I wrote this a while ago but....
During the last few years, the state of Himachal Pradesh has made
significant progress in
industrialization of specific pockets. Share in the state’s income from this
sector accounted for only 1.1% of the total income of the state in the year
1950-1951 which has now jumped to 17.1% during 2005-2006[1]. The grant of special package by the Central Government has acted
as a catalyst in boosting industrial development in the state and increased the
industrial investment proposals in the state manifolds. In order to provide
infrastructural facilities to entrepreneurs, 41 industrial areas
and 15 industrial estates have been developed in the state so far. Most of the
industrial areas in the state so far are set up either by the Department of
Industries (DOI) or under the provisions of Town and Country Planning Act as Special
Area Development Authority (SADA). The state government has set up single
window clearance agencies in the state, which
are functioning from several locations in the state. The state has been
acknowledging the importance of development of industries in the state through
their industrial policy statements in 1999 and the most recent in 2004. As per
the Industrial Policy Guidelines, 1999 and 2004, there is a shift in the
perception of the state government from the existing practice of merely taxing
industries to being more facilitative, in order to increase investment in the
industrial sector.
Government of India announced a new package [2] of industrial incentives
for the facilitation of rapid industrialization of the state of HP. These
incentives provide for cent per cent excise duty exemption and income tax
exemption for a period of 10 years, coupled with enhanced capital investment
subsidy, relaxation in the cost sharing for industrial infrastructure
development fund, central transport subsidy etc amongst many other things. In
line with these incentives the state government also gave some more incentives
to the industry, which would be additional to the existing ones.
Official data shows that the state has got investment of only
Rs.6,523 crore, though proposals amounting to Rs.41,205 crore have been
cleared. The government has approved 13,195
projects since 2003 when the package was announced. Of these, only 6,356 units
have begun production. Pharmaceutical, food processing, textile, packaging and light
engineering sectors have seen most of the investment.
More than 80 percent of industry is mainly cluttered in the
Baddi-Barotiwala-Nalagarh belt in Solan district only. A resolution
demanding that the package be extended by 10 years till 2020 was passed in the
assembly in December last year. In January, the
commerce ministry had recommended to the prime minister and the finance
ministry that the package is extended till 2013. Punjab government
moved the Supreme Court in December last year challenging the central
government's sops to Jammu and Kashmir Maharashtra . Industry experts
say if the subsidies are withdrawn, the cost to companies could increase by
anywhere between 20 and 30 percent. Further, they would go to other states where there is better
infrastructure.
The attitude of the governments and the industrialists is clear
that in a capitalist economy the profit of the few can be rationalized at the
cost of many.
The Financial Dole
If we take the lower figure of the companies which have already
come in and just take the component of “Capital Subsidy” which has a ceiling of
Rs 30 lakhs only, it comes to a whopping Rs 2000 crores. Of course, despite these being called back-ended subsidies ie given
after the investments have been made we all know that several more would have
claimed and the figure could be as high as Rs 5000 crores or that is what the
government is already committed to dole out to the companies. This is an
outright give away in cash. Thus for an investment of Rs 6500 crores if industrialists get
back Rs 5000 crores in cash what is the need for such industrialization.
It is not that the rest of the money invested is not guaranteed to
shower more returns. The tax holidays will add to an enormous amount over this
as excise duty and income tax alone will be 40 percent of the gross profits.
Few specific companies themselves have reported turnovers of Rs 1000 crores[3]. But even if we take a conservative estimate of Ra 5000 crores,
another Rs 2000 crores is given away as tax concessions.
The process of robbing itself and the community to pay investors
and promoters is not new or isolated to the industrial sector alone. The
infrastructural back up of power is provided with another package of concessions. However,
the utility in the State is bleeding hundreds of crores. (see box 1)
The contra-banking
of power during current summer has created a financial crisis for the state
power utility which is running a huge overdraft of over Rs 640 crore. The
utility the assets and functions of which have been vested in the government
under the ongoing restructuring exercise has been in the red and its
accumulated loss has crossed Rs 260 crore.
Its cash-flow position has worsened as under the contra-banking arrangement surplus power supplied to deficit neighbouring states during summer months will be returned during the lean winter months. It is not receiving the usual revenue from sale of power during summer
Its cash-flow position has worsened as under the contra-banking arrangement surplus power supplied to deficit neighbouring states during summer months will be returned during the lean winter months. It is not receiving the usual revenue from sale of power during summer
The financial
health of the utility has not improved despite annual increase in tariff by the
state electricity regulatory commission over the past five years. The employees
have been claiming that consumers will have to pay more after unbundling as
electricity will become dearer. However, the fact was that successive tariff
hikes have increased the average sale price of power from Rs 1.90 paise per
unit in 2003 to Rs 3.70 paise in 2008.
