Perspectives

NURM and the Poor The NURM would cover 60 cities: seven
category A or mega cities, 28 category B
or other metro cities and remaining the 25

in Globalising Mega Cities of the 28 listed in category C as urban

agglomerations (UAs) with less than one
million population. The prime minister of
India, on the launch of this first major
The central government’s National Urban Renewal Mission is urban development programme of the
expected to convert select cities into “world class” urban central government, stated that the NURM
centres. The submission for basic services that falls under the was in line with the national common
minimum programme (CMP).2
NURM would benefit the poor only if they have security of Rationale: The rationale for the mission
tenure and their settlements and dwelling units get connected to is based on the expectation that overall
these networks. The land question is central to making reforms would lead to high economic
affordable housing available for the poor. Since the growth and to a higher rate of urbanisation
(40 per cent by 2021). Cities thus covered
mission does not address this question, how would a city would in turn act as “growth engines” for
become world class without reaching out to half its population? the entire economy and urban areas would
The mission will instead encourage processes that would displace contribute 65 per cent of the total gross
the poor, rather than include them in the process of city domestic product (GDP). For all this to
happen, infrastructure services such as
transformation. power, telecom, roads, water supply and
mass transportation, along with civic infra-
DARSHINI MAHADEVIA 2005. Demolitions continue. In Delhi, structure, such as sanitation and solid waste
27,000 families in the Yamuna Pushta area management in the cities have to improve.

T
he Jawaharlal Nehru National Ur-
ban Renewal Mission (JNNURM –
henceforth NURM) is expected to
convert select cities into “world class”
ones. The term “world class” is now being
used more as a paradigm for urban devel-
opment, signifying cities with international
standard infrastructure, particularly roads,
airports, public transport, open spaces, and
real estate projects. A large amount of
funds, in a relative sense, have been com-
mitted for this mission. In itself, such a
transformation of a city is not disagree-
able, if it would benefit all or benefit some
and not adversely affect others. But, given
the trend of displacement of the poor in
the last decade, particularly from the mega
cities, it is necessary to take a closer look
at the NURM.
The reality of Indian mega and large
cities over the last decade has been: forced
evictions of slums, hawker removal,
removal of “unwanted economic activities”
such as banning of dancing in beer bars,
displacement of poor through infrastruc-
ture projects and speculative property
markets, and displacement because of
environmental hazards and political vio-
lence. For example, in Mumbai, 90,000
to 94,000 slum units were demolished
between November 2004 and January
and about 1,00,000 families all over the
city were evicted from slums in last eight
years. Those rehabilitated have been shifted
far away on unserviced plots, given on a
five to 10-year lease.1 In Ahmedabad city,
the Sabarmati Riverfront Development
(SRFD) scheme will displace 30,000
households. Four thousand households
have been offered rehabilitation in
20 sq yard apartment units, along with a
loan of Rs 60,000, in a location not clearly
stated. A hundred thousand homeless
people in Delhi were in dire conditions in
the winter of 2005-06, inviting attention
from the National Human Rights Com-
mission (NHRC).
This article asks the question as to
whether the NURM would address the
burning issue of the urban poor’s access
to shelter and basic services (as without
shelter, access to basic services is not
possible). Is this the right question to ask,
given that NURM is supposed to convert
mega and large cities into “world class
cities” and not necessarily serve the poor?
This question, however, is relevant given
that a very large section of urban residents,
poor and non-poor, continue to live in sub-
standard housing with very poor access
to basic services and the NURM has a
submission for the urban poor.
NURM is to begin with select cities, where
investments would be increased in the next
seven years, starting from year 2005-06.
Since the cities and state governments are
not able to do so on their own, the central
government will step in with financial
support.
The other stated rationale is to achieve
the targets of the Millennium Develop-
ment Goals (MDGs) in these cities – with
five of the eight MDGs on poverty, health
and gender equality being addressed. The
unstated rationale is to force state govern-
ments to implement urban sector reforms
more seriously than before, which was not
possible through the City Challenge Fund
(CCF) and Urban Reform Initiative Fund
(URIF). Lastly, if it is not a mission then
no programme gets implemented.
Components: The NURM has two sub-
missions: (a) Submission for Urban Infra-
structure and Governance (UIG), which
will be administered by the ministry of
urban development (MUD), and (b) Sub-
mission for Basic Services to the Urban
Poor (BSUP), which will be administered
by the ministry of urban employment and
poverty alleviation (MUEPA).3 Projects
such as road and associated infrastructure,
public transport, trunk networks of water
supply, sanitation and storm water drains,

