the US economic crisis became acute. In the same way, the fact that exports and imports now account for over 40% of the GDP means that international crises affect India to a far greater extent.

The growth of the economy, the booming sales figures and profits, had been based on a minority of the population. As I remarked, there had been no significant trickle down. Because the Indian population is huge, even 10-15 percent of it looks like a massive market. They drove the housing market, for example. They drove the market in cars, though in the case of India, the market in cars means adding to the oil import bill, adding to pollution, and creating a terrific congestion. Calcutta, for example, has just about 7 percent of its land for roads. Going for a model of development that depends on selling private cars instead of improving public transport, as has been done in recent years, means a serious environmental as well as long term economic crisis. A Jadavpur University team found out that in busy Gariahat junction in Calcutta, standing out one day for 8 hours is equivalent to smoking 30 cigarettes.

Generally, then, the growth that is talked about has been based on a minority. Its wealth has increased. But for the working class that has certainly not been the case. The liberalisation of 1991 was accompanied by a vigorous employer campaign for an 'Exit Policy', i.e. the right to hire and fire workers freely. This was resisted just as fiercely by trade unions, and temporarily withdrawn. However, dismissals and closures continued unabated throughout the decade. In Bombay alone, plants belonging to Ciba Geigy, Abbott Laboratories, Roche Pharmaceuticals, Hoechst, Boots, Boehringer-Mannheim and Parke-Davis were closed, demolishing some of the best jobs available anywhere in India, especially for women. Most of these were achieved by means of so-called Voluntary Retirement Schemes, which, however, contained a large element of intimidation and coercion combined with disinformation designed to create what workers called 'a fear psychosis’.

Employers thus demonstrated that they could get rid of their workforces even without any change in the law. Nonetheless, Indian employers in particular found it cumbersome to be obliged to negotiate a retirement compensation scheme with the union, or to obtain permission for closure or downsizing from the state government. They therefore mounted a systematic campaign to revise (a) the Contract Labour Act, especially Section 10, in order to remove all restrictions on the use of contract labour, and (b) the Industrial Disputes Act, 1947. Provision V B of the latter, introduced in 1976, specified that all units employing 300 or more workers would have to obtain permission from the state government before carrying out dismissals or closures, and this was made applicable to all units employing 100 workers or more in 1982.

Looking at the proportion of informal labour, one estimate puts it at 90.5 per cent in 1972-73, 90.1 per cent in 1987-88, and 91.1 per cent in 1993-94  . The total labour force was 314.13 million in the 1991 census while the Economic Survey 1997-98 estimated the labour force as being 397.2 million in 1997. According to the Statistical Outline of India 1998-99, employment in the organised sector, in millions, rose from 26.73 in 1991 to 28.25 in 1997, so the proportion of (permanent) employees in the organised sector declined from 8.5 per cent to 7.1 per cent in the period 1991-97. Finally, it was estimated that organised sector employment fell from 8 per cent of total employment in 1994 to 7 per cent in 1999-2000 (Economic Times 2000).  

As a result, it is fair to say that globalization has not improved the conditions of the bulk of the labour force, just as it has actually worsened the conditions of the bulk of the rural poor. However, it is at this point that I want to look at the most recent thrust – the call to build special Economic zones. This represents, on one hand, a response to what little legal protection any sector of the working class has, and on the other hand, as response to all environment protection laws and regulations that put the slightest barrier to the accumulation of capital.

B. The Development of SEZs
The name and the concept were borrowed directly from the Chinese. The policy prescription is simple – set up a development zone with the entire infrastructure, offer fiscal and non-fiscal incentives, (income tax concessions, exemption from custom and import duties, and so on), ensure that bureaucratic hassles do not come in the way (no custom clearance required, automatic foreign direct investment or FDI approval, ignore environment and labour laws), and see the rising tide of investment create an export led growth impulse which would attract fresh rounds of investment and provide more employment – a multiplier effect would thus take the economy forward.

SEZ has its origin, in India, in the Export Promotion Zones which had first come up very tentatively in 1965. Till 1985 the EPZs were few and did not really amount to much. In 1981, the Tandon Committee argued that excessive protectionism had imparted a significant bias against exports and the high cost of production structure created by heavy protection reduced the competitiveness of Indian exports. It suggested that free trade zones could be a useful instrument of export promotion. A few EPZs were set up. But there were no major law changes. From 1991 to 2000, there was greater interest, and zone authorities were granted greater powers to provide additional fiscal initiatives, simplifying policy provisions and greater facilities. Moreover, agriculture, horticulture and aqua culture were brought within the purview of EPZs. In 1994, trading, re-engineering and re-conditioning units were also permitted to be set up.  

