dailyO
Politics

Why it would be great if Modi government announces Coastal Economic Zones in Budget

Advertisement
Rajeev Sharma
Rajeev SharmaJan 15, 2017 | 13:41

Why it would be great if Modi government announces Coastal Economic Zones in Budget

Here is an important sneak peek into the Modi government's Union Budget 2017-18, due to be presented shortly.

The Budget will have a new major policy announcement of two Coastal Economic Zones (CEZ) – one each for the east coast and the west coast. It is s billed as one of the big-ticket budgetary announcements.

The objective is to generate sizeable employment, kick up growth and benefit industry by reducing transportation costs and time overruns. The CEZ is a novelty to the Indian set-up. Though India has several Special Economic Zones or SEZs, a CEZ is yet to find a place in the Indian economic architecture.

Advertisement

CEZs are an integral part of the Chinese economy and have contributed significantly to the Chinese growth story. The Modi government is inspired by the Chinese model with regard to the CEZs.

The proposed budgetary announcement is going to be a pilot project and if the government meets its expected objectives by setting up the two CEZs, many more will be announced in due course.

The proposed CEZs are going to be the government's mantra for port-led industrialisation and development aimed at reducing logistics costs by optimising movement of cargo and help increasing competitiveness in availability of raw materials, skills, supporting infrastructure and existing industrial agglomeration.

coast_011517012407.jpg
CEZs will trigger faster and integrated growth of the maritime states once all the proposed zones come up.

India has a long coastal line of 7500km and a CEZ would aim at transforming it into a goldmine of business and opportunities. The CEZs will not only give the much-needed fillip to industries like food processing, steel, cement, leather processing, petrochemicals, ship building, electronics and automobiles but will also give a major boost to the tourism sector. 

CEZs will trigger faster and integrated growth of the maritime states once all the proposed zones come up. Nine of India's 29 states are maritime states. This will inevitably push up the Gross Domestic Product (GDP) in quick time.

Advertisement

The proposed project is believed to be the brainchild of Arvind Panagariya, the chief of NITI Aayog. He is said to have been working on this ambitious project ever since he took over the reins of the NITI Aayog, the new name of the erstwhile Planning Commission.

The CEZs are the backbone of Modi government's Sagarmala Project and are billed as important engines of Prime Minister Narendra Modi's Make in India scheme.

The Central government plans to have as many as 14 CEZs across major and non-major ports of India. Once this chain of the proposed 14 CEZs is fully in place, the Indian economy is expected to get a booster of as much as $110 billion by enhancing industrial competitiveness of the country.

12 of the 14 proposed CEZs are planned to be major clusters across three major sectors – energy, material and manufacturing.

The 14 proposed CEZs would require upto Rs 14 lakh crore investment or over 200 billion dollars, besides over two billion dollars worth investment in basic infrastructure. The port-led development theme of CEZs would be cushioned by budgetary announcements of sops and subsidies to make the experiment click. It will seek to give to the industry the benefits of the lower costs movement by waterways, something which is yet to be conceptualised in the Indian economy.

Advertisement

Kachch, Suryapur and Saurashtra in Gujarat, North Konkan and South Konkan in Maharashtra, Dakshin Kanara in Karnataka, Malabar in Kerala, Mannar, VCIC South and Poompuhar in Tamil Nadu, VCIC North and VCIC central in Andhra Pradesh, Kalinga in Odisha and Gaud in West Bengal are some of the places where the proposed CEZs are to be set up.

However, as a pilot project only two broad-based CEZs, one each for the East coast and the West coast, are to be announced in the upcoming Union Budget.

But the Modi government confronts a legal problem in announcing the two CEZs in view of the upcoming Assembly elections in the states of Uttar Pradesh, Uttarakhand, Punjab, Goa and Manipur. The government is straitjacketed by the model conduct of conduct which forbids it to announce any new schemes that may be construed as sops for the poll-bound states.

The proposed CEZ on the Western coast will directly impinge on the Goa elections. This is problematic for the Central government.

The government may well have to discuss its proposed announcement about the first-ever CEZs with the Election Commission and seek its nod.

Last updated: January 15, 2017 | 15:22
IN THIS STORY
Please log in
I agree with DailyO's privacy policy