Friday, January 25, 2008

Peoples' Economic Zone (PEZ) for Nandigram

PEZ (Peoples’ Economic Zone)

Here is a good example of the provision of urban facilities in rural areas, in Avasari Khurd village on 1500 acres.

If such initiatives can be replicated in over 6 lakh villages (or, 1 lakh janapadas consisting of about 6 villages per janapada), a veritable revolution can be unleashed to provide for new hope, amenities and new livelihood opportunities for the bed-rock of Bharatiya economy: villagers. Why can't such a PEZ be realized by and for the people of Nandigram?

Namaskaram. Kalyanaraman

A Lesson For Nandigram

In a first, farmers of Avasari village set up their own SEZ, aided by a local visionary

Smruti Koppikar (Outlook, Feb. 4, 2008)

Socialist SEZ

The first SEZ to be set up and run by farmers is unique in many ways:

The venture at Avasari Khurd village, 40 km off Pune, will have 1,500 farmers as its stakeholders

Locals have put up little resistance

A core team of farmers and professionals will manage operations
Villagers will have the first right to developed land should they wish to start an industry unit

The multi-product SEZ is spread over 3,557 acres. The project is expected to come up in three years.

It will have residential complexes and malls. Will house automobile, engineering, IT, biotech and agri units.

Avasari Khurd, a typical nondescript Maharashtrian village, may well rewrite the unhappy script that the SEZ (special economic zone) story has followed so far. Nestled in the plains of Ambegaon, 40 km from Pune, Avasari's farmers have designed an SEZ that will be owned, largely constructed, and managed by themselves. "The Avasari farmer," says 72-year-old Sopanrao Bhor, prime mover of the project, "will play the role of Tata and Ambani but will keep in mind the villagers' interests. You could call it a socialist SEZ."

Bhor, along with a core team of professionals from Avasari working in Mumbai and Navi Mumbai, is in the thick of finalising documents required to register their company, Avasari Khurd Industrial Development Pvt Ltd. The proposed entity will have most of the 1,500 farmers in the village as shareholders. It will promote and manage the 3,557-acre multi-product SEZ that should be ready three years from now. The Maharashtra government has given it the in-principle nod. And things began to move last month after a series of meetings between the core team, government officials and the Union ministry of commerce which has to sanction the SEZ. The state has promised all help. Says chief minister Vilasrao Deshmukh: "There's no reason why we shouldn't give it a push."

On paper, the Avasari Khurd SEZ looks like the perfect middle-ground resolution to the angry face-off between agitated farmers, corporates and state governments. The key issue in the SEZ debate has been about millions of farmers across the country having no option but to sell land—their only capital—to promoters, often without adequate compensation. In most cases, the state government has been seen as acting on behalf of the promoters. In the Avasari SEZ project, farmers do not have to give up their right to their land, let alone sell it and move away. There's virtually no displacement, only a relocation of some farms and a few hundred families within the village to allow for a contiguous SEZ.

The government's role will be limited to playing the facilitator and releasing the 40 per cent subsidy it provides for all SEZs. Industry and service sectors will get developed plots on long lease, farmers can continue to live in the village and, in fact, hope to benefit from the SEZ itself. A section of the land is reserved for native villagers with professional expertise and skills to set up shop. "This is not just about locals getting reservations in jobs in other SEZs," says Bhor. "We have enough Avasari people who'll set up industry, cargo terminals, spare-part manufacturing units. They have the first right on the developed land." Adds Bajirao Shinde, deputy sarpanch: "We will all be stakeholders. Everyone here will be a farmer-industrialist."

Avasari has a total land outlay of 6,252 acres, of which 40 per cent is under cultivation and living/grazing area.

The rest, largely vacant, would have tempted any SEZ developer. Instead of living in anxiety about an outsider buying their land, Bhor asked villagers if they could re-use it to set up an SEZ of their own. Of the 18,000 villagers, only a fraction still believes the SEZ is not a great idea; the large majority fully supports it.

Initially, Bhor and his team faced opposition to the idea. But the comprehensive nature of the plan and Bhor's impeccable track record as a farmer, an industrialist—he owns Bhor Rubber Products—and a politician eventually convinced the villagers. An associate of socialist leaders Jayaprakash Narayan and S.M.

Joshi, Bhor has been affiliated to the Congress for decades. As his SEZ idea led to a political divide in the village, Bhor worked around it and told villagers that if they wouldn't join, he and his siblings would create an IT-based SEZ on the 15 acres they own. In June last year, the Avasari

Khurd gram sabha gave the consent and the gram panchayat adopted a resolution to set up the SEZ. It had to be annulled last week because the law does not allow a gram panchayat to undertake such activities. Then, the process of launching and registering a company began. Bhor had valued the land last April at Rs 1.25 lakh per acre. Within months, as the SEZ plan took shape and promoters began to show interest, prices shot up to Rs 9 lakh an acre. The plan now: land will be valued at Rs 25 lakh an acre, the Avasari Khurd Industrial Development Pvt Ltd will take over the land, farmers will be issued share certificates according to the acreage they hand over to the company which will then develop it, and the 150-odd landless villagers will be given shares for a nominal cash capital. Post-development, the land price is expected to touch Rs 2 crore an acre.

"There is clear profit in setting up an SEZ, that's why the biggest industrialists are doing it. Why shouldn't farmers take the profit themselves?" asks Bhor. The total outlay of the project is Rs 18,000 crore, a sum that many farmers don't even comprehend. But Bhor and his team have a plan in place. If you factor in the land, the company assets will be in the region of Rs 1,000 crore. "With this, we can easily raise bank loans for initial development, then lease out parts of the SEZ and raise more money. There's government subsidy as well," says Bhor.

Of the 3,557 acres, about a thousand will be set aside for residential complexes, roads, markets/malls, gardens and so on. About 2,500 acres will have automobile, engineering, electronic and IT, pharmaceutical, chemical, biotech, horticulture and agro-based units, as well as warehouses and transport hubs. The detailed layout has been readied.

"The Avasari Khurd proposal looks promising, we await the papers," a Union commerce ministry official told Outlook. Economists from the Pune University believe this is a pathbreaking concept that could impact the very concept of SEZs in the country. Already, enthused by the Avasari progress, villagers of Navale, also near Pune, have decided to set up a meat export SEZ. Villagers of Akrole in Nashik district are looking to replicate Avasari for an export-oriented wine SEZ. "My understanding is that India is already yoked to the world economy. Indian and foreign companies have swallowed the small-scale sector, and SEZs threaten farmers," says Bhor. "It follows that farmers stand to gain if they become real stakeholders and shareholders in SEZs. Ultimately, as a farmer, I don't want to give up ancestral land but I can put it to modern, perhaps more beneficial, use." A contagion all would welcome.

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