The real change came from the end of the 20th century. The export import policy 1997-2002 introduced a new wscheme for big SEZs. SEZs will be permitted to be set up in the public, private or joint sectors with a minimum size of 1000 hectares.
So let me first summarize the laws and proposals involved:
Special Economic Zone (SEZ) is a specifically delineated duty free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs.
If an application is made by a company or a group to set up an SEZ,
The State Government shall, forward it along with their commitment to the following to the Department of Commerce, Government of India:
•    That area incorporated in the proposed Special Economic Zone is free from environmental restrictions;
•    That water, electricity and other services would be provided as required;
•    That the units would be given full exemption in electricity duty and tax on sale of electricity for self generated and purchased power;
•    To allow generation, transmission and distribution of power within SEZ;
•    To exempt from State sales tax, octroi, mandi tax, turnover tax and any other duty/cess or levies on the supply of goods from Domestic Tariff Area to SEZ units;
•    That for units inside the Zone, the powers under the Industrial Disputes Act and other related labour Acts would be delegated to the Development Commissioner and that the units will be declared as a Public Utility Service under Industrial Disputes Act.
•    That single point clearances system and minimum inspections requirement under State Laws/Rules would be provided.
The proposal incorporating the commitments of the State Government will be considered by an Inter-Ministerial Committee in the Department of Commerce. On acceptance of the proposal, a letter of permission will be issued to the applicant

C. What are the facilities Incentive/ Facilities to SEZ Developer?
•    100% FDI allowed for: (a) townships with residential, educational and recreational facilities on a case to case basis, (b)franchise for basic telephone service in SEZ.
•    Income Tax benefit under ( 80 IA ) to developers for any block of 10 years in 15 years
•    Duty free import/domestic procurement of goods for development, operation and maintenance of SEZs.
•    Exemption from Service Tax /CST.
•    Income of infrastructure capital fund/co. from investment in SEZ exempt from Income Tax
•    Investment made by individuals etc in a SEZ co also eligible for exemption u/s 88 of IT Act
•    Developer permitted to transfer infrastructure facility for operation and maintenance.
•    Generation, transmission and distribution of power in SEZs allowed
•    Full freedom in allocation of space and built up area to approved SEZ units on commercial basis.
•    Authorised to provide and maintain service like water, electricity, security, restaurants and recreation centres on commercial lines.
•    SEZs in India functioned from 1.11.2000 to 09.02.2006 under the provisions of the Foreign Trade Policy and fiscal incentives were made effective through the provisions of relevant statutes.
•    To instill confidence in investors and signal the Government’s commitment to a stable SEZ policy regime and with a view to impart stability to the SEZ regime thereby generating greater economic activity and employment through the establishment of SEZs, a comprehensive draft SEZ Bill prepared after extensive discussions with the stakeholders. A number of meetings were held in various parts of the country both by the Minister for Commerce and Industry as well as senior officials for this purpose.  The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005. The draft SEZ Rules were widely discussed and put on the website of the Department of Commerce offering suggestions/comments. Around 800 suggestions were received on the draft rules.  After extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th February, 2006, providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments.   The main objectives of the SEZ Act are:
(a) generation of additional economic activity
(b) promotion of exports of goods and services;
(c) promotion of investment from domestic and foreign sources;
(d) creation of employment opportunities;
(e) development of infrastructure facilities;

•    It is expected that this will trigger a large flow of foreign and domestic investment in SEZs, in infrastructure and productive capacity, leading to generation of additional economic activity and creation of employment opportunities.
We now need to look at the actual impact of SEZs, the aim of Indian and international capital regarding SEZs and similar units, and the growth of popular resistance.