Economic and Political Weekly August 5, 2006 3399

parking lots and city beautification, would
be taken up under the UIG. For those
related to slum improvement – shelter
and all basic services – and enhancing
access of urban poor to other social ser-
vices, the BSUP submission would be
tapped into.
The NURM will be implemented first,
by formulating a city development plan
(CDP) indicating policies, programmes and
strategies, and financing, followed by the
preparation of detailed project reports
(DPRs) for the identified projects by urban
local bodies (ULBs)/parastatal agencies.
Each project would have its life cycle costs
– capital outlays and attendant operation
and maintenance (O&M) costs to ensure
that assets are in good working condition
– recovered. Project preparation, evalua-
tion, capacity building, etc, would be done
by empanelled consultants listed by the
central ministry of urban development.
Detailed guidelines for CDP, project prepa-
ration, etc, are also made available.
Finances: It is expected that central finan-
cial assistance would leverage additional
funds for the projects. Central and state
government funds would be hosted in a
state level nodal agency, which can be an
existing agency or a new agency, as grants-
in-aid, part of which would be treated as
revolving fund – 25 per cent for the UIG
projects and 10 per cent for the BSUP
projects. At the end of the mission period,
the revolving fund may be upgraded to a
state level urban infrastructure fund. For
the identified projects, funds would be
disbursed to the ULBs/parastatals as soft
loans or grant-cum-loans or grants. The
ULB/parastatal has to get the rest of the
funds, for which it can seek private sector
participation or borrow from the market
and/or financial institution.
It is expected that Rs 17,219.5 crore per
year (Table 1), that is Rs 1,20,536 crore
over the seven-year period, would be in-
vested in the cities, of which Rs 50,000
crore over the whole period, or Rs 7,698
crore per year, would come through central
government assistance.
For mega cities, the central grant con-
tribution would be 35 per cent of the total
project cost in case of the UIG submission
(Table 2) and would go up to 50 per cent
for BSUP submission. For the next two
categories of urban centres, the central
government grant contribution remains the
same for both the submissions. For the
BSUP submission, the only change from
Table 2 is that the state government’s grant
contribution is taken away and the state
government, ULBs, parastatals and ben-
eficiary contributions make up the rest of
the financial requirements. Thus, in cities
with one to four million, in UIG, grants
would be 70 per cent whereas in BSUP,
grants would be 50 per cent; in NE states
and J and K, grants for UIG would be 100
per cent and for BSUP would be 90 per
cent and lastly for all other non-metro UA,
grants for UIG would be 90 per cent and
that for BSUP, 80 per cent. In essence, in
all except the mega cities, the UIG sub-
mission has a higher grant component than
the BSUP submission!
Conditions: The most contentious part of
the NURM is the conditions/prerequisites
for accessing central funds. There are a set
of mandatory reforms for the ULBs/
parastatals and for the state governments,
and there are a set of optional reforms,

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3400 Economic and Political Weekly August 5, 2006