The State has proposed an Industrial Township Act which is so draconian that there shall be
no Panchayat for Industrial Township [4]. If any industrial development area or any part there of is
specified to be in the said industrial township then such area can be allowed
not to have a Panchayat. As per article 243 of the constitution of India
This Act has been accorded overriding effect
[5] over provisions of
any other Act such as TCPA and Himachal Pradesh Municipal Act, 1994. If such
area which is now declared as industrial development area was within the
municipal limits or was included in the master plan or zonal development plan
under the TCPA or under any other development plan under any other Act in the
state then it shall be deemed to be excluded from them from the date of
declaration of such area as industrial development area.
This authority along with the Director of Industries is also
granted power to issue no objection certificate under the proposed Act if any
water, electricity or sewage connection with in the industrial development area
is required by any person [6].
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UNA Special Economic
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The government had
announced that 4,000 acres of land adjoining the Swan River would be acquired for the project. However, the answers to the RTI application
reveal that 11,500 acres are to be acquired. The government has also said
that the land to be acquired is barren and lacks any form of vegetation. I
have visited this site and can say with complete conviction that the land in
this area is among the most fertile in Himachal Pradesh. Again, the
government says that it has bored and is using 3,000 bore wells although
including the private ones there are 10,000 bore wells here. The revenue
department’s estimate of 7,000 trees in the area is also wrong as there are
lakhs of trees here. Initially,
the government had said that only the lands traditionally inundated by the
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December 13, 2008 EPW Economic & Political Weekly
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It is therefore clear that the process of dispossessing people of
their land and other natural resources and depriving them of many
constitutionally guaranteed rights and curtailing institutions of local
self-governance is covertly and overtly being undertaken by the State in the
name of liberalization, privatization and it is being conveniently spoken about as the
inevitability of globalization.
Almost all river segments and over 50,000 ha of prime land and other natural
resources including forests, mineral resources and even cheap human resources
are being sacrificed at this alter of globalisation.
The 12th Finance Commission
has granted resources for the Himalayan States for the ecosystems services and
the base value for the vegetation cover itself is valued at Rs 50,000 per
hectare per annum. When we include all the elements of the services provided it
could be several lakhs.
Thus the model of industrialization totally negates the critical
ecosystem value, destroys local cultures and accumulates wealth amongst the
few.
What Himachal
Needs?
The Himalayan States and particularly
Himachal Pradesh demands the formulation of an industrial policy that intensively
promotes decentralised and green growth.
Opportunities are abound with Horticulture, Medicinal Plants,
agriculture, decentralized power generation systems, community based tourism.
Essentially these industries that need positive discrimination and if they are
encouraged with the right kind of incentives the Gross Value
added per invested rupee will be positive and much larger than the short run
fly-by-night industrialization which would have devastated the basis for long
term sustenance.
Time to Wake-Up
The deleterious effect of the massive change in the ecosystems,
displacement and deprivation of people and the poor rate of assimilation of
local employees in the industry (under 10 percent as against a stated policy of
70 percent) is a clarion call for change. While the State seems to be trying to extend the current
concessions, it is clear that this model only benefits the investors and
investment bankers, the owners, the managers, corrupt politicians and other elite
while crushing the local people and annihilating the
local environment which will have long term implications on the ecosystems and
the community. In an era when Climate Change is a widely debated issue, it
calls for an urgent change in the industrial policies and the package for
promotion should clearly aim at green growth.
[2] vide
office memorandum dt 7th January, 2003 GOI, Ministry of commerce and Industry
[3] Pharmaceutical Exporter
- AmeriStat Pharma, Inc.
Himachal Pharmaceutical Industries -
Suppliers and exporters of ... our annual export turnover is around
200 million USD, including pharmaceuticals www.aipharma.com/pharmaceutical%20exporter.htm
[4] This word
is used here for the first time. However there is a mention of this word in the
Constitution of India in Article 243Q proviso to clause 1 which says Provided
that a Municipality under this clause may not be constituted in such urban area
or part thereof as the Governor may, having regard to the size of the area and
the municipal services being provided or proposed to be provided by an
industrial establishment in that area and such other factors as he may deem
fit, by public notification, specify to be an industrial township.
[5] Section
22a
[6] Section
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