According to government propaganda,
“Out of the 531 formal approvals given till date, 174 approvals are for sector specific and multi product SEZs for manufacture of Textiles & Apparels, Leather Footwear, Automobile components, Engineering etc.. which would involve labour intensive manufacturing. SEZs are going to lead to creation of employment for large number of unemployed rural youth. Nokia and Flextronics electronics hardware SEZs in Sriperumbudur are already providing employment to 14577 and 1058 persons. Hyderabad Gems SEZ for Jewellery manufacturing in Hyderabad has already employed 2145 persons, majority of whom are from landless families, after providing training to them. They have a projected direct employment for about 2267 persons. Apache SEZ being set up in Andhra Pradesh will employ 20, 000 persons to manufacture 10,00,000 pairs of shoes every month. Current employment in Apache SEZ is 5536 persons. Brandix Apparels, a Sri Lankan FDI project would provide employment to 60,000 workers over a period of 3 years. Even in the services sector, 12.5 million sq meters space is expected in the IT/ITES SEZs which as per the NASSCOM standards translates into 12.5 lakh jobs. It is, therefore, expected that establishment of SEZs would lead to fast growth of labour intensive manufacturing and services in the country.”

The actual picture is quite different. In most cases, the so called new jobs created in SEZs are jobs shifted from the previously existing industries.  Relatively better paid workers have lost jobs and worse pay or worse working conditions have been imposed. Nirmala Banerjee’s studies show that the SEZs have a higher proportion of women workers, who are willing to put up with worse conditions, because many of them feel they will not be working all their lives. They are trying to save up money for a dowry, and are therefore willing to put up with the additional burden. Employers’ unwritten conditions for hiring women workers include the terms that they have to be young and unmarried. Marriage or pregnancy often leads to immediate sacking, since employers are not interested in paying additional amount as maternity benefit, including paid leave. In the organized sector, workers get 4 months paid leave, and in some sectors there is a pressure to make it six months.

D. SEZs and Peasant Resistance
But the immediate victims of SEZs are peasants. Special Economic Zones were first conceptualised during the Bharatiya Janata Party-led National Democratic Alliance government. The government began giving away land across the country at throwaway prices to big industrial houses. Critics were silenced by the refrain: China had done the same in the 1980s, look at it now. Continuing with the NDA government's policy, the Congress-led United Progressive Alliance government notified 63 places in various states to set up SEZs. In all, it is planning to set up 235 such zones. The UPA government believes these SEZs will lead to investments to the tune of Rs 300,000 crore (Rs 3,000 billion) and also create 4 million jobs.
The reality is different. Land for SEZs cannot be land in deserts or inaccessible places. In the end, it is agricultural land that is targeted, with the argument that development will benefit everyone. This is a rhetoric common to Narendra Modi, BJP Chief Minister of Gujarat, and Buddhadev Bhattacharya, CPIM chief minister of West Bengal. It was in West Bengal, that large scale popular resistance developed. Land take over is of course not restricted to acquisition for SEZs alone. In Kalinganagar, in Jajpur district of Orissa, the government was trying to take over land from indigenous peoples for the Tata steel plant expansion. On 2nd January, 2006 the State police opened fire on a protest by local tribals against the takeover and seizure of their land. Sixteen people died on the spot, four more died in the hospital, and a police constable was also killed in the clash. The firing was indiscriminate and in all directions, and continued for over an hour. Even people who were 200-300 meters away were injured. Many people who were trying to escape have bullet injuries in the back, whereas others who stood and tried to fight back, have been injured in neck and torso in front. The tribal woman who died was inside her house when see came out to see what the noise was and was struck by a bullet. The whole massacre seems pre-planned and organized, with certain key persons in the Government and bureaucracy collaborating with Tata Steel to crush the tribal resistance to industrialization and displacement. It seems that a clear signal was to be sent to the opponents of the forced "industrialization" through private capital that no obstacles shall be tolerated.