to be accomplished during the mission (LIG) categories with a system of cross
period. subsidisation; and (c) introduction of
Some of the mandatory reforms at the computerised process of registration of land
ULB/parastatal level are: (a) adoption of and property.
modern accrual-based double entry sys-
tem of accounting; (b) reform of property NURM and the Urban Poor
tax with tax collection efficiency to reach
at least 85 per cent within the next seven NURM is the first comprehensive mis-
years; (c) levy of reasonable user charges sion for urban renewal, albeit in select
with the objective of full cost recovery of cities, which is in line with the ongoing
O&M or recurring costs; (d) internal ear- changes in mega cities particularly, and for
marking, within local bodies, budgets for which they have been clamouring for funds.
basic services to the urban poor; and It is a realisation that cities would not be
(e) provision of basic services to the urban able to undertake this renewal on their own,
poor including security of tenure at afford- given the Indian system of vertical fiscal
able prices, improved housing, water imbalance. The mission, if the funds were
supply and sanitation. made available from the central government
Some of the mandatory reforms at the as promised, would certainly change parts
state level are: (a) Implementation of of some cities (not whole cities). There are
decentralisation measures as envisaged in doubts whether the central government
74th Constitutional Amendment Act would get an additional Rs 7,698 crore per
(CAA); (b) repeal of Urban Land Ceiling year on top of its annual planned outlays
and Regulation Act (ULCRA);4 (c) reform for the two ministries concerned.
of rent control laws, balancing the interests For the urban poor, besides the BSUP
of landlords and tenants; (d) rationalisation submission, two mandatory reforms for
of stamp duty to bring it down to no more the ULBs/parastatals are important;
than 5 per cent; (e) enactment of the public (i) internal earmarking within local
disclosure law to ensure preparation of the bodies’ budgets for basic services to the
medium-term fiscal plans of ULBs/ urban poor; and (ii) provision of basic
parastatals and the release of quarterly per- services to the urban poor including
formance information to all stakeholders. security of tenure at affordable prices, etc.
The important optional reforms expected While the former may be achievable, it is
to be undertaken by ULBs/parastatals and not clear how the latter would be achieved,
state governments are: (a) simplification particularly, as there is no mention of how
of legal and procedural frameworks for land prices would be made affordable.
conversion of land from agricultural to Certainly, the market is not expected to do
non-agricultural purposes; (b) earmarking so, as envisaged under the mission through
at least 20-25 per cent of developed land the repeal of ULCRA.
in all housing projects (both public and In fact, the repeal of ULCRA is the first
private agencies) for economically weaker major concern. With its repeal, theoreti-
sections (EWS) and low income group cally there is no other instrument through
Table 1: Investment Requirements for NURM
(in rupees crore)
Category Number of Investment Requirement Annual Funds
Cities (Over Seven Years) Requirement
Cities with over four million population 7 57,143 8163.3
Cities with one to four million population 28 57,143 8163.3
Selected cities with < 1 million population* 28 6,250 892.9
Total 63 120,536 17219.5
Note: * Of this only 25 would be taken, as the total cities to be covered would not exceed 60.
Source : From the preface of NURM.
Table 2: Contribution by Different State Agencies for UIG Submission
(in per cent)
Category of Cities/Towns/UAs Grant ULB/Parastatal
Centre State Share
Cities/UAs with four million population 35 15 50
Cities with one to four million population 50 20 30
Cities/towns/UAs in north-eastern (NE) states and J and K 90 10 0 to “reform”? It is known that these financial
Cities/UAs other than those mentioned above 80 10 10
Source: From guidelines for the Submission for Urban Infrastructure and Governance.
Economic and Political Weekly August 5, 2006
which affordable land can be made available
to the urban poor. People’s movements for
housing rights have now begun asking for
the strengthening of ULCRA rather than
its repeal. If it does get repealed, we would
be back at the pre-1976 situation in this
area, that is the prevailing scenario before
the UN Habitat Conference held in
Vancouver. If the land tenure issue does
not get addressed, which is the case with
nearly half the population in the megacities,
their access to basic services would also
not get addressed. In that case, the BSUP
sub-mission may not help the poor much.
The second important concern is that the
CDPs are to be framed by consultancy
firms, without any public debates. CDPs
would not be people’s plans, when there
is indeed a dire need to democratise urban
plan-making and development processes.
One does not have an issue with the NURM
benefiting consultancy firms, but their
documents may not be covered under the
Right to Information (RIF) Act. Thus, while
the city master/development plans could
be available for public scrutiny, CDPs may
not be. In that case, even if implementation
of the 74th CAA has been made manda-
tory, it might be so just for the purpose
of cost recovery for the NURM and other
projects and not for deciding city deve-
lopment priorities, which would be de-
cided by consultants. There is also no idea
as to how the RIF Act and Public Dis-
closure Law would work in coordination.
Further, is it not ironical that the 74th
CAA has not yet been fully adopted by
state governments and that this has to be
made into a mandatory requirement for the
NURM? The situation indicates the lack
of interest on part of the state governments
to decentralise power on one hand and a
streak of non-transparency on the other.
This is how most new projects on urban
renewal are being implemented in the cities.
Citizens do not know that their local
governments are borrowing, and may be
mismanaging such funds, and they are then
suddenly confronted with the reality of
increased charges and taxes.
Citizens also do not know that inter-
national funding institutions such as the
World Bank, the USAID, and the ADB are
assisting their governments to “reform”
and what conditionalities such a reform
process bring. In a democratic country such
