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Directive – Examine Content Words – Special Economic Zone: Boon or Bane
So, what does this directive EXAMINE mean? When you are asked to Examine, you have to look into the topic in detail & establish key facts and issues associated with the topic. You should try and offer reasons as to why the facts and issues you have identified are the most important, as well as explain the different ways they could be construed. Remember to balance your answer with a fair judgement and focus on establishing facts.
DO NOT be biased or take a single stance. DO NOT offer suggestions when asked to examine an issue.
In the given topic, you have to examine whether Special Economic Zone (SEZ) is a boon or bane. Clearly, the examiner will expect you to write facts related to SEZ and based on your way of handling question, you will be awarded marks if you are able to explain the facts, causes and their implications. Writing in an unbiased style, you have to present your arguments on both sides – benefits of SEZ and drawbacks of SEZ.
SAMPLE ANSWER Introduction
Special Economic Zone is an exclusively demarcated area deemed to be foreign territory for the purposes of trade operations and duties and tariffs in India. SEZs can be set up under Public Private Partnership and it envisages the State Governments about their key role in creating Infrastructure and thereby resulting in development of the State. These zones are entitled to get more liberal economic laws as compared to the typical economic laws. Many people consider it is a boon for the trade purpose while few criticize it as of no use because most of the benefits are taken by high profile people.
Body paragraphs To begin with, any policies, schemes that promote investment, technology flow and employment generation in the country, be it domestic investors or foreign ones are always welcome. Any effort to improve infrastructure and provide hassle free business environment is worthy of encouragement. In that sense SEZ policy is a welcome strategy for economic development. The component of SEZ include roads, airports, ports, generation & distribution of power, telecom, hotels, hospitals, educational institutions, leisure and entertainment units, industrial and commercial complexes, water supply, and any other facility required for the development of the zone.
The fiscal concessions include full exemption from income tax for the SEZ units for five years and 50 per cent concession for the next five years and exemption from customs and excise duty from all imported inputs to SEZ developers as well as units located in them. They are not required to pay even the minimum alternate tax (MAT). At present there are fourteen functional SEZs located at Santa Cruz (Maharashtra), Cochin (Kerala), Kandla and Surat (Gujarat), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh), Falta and Salt Lake (West Bengal), Nodia (Uttar Pradesh), Indore (Madhya Pradesh), Jaipur (Rajasthan), etc. Attractive incentive and great investment opportunities have attractive many business tycoons to step into the SEZ all over the country.
However, the policy has received scathing criticism from various quarters across many states. A major drawback is welfare loss to the community that includes confiscation of land, displacement of people and shifting of productive land away from agriculture. Definitive estimates of the land to be acquired and people to be displaced are not available but some estimate that over a million people may be displaced. The Central as well as the State Governments have not done anything substantial about rehabilitation of the uprooted families.
Moreover, the prospects of revenue loss of SEZs in India are alarming. It is argued that the incentives given to SEZs could adversely impact the rest of the economy and the net investment is likely to remain low. Low employment intensity in the capital-intensive activities in SEZs implies an adverse impact on the aggregate employment.
Conclusion In sum, SEZ can bring great transformation through industrialization and promote economic growth through sustainable development. The bottlenecks such as revenue losses because of the various tax exemptions & incentives and degeneration of agriculture pose as few of the challenges in complete success of SEZ.
By: Jayant Puri ProfileResourcesReport error
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