It was not very different in West Bengal, except that the peasants were not indigenous people (adivasis, or “tribals”). The first attack was in Singur, a part of Hooghly district. According to the government, this area has poor land, identified as capable of producing only one or at best two crops a year. In fact, development of irrigation, road networks, and land reforms have combined to produce a multi-crop area here.  There have been many investigations. A women’s team from Calcutta visited the area several times. What they saw was clear. The government is using a 19th century colonial era act that has remained in the statute books. It allows the government to take away agricultural land for a compensation in cash, and for public need. In Singur, the public need was to give land at throwaway price to the Tatas, once again, so that they could manufacture their Nano, the promised $2000 car, The agreement between the government and the Tatas remained a secret deal, despite attempts to get the details out through the right to information Act. What has been leaked out indicates that the Tatas would pay a paltry sum, over 60 years. The motor car factory is not a labour intensive factory. It was to come up by displacing not only peasants who, willingly or unwillingly, were going to be given cash compensation, but also share-croppers, agricultural labourers, transporters who moved agricultural products, and a range of people who were not going to be compensated at all. In addition, as some of the peasants said clearly, they were peasants, and they wanted development to mean improvement in rural conditions, not their displacement. The process of selection of the site is quite unprecedented and queer. From the statements of the Chief Minister, only this much could be ascertained that the Tatas opted for it and the government accepted readily. Presently a small plot of land of as little as 5 cottas can encourage a sharecropper to send his kids to school nourishing an aspiration for a better future. This was what was brutally destroyed on 2 Decmeber 2006 when a massive violence was unleashed and the land marked out was taken over, even though despite all government and CPI(M) efforts, peasants in half the area had refused to even take the compensation cheques. Resistance continued. So did state and party violence. On 8 December, Tapasi Malik, a young woman (18) leader of the resistance struggle, was strangled, and then burnt to death. The CPI(M) in India, and some intellectuals in the US, like Vijay Prashad, claimed that Tapasi’s father and brother had killed her  . After a protracted fight, including a campaign to have not the state criminal investigation department but a central body, the Central Bureau of investigation, look into the murder case, a CPI(M) leader and a CPI(M) activist were arrested. A lower court has found them guilty and sentenced them to life imprisonment, but the case is going on in a higher court. Peasant resistance also created a major upset. In the rural self government bodies’ elections, the district was won by the rightwing opposition Trinamul Congress, as its leader Mamata Banerjee had supported the peasants. Banerjee had been a partner in the BJP led coalition that had initiated the SEZ projects in India, so her role is purely opportunistic. But that she changed positions shows the degree of popular anger at the land acquisition policy.

Singur was followed by bigger plans. The government was upbeat about acquiring land and setting up various SEZs. The first one was to be in Nandigram, in East Medinipur district. A traditionally strong left base, Nandigram also has a record of militant fighting. In January 2007, a notice was circulated that land would be acquired to set up a Chemical Hub. Peasants opposed this. Lakshman Seth, the CPI(M) strong man of Haldia, a nearby town, threatened to use force. There were clashes, and some local CPI(M) leaders, attempting to fire on peasants, were counter attacked. One of them was killed and his house was burnt. A large number of CPI(M) supporters left the area, claiming they were unsafe. After two months, in March, they gathered arms, and backed by the police, attacked in force.

On December 29, 2006, Seth held a public meeting where he announced that land would be taken for the chemical hub, to be set up by the Salim group of Indonesia. For this, 10,000 hectares of land would be acquired from 15 Mouzas (villages). 4500 acres of land was to be acquired in 14 mouzas for a ship building and repairing industry. A number of other villages were to be totally acquired. The total area to be acquired was to be just under 18547 acres. Over 15,000 families would have to be evicted. 137 schools (mostly primary, but also some secondary), and 3 health care units were to be shut down. 16,652 water bodies would be filled up.

To resist this, Nandigram peasants did not allow government personnel into the areas between January and March. The CPI(M) retaliated by organizing an economic blockade of Nandigram. CPI(M) camps on the road to Nandigram searched vehicles. Peasants set up a committee, the Bhumi Uchhed Pratirodh Committee(land eviction resistance committee). Between 11 and 14 march they were sending telegrams and appeals saying they feared an attack. On the 14th, police and CPI(M) goons attacked, killing at least 14. Hundreds were injured. Some of us went there in a relief team. We saw attempts at resistance, but no trace of Maoist guerillas, who, according to the government, were fomenting trouble.

The peasant resistance continued even after the killings. Finally, in April the government stated that an SEZ would not be built in Nandigram, but they refused to pay any compensation for those killed, injured and raped on March 14. No attempts were made to arrest and punish the guilty. So called peace talks were held, but the BUPC was never called for peace talks at the state level. The CPI(M) claimed that the BUPC had ejected 3500 of its supporters from Nandigram area. But civil liberties groups trying to meet those people were not allowed to do so. The APDR estimated that the real number of people ejected were around 300. From late October the CPI(M) again stepped up armed threats, culminating in a mass attack in early November. On 6 november, several villages were torched. Two days prior to this, CPI(M) all India leader Brinda Karat had called for public violence on the people of Nandigram. By 7 November 25000 people had been rendered homeless. Medha Patkar, travelling in a car that also had one of my colleagues, Prof. Amit Bhattacharya, was not allowed to proceed to Nandigram.