as India, these financial institutions would
demand the state and local governments
institutions are more interested in recover-
ing their funds and are thus only asking
3401
for such reforms, for their mandate
would not permit them to demand
political reforms.
The most important fear is that the NURM
would lead to more slum demolitions and
displacement, as we have seen happening
across cities. This might especially happen
when the relocation and rehabilitation
tasks of project affected people are ex-
tremely complicated, in an Indian society
that tends to be highly fragmented and
corrupt. This along with an official policy
of non-recognition of slum dwellers who
are squatting or living in unauthorised
settlements would make the situation more
precarious.
Land costs are not to be covered in
project costs. How would the city govern-
ments make land available? Most likely by
freeing lands from the slums. Lands would
also be required for raising financial re-
sources. Earmarking at least 20-25 per cent
of developed land in all housing projects
has been suggested as an optional reform
and hence, the state and city governments
have no tool at their disposal to make lands
available for the housing of the urban poor.
In states where urban planning is done
through town planning schemes there is
such a provision but it has never been made
use of. Land and property costs are spi-
ralling. Given that a large proportion of
the urban population, even in mega cities,
still works at low wages in the informal
sector, it would not be possible for this
section to buy a formal house from the
market. This indeed is the reason that they
have resorted to living in slums and will
continue to do so.
The land question is central to making
affordable housing available to the poor
along with other facilitative mechanisms
such as microcredit and affordable basic
services provision. Since this question is
not to be addressed by this mission, how
would a city become a “world class
city”, without reaching out to half of its
population?
Would conditions attached to NURM
funding deter state governments from
accessing central funds? Newspaper re-
ports suggest that the major metros, in
particular, are quite enthusiastic about
NURM and many states have already
prepared CDPs for the cities covered under
the mission. It is likely that not all the cities
listed would be covered and only those
with the capability to raise their own
resources would come forward.
There is also concern about the type of
projects selected by the city and state
Economic and Political Weekly August 5, 2006
governments. For example, Ahmedabad’s
CDP states that the city would spents 16.6
per cent on roads and bridges; 20.1 per cent
on storm water drains and sewerage;12.7
per cent on housing and slums; 30.8 per
cent on other projects, most likely to be
city beautification projects; 6.41 per cent
on water supply, 7.44 per cent on social
services, just 1.03 per cent on solid
waste management; 3.66 per cent on
city management and the rest on other
activities, of the total Rs 3,900 crore of
projects proposed over the seven-year
period.5 Some cities, such as Mumbai
and Bangalore might just spend on
road and transport projects. In fact,
Bangalore Municipal Corporation has
been spending more than half its budget
on such projects in the last few years
since water supply and sanitation are
provided by a parastatal, which has now
moved towards privatisation, assisted by
the USAID.
Further, in the proposed budget for
2006-07, the Ahmedabad Municipal
Corporation’s capital budget has increased
by 179 per cent to Rs 8506 crore from
Rs 305 crore in the previous year, because
of the NURM. Further, 47.9 per cent would
be spent on city level basic infrastructure
such as water supply, sewerage and
storm water drains, whereas a whopping
37.6 per cent would be spent on road
projects such as widening, flyover con-
struction and making of footpaths. It is
likely that most NURM cities would come
up with such priorities. It is likely that the
selection of projects would be susceptible
to the working of pressure lobbies such as
the IT lobby in Bangalore and the Bombay
First and middle income households
organised under resident welfare
associations.
Summing up, the problems that the urban
poor are facing in the mega cities of India
today, mainly the lack of shelter with a
secured land title and access to basic
services at affordable costs, do not get
addressed by the NURM. The BSUP
Back Volumes
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submission and other infrastructure projects
would benefit the urban poor only if they
have security of tenure and their settle-
ments and dwelling units get connected to
these networks. Attaching the name of the
first prime minister of India, Jawaharlal
Nehru, does not automatically make the
mission pro-poor.
NURM might well turn out to be a mission
for improving a certain type of infra-
structure, which is being demanded by the
business class and middle class lobbies in
the mega and large cities. It will certainly
expedite the process of transforming the
60 large cities into “world class cities”,
more by encouraging processes that
would displace the poor from them. This
has been witnessed since last 20 years, the
poor have been displaced rather than
actively included in the process of city
transformation. EPW
Email: d_mahadevia@yahoo.com
Notes
[Based on discussions held at a workshop titled
‘Right to Shelter and Basic Services in Global-
ising Mega Cities of India’, in Ahmedabad on
February 10, 2006, under the Indo-Dutch Project
on Alternatives in Development (IDPAD), jointly
organised by Centre for Development Alternatives
(CFDA) and Institute of Social Studies (ISS), The
Hague, the two project partners of a research
project titled ‘Inclusive Mega Cities in Asia in a
Globalising World’.]
1 From a presentation made by Lalit Batra
of Hazards Centre, New Delhi titled ‘Trajectory
of Urban Change in Neo-liberal India: The
Case of Delhi’, on February 10, 2006 at this
workshop.
2 http://pmindia.nic.in/speech/content.asp?id=235.
3 For the details of the mission, sectors and projects
eligible for funding under both the submissions,
and mandatory and optional reforms see: http://
urbanindia.nic.in/moud/programme/ud/
jnnurm.htm.
4 In respect of people-oriented schemes relating
to water supply and sanitation, UCLR Act repeal
and reform of rent control laws may be taken
as optional reform.
5 Based on data from Gujarat Samachar,
February 4, 2006.
6 Ibid.
3403
NURM Pani

http://economictimes.indiatimes.com/articleshow/1516810.cms

Dressing up the urban crisis

NARENDAR PANI

[ FRIDAY, MAY 05, 2006 12:25:20 AM]

The vision underlying the National Urban Renewal Mission could result in a huge
expenditure on under-utilised infrastructure, even as access to basic services gets more
difficult and urban taxes increase inequity.

One of the pitfalls of policy making in a crisis is that the dire situation tempts us to
uncritically accept virtually any response. This is perhaps nowhere more true than in the
case of the Jawaharlal Nehru National Urban Renewal Mission.

There is no doubt that the infrastructure in most of our major cities is under severe strain.
There is then great relief that the government is willing to pump in huge sums of money
to address this challenge. And under the barrage of projects worth thousands of crores of
rupees, there is little scope for a critical analysis of whether this is the most efficient
response to the crisis. In the process we could be left cheering a Mission that is actually
making the situation worse.

The Mission itself does not go beyond a simple, popular notion of the urban challenge. In
essence, the argument is that liberalisation will cause a huge spurt in urbanisation,
leading to a greater demand for urban infrastructure. This demand can only be met by
huge, expensive projects. While the government can contribute to the setting up of these
projects, they have to run themselves. The users must then be made to pay the costs of
operation and maintenance. And if the cities have to contribute they must raise local
resources, particularly property taxes.

The trouble is that this popular notion is based on fudging a number of less convenient
facts on the ground. The very contention that liberalisation will lead to a rapid spurt in
urbanisation is not as clear-cut as it seems. The National Urban Renewal Mission insists
that the proportion of urban population will rise from less than 28% of the population in
the 2001 census to 40% by 2021 as a result of liberalisation. But in the first decade of
liberalisation, from 1991 to 2001 the proportion only increased by around two percentage
points, from just a little less than 26% in 1991.

It is then by no means certain that the rate of urbanisation will be trebled over the two
decades following 2001. Indeed, given the fact that economic growth in cities like
Bangalore or Hyderabad is more linked to foreign markets than it is to the hinterland, the
growth may well be more in terms of the expensive elements of urbanisation rather than
the number of people involved.
The tendency to exaggerate size influences the choice of projects as well. Nothing less
than systems that deal with much larger numbers, in the largest cities in the world, will
do. These symbols of development have to be introduced regardless of cost. The
experience of Delhi and Kolkata may show that the people using the metros are much
less than estimated, but that will not stop urban policy makers, as well as the popular
mind, from believing that these are essential for urban development.

The preference for large glamorous symbols of development also diverts attention from
the specific requirements of infrastructure that the economic development of each city
needs. An Information Technology led industrial growth for a city would generate a
demand for an infrastructure that emphasises telecommunication. On the other hand, a
garment industry led growth would emphasise other more rudimentary infrastructure on a
much larger scale. These nuances will only be understood if there is a critical place for
the economic impulses in each city.

Since the Mission has no significant place for local economic impulses, it can at best
offer standardised infrastructure for all cities. There is then the very distinct possibility of
expensive infrastructure not being