May 6, 2007

SEZ Land Travails & Opportunity Cost

There is a heated debate going on in India about securing land for industry. There are those who really need land for setting up an industry, and there are also allegations that some are grabbing land in the name of industry. Business Today had a good piece on this in their latest issue. I have no comments yet on how much land an industry really needs. However I will hold as in an earlier post that we need to kick start large scale manufacturing that can employ millions. If a 50 sq km patch of land with no red tape and hassles lets us have it, then so be it!

What is more important is to understand the massive opportunity cost involved in these humongous delays the government is creating in closing the SEZ decision. We are losing crores of rupees by the hour and I am not exaggerating. Taking an example, Times of India reports that Infosys is being shown an alternate site for a new campus at Hyderabad; this is an year after they were originally allotted land at a site near the new International airport, but the government bungled big time and did not close the decision quickly. It is also reported that this new campus will accommodate 25,000 employees. Now a typical IT Services major can generate at least Rs 2500 crores revenues on such a base (being conservative). Take into account the multiplier effects, that is 100,000 more downstream jobs in the economy delayed by an year! Sheer profits wise that is at least Rs 500 crores in an year. The opportunity cost is criminal, which our politicians will not understand. They will be only too happy to take small time bribes to facilitate decision of much lesser consequence.

1 comment:

Yuva said...

true.. still agri land buy or sell is illegal that needs to change first.

and on similar lines.. india cannot afford villages