Nandigram was taken back by the CPI(M), but at a high price. In East Medinipur too, the party lost in the rural elections. More important, the left political culture in the state received a severe jolt.
Finally there was the struggle in Lalgarh. The Jindal group wanted to set up an SEZ. The focus was to be a steel mill. The area chosen was near Shalboni in West Midnapur district. Inhabited by adivasis or tribals, who have, even six decades after independence, been treated virtually in the same way that the colonial rulers sued to treat them, this was seen as a “soft” area. On 2 November 2008, some Maoists exploded bombs close to the car of the Chief Minister. Immediately, the police swung into action against ordinary people. The police, supposedly there to ensure the safety and security of people, was identified as the main element contributing to people’s insecurity. The organization that came up was named Pulishi Santras Birodhi Janasadharaner Committee (Peoples’ Committee Against Police Atrocities)– a telling commentary on how people see the police. Their charter of demands was the consequence of state violence, including violence on women. On 4th November, an armed police party arrested Dipak Pratihar of Kantapahari village while he was buying medicine from a chemist’s shop in Lalgarh for his pregnant wife Lakshmi. In the process the police brutally beat up Lakshmi and threw her to the ground. She had to be subsequently hospitalized. The police and CRPF, led by the officer in charge of Lalgarh police station, Sandeep Sinha Roy and the superintendent of police of West Midnapore district, Rajesh Singh, unleashed a reign of terror in 35 villages encompassing the entire tribal belt of Lalgarh. In raids throughout the night of November 6th, women were brutally kicked and beaten up with lathis and butts of guns. Among the injured, Chintamani Murmu, one of whose eyes was hit by a gun butt, and Panamani Hansda, who was kicked on her chest and suffered multiple fractures, had to hospitalized. Chintamani’s lost her eye because of the injury. Eight other women were badly wounded. These police brutalities soon reached a point where the adivasis had no other option but to rise up in revolt. The 13 point charter of demands expressed the demands perhaps a little crudely, but very firmly. Demand 1 called for the oppressive Superintendent of Police apologizing in public, using a form that was a form of punishment, and thereby attempting an inversion of existing power relations. Not surprisingly, any talk of an apology by the Superintendent of Police was unacceptable for the state, since how could it lower its head to people it really considers inferiors and subjects rather than citizens. For months, there was a peaceful and democratic struggle by the adivasis both for their land and for their dignity. Eventually, using some violence carried out by Maoists, the state swung into action, making the “Operation Lalgarh” out to be virtually a military operation against a foreign enemy, where police and paramilitary forces, backed by the Indian Air force, march only a few kilometers a day, “reconquering” territory, and beast up locals after they do that reconquest.  
There have been battles elsewhere too. In Gujarat, the Reliance Company, owned by Mukesh Ambani, is setting up an SEZ to producer organic farm products. Peasants are questioning why the government does not punish polluting industries who dump waste on agricultural land, or whose waste is carried by water so that irrigation becomes impossible, while subsidizing farming by one of India’s richest industrialists.

D. SEZs and the Environment
The environmental dimensions of SEZs are less discussed, because the position of all mainstream political parties is a contemptuous one towards environment. In the entire din surrounding the impacts of the Special Economic Zones there is not much information on the impact of these zones on the water situation in the areas around these zones. Broadly, there are three kinds of impacts that SEZ can have on access to water for the people in the SEZ area. First would be due to the diversion of water for use within the SEZ. Second impact would be the impact of release of effluents from the SEZ. Here the situation at locations like Ankleshwar in Gujarat and Patancheru in Andhra Pradesh, among scores of other places is illustrative. At these places, the release of untreated effluents from the industrial estates has created a hell for the residents of the area. Thirdly, the conversion of land to SEZ would mean destruction of groundwater recharge systems. Moreover, it should be remembered here that in India, right to extract groundwater continues to be connected with the ownership of land. Hence SEZs even in relatively small area can pump out huge quantity of water, drying up the wells of the surrounding area.

