This mindlessness becomes more evident when one looks at similar projects like IT/ITES SEZs. Usually, they should have similar characteristics but in reality, key parameters like employment per hectare and unit of investment and the ratio of indirect to direct employees vary by multiples of ten across the proposed SEZs. It makes one wonder whether the august Board of Approvals really looks at what it is approving.

Neither does it care about monitoring. Even though the minister stated in Parliament: "We no more talk of exports to earn foreign exchange... We kept the focus on how we would generate employment," the monitoring format devotes two pages to calculating 'net foreign exchange' earned. Employment merits just one line.

Nevertheless, if one assumes that the commitments are credible, how will SEZs change India? Well over half of the jobs are in Gujarat and Andhra Pradesh alone. If one adds other high-growth states Karnataka, Maharashtra and Tamil Nadu, this goes up to 85 per cent for direct jobs. Of the proposed investment by units, for which the information is available, Gujarat and Andhra Pradesh account for 92 per cent. It is thus difficult to argue that the SEZs' benefits are truly additional and that they are spreading growth across India.

Indeed, the 154 notified SEZs are in only 53 districts. Almost all SEZs are in districts with a higher level of literacy and most are in relatively more industrial districts. Twenty, mostly urban, districts account for 71 per cent of SEZs by number, 82 per cent by area, 88 per cent by number of direct and indirect jobs. These districts include all the major cities - Delhi, Hyderabad, Bangalore, Chennai, etc. - in addition to newer cities like Ahmedabad, Coimbatore, Indore, Mohali, Nagpur, Pune, Surat and Visakhapatnam.

In places like Goa, and around existing urban centres, it is possible for SEZs to succeed financially based just on housing and commercial development, even if they fail as processing areas. This, and the fact that many SEZs are ostensibly for IT/ITES, which are virtually indistinguishable from commercial real estate, and located close to existing urban areas lends credence to the fears that SEZs are actually real estate scams.

While the SEZ rules make it clear that the developer "shall abide by the local laws, rules, regulations or by-laws in regard to area planning, sewerage disposal, pollution control, labour laws and the like as may be locally applicable', local planning bodies have had no role so far Nineteen small IT/ITES SEZs are to come up in Rangareddy district, around Hyderabad. These, being small, will depend on the city, but the local government has had no say. Neither was the National Capital Region Planning Board consulted about the SEZs in their jurisdiction. Such negligence, at a time when the local municipal authority is looking to limit BPOs in Gurgaon, because they are unable to handle their disregard for urban laws, is almost criminal.

If SEZs come into being, they will be our new cities. This deliberate neglect of urban planning is thus a dangerous policy In the name of a liberal regulatory regime for industrial growth, we may generate chaotic urban growth, spawned by laissez-faire real estate development, a replication of the governance disasters that are our existing cities.

In China, the inspiration for our SEZ policy, the zones are firmly under municipal management. The Beijing zone is one of its 13 municipal districts. A similar zone in Hangzhou, in Zhejiang, is under one of Hangzhou's municipal districts. The zone land is publicly owned and each of the major municipalities has substantive planning capacity. For example, Shenyang, a city of about four million has a Planning Institute with 300 professionals, including about 60 urban planners. A far cry from our lackadaisical neglect.

Are all SEZs fraudulent? Of course not, but many are. Even those that are real foreshadow a promised land that we appear unwilling, if not unable, to manage. Based on the ministry's own data, the benefits of SEZs appear to be a mirage. Many appear based on false pretences and the government mechanism that is supposed to separate wheat from chaff seems dysfunctional. This is not a failure of the SEZ concept, but of our governance process.

It is difficult to believe that a government that baldly accepts averments that a 14-hectare zone will create half a million jobs will hold the developers to their promises. It does not even appear to have a standard, even within sectors, for appraising a proposal and neglects to regulate the urban aspects of SEZs. The governance failures that led to SEZs in the first place seem to have continued in their supervision as well. When will the government learn that it cannot abdicate governance and outsource the task of development to the private sector?

Source: Partha Mukhopadhyay is at the Centre for Policy Research, New Delhi. An expanded version of this piece appears as 'The Promised Land of SEZs' in the January 2008 issue of Seminar available at < href="http://www.india-seminar.com">www.india-seminar.com