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RBI ECHOES FM LINE ON SEZS

Sez-1After land scam and weakening of domestic industrialists and market, another worry has been voiced about the increasing number of Special Economic Zones being planned for the city. This time the worry of the finance minister P Chidambaram has been reiterated by the Reserve Bank of India. The worry that disorderly development of special economic zones could result in unjustified loss of tax revenue to the government. It has been voiced that Special Economic Zones are going to intensify the irregular pattern of development because they will take in resources from less developed areas. Another factor that has to be closely studied is the revenue implications of taxation benefits. With the government giving tax holidays and relaxing labor laws for Special Economic Zones, there has been a rush to set up SEZs. In Navi Mumbai itself, two SEZs have been sanctioned – one being the Mukesh Ambani SEZ and the other Maha Mumbai SEZ. Though the government was contemplating that the revenue loss of taxes to it can be compensated or justified if all the Special Economic Zones ensure forward and backward linkages with the domestic economy, the finance ministry is now opposing it altogether saying that the revenue loss would be too much.

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