The Government of India SEZ Act of 2005 has no mention of the sources of water for the proposed zones, leave aside the question of restrictions or impact assessment. In fact, the only time the Act mentions water, it is in the context of territorial waters of India. The SEZ acts or orders or notifications of various states give a blank cheque to the water requirement for the zones. For example, the Gujarat Act says, “The SEZ developer will be granted approval for development of water supply and distribution system to ensure the provision of adequate water supply for SEZ units.” Similar is the situation for other states.

Protests in Maharashtra: The Govt of Maharashtra has issued a land acquisition notice to acquire 10 000 ha land of 45 villages in Pen, Uran and Panvel talukas of Raigarh district for the proposed Mahamumbai SEZ by Reliance. But farmers here have been strongly agitating against this proposal, refusing to give any land for the project. In Pen taluka there are people displaced by the Koyna dam, still without potable water, living in miserable conditions, punching holes in govt’s claim of rehabilitation. Adjacent to this land, the company, in joint venture with the Maharashtra City and Industrial Development Corporation, is acquiring 5000 ha for Navi Mumbai SEZ. At Maan near Pune, where the govt plans to acquire 800 ha of land for industrial zone, a strong protest by the farmers, fisherfolk, salt pan workers and other affected persons demanded scrapping of the SEZ on April 5.

Large scale Mangrove destruction in Gujarat: In the 13 000 ha Mundra SEZ in Kutch in Gujarat, 3000 ha area is covered by Mangroves, which are already being destroyed for the SEZ. Gujarat Forest Dept has raised an alarm over this destruction. Mangroves are also facing destruction at a number of other locations in Gujarat due to industrial expansion along the coast in Kutch, Saurashtra and South Gujarat. Potentially the largest SEZ in the country, the Mundra SEZ will destroy fisheries and livelihood of large number of fisherfolk and they are protesting against the SEZ. On Feb 14, ’07, five members of the community have filed a petition before the Gujarat High Court. Nine villages have also lost their grazing land to the SEZ.

So by now, across India, over a hundred have died resisting the SEZs. And they harm peasants, workers and the environment. The ideology of free market, and the attack on any state aided protection – social security, education, health, are being branded “socialist”, because it was hoped that this would weaken resistance. In recent times, the bogey does not appear so threatening. What is harmful, though, is the dual role of the CPI(M), which has been a major factor in the fortunes of the left dipping in the elections of 2009.

Notes and References:

  1. ‘The Indian Economy’, article in Wikipedia, accessed on 4 April 2009. The recent version is heavily edited. See ‘Economy of India’, , accessed on 1. 7. 2009.
  2. Chibber, Vivek. Locked in Place: State-building and Late Industrialization in India, Princeton: Princeton UP (2003).
  3. See Dutt, Ruddar and K.P.M. Sundaram. Indian Economy, Delhi, S Chand & Co (2008) for details of these policy documents. See also Tomlinson, B. R. and Gordon Johnson, The Economy of Modern India 1860-1970, Cambridge University Press (1996), for a discussion on how limited the resolutions really were.
  4. See Vanaik, Achin The Painful Transition: Bourgeois Democracy in India, Verso, London (1990).
  5. For the Hindutva forces see Chattopadhyay, Kunal (Ed): The Genocidal Pogrom in Gujarat – Anatomy of Indian Fascism. Vadodara, Inquilabi Communist Sangathan (2002).
  6. See Chattopadhyay, Kunal and Soma Marik, ‘The Left Front and the United Progressive Alliance’, in (accessed June 15, 2007)
  7. Mahendra Dev, S., 'Economic Liberalisation and Employment in South Asia -I', Economic and Political Weekly, Vol.XXXV Nos.1&2, 8 January, 2000, p.48.
  8. Ibid, pp. 40-51.
  9. Shalti Research Group SEZ in West Bengal, Kolkata, (2008).
  10. Special economic zones in India, (accessed on 30.6.2009)
  11. See Mitra, Pinaki and others, Marxbad Amader Bhitti, Punjibad amader Bhabishyat, Kolkata, no date.
  12. Peoples’ Democracy 7 May 2007; Sudhanva Deshpande and Vijay Prashad: Communism in Bengal-- The Political Economy of a Crisis, Counterpunch, May 23, 2007.  (accessed 25 November 2007).
  13. For Lalgarh, I have relied mainly on television coverage, since it forms part of the government’s strategy. See for detailed accounts the website as it has been providing a consistent coverage since early November 2008.