Why should Government step in to make millionaires billionaires while Government does not step in that effectively to raise BPLs to APLs? ,argues Mr Sahadeva Sahoo, Former Chief Secretary, Government of Orissa

Dear Sachi, I was hesitant to air my views on PSCO & SEZ. I want growth but not of the top 10% only. Here are some of my observations.

POSCO & SEZ

Let me state my position on foreign investments. I want outside funds to propel the country's growth, but I also want people to benefit proportionately. Our people consider land as capital in a sense much more pronounced than what money means to the investors.
Can we find a way to enrich the oustees at the rate of growth commensurate with the rate of growth of the industry for which they forego their lands? One way is to allow them a share in the industry's investment and therefore a return on the value of land they surrender
to the industry. Employment potential for the emplyables among the oustees is almost nil in the new technology-driven production. Therefore profit sharing is the treatment of choice. Mahathir Mohammad of Malaysia enforced a percentage of shares ( perhaps
25%) of the ousting company to be reserved for the oustees who were given compensation for land lost partly in form of cash and balance in form of shares in the company. Oustees were free to choose percentage of shares they would purchase. Even if the industry
collapsed they would get a proportionate return on sale of the sick industry.

(1) Opportunity cost to the State

There is a competition among the states to woo as much Investment (be it FDI or domestic capital) as possible. Against this background we consider the case of POSCO. If Orissa leaves POSCO other states would grab it.Have not you noticed the envy in the eyes of other
states, particularly West Bengal when the news spread that Orissa bagged the largest ever FDI via POSCO. If we oppose POSCO, Orissa would not only lose the largest FDI but also credibility as a state which cannot keep its commitment to investors. Mind it,
this FDI is much beneficial to the Govt. of India as its forex reserve goes up by $ 1 billion and domestic MNCs like TATA can/could use the surplus forex to buy foreign companies and make us proud of reverse colonialism.

(2) Opportunity cost to the people.

If there is an industry, people beneft in myriad ways. Those who have no initiative would in any case be the losers. The less educated would join the service sector. The enterprise would have to provide for better health facilities in the area and sponsor or run education and training facilities for the children of oustees. In a democracy how long can an enterprise ignore the demands of the local people?

(3) Corporate Social Responsibility (CSR)

Education and health should be free for the oustee families while non-oustees pay for it at Government rates. MOUs provide for encouragement of ancillaries for eventual employment in the Company or its supporting facilities like maintenance of roads,
parks, ports, etc. allied industries (nonoustees to pay for education and training as per Government norms.) CSR must cover the area development in infrastructure, health and education for the people at the cost of the Company. (Infosys has paid to the Karnataka
Government Rs.600 crores to improve the roads and water supply in Bangalore as people including the Devegouda sr. demanded that IT industries compensate the wear and tear on infrastructure).

SPECIAL ECONOMIC ZONE

While FDI is no liability on the state's citizens, liberalized corporate investments are a burden on the citizens. SEZ may be FDI or domestic investments. It is an American Capitalist invention that allows trading in Shares without any assurance to the share holder on the security of his/her money. Obviously the corporate sector is obliged to pay heavily to the politicians and political Party. Companies are allowed to float and trade shares at a much higher price, sometimes twenty times the face value of the share while share holder gets a written receipt for Rs.10 only per share. Co.s do not pay tax as ordinary people pay on any additional earning they make whereas were
the State make a public borrowing it has to commit to pay back the principal along with an assured interest and inspite of such assured return the intellectuals would upbraid the government for increasing per capita loan liability of the state. Co.s make free money at
the cost of the citizens. What they pay to their Executives is not salary, it is compensation. Compensation includes some payment in the form of shares. If you and I get any extra payment over and above our salary the IT department would on our neck and count every paisa but in case of corporate compensation package additional payment in shape of shares is tax free. If companies get so much free money as their capital at the cost of citizens should they not spend adequately in the area of their operation for the improvement in the quality of life? Which means (1) education and skill improvement (2) medical care and public health (3) roads and markets for transport of
local produce (4) improvement and marketing of products of local artisans and all that as part of CSR, whatever may be the cost. They are substituting Government in their area of operation. SEZ is something more sinister. The area is an island of economic sovereignty. They are allowed to purchase from the hinterland without paying taxes and sell them abroad without paying customs and other duties which a normal exporter would pay. Local tax authorities and police/administration would keep their hands off.

Like some of our small scale industries if they blackmarket the raw materials would the Government tolerate? Why should they be tax havens? As happens in international borders unscrupulous elements with the support of political heavy weights would prosper at the borders of SEZ. If SEZ is an island independent of the Government let it be a patch of barren land.

Why should Government step in to make millionaires billionaires while Government does not step in that effectively to raise BPLs to APLs?

Sahadeva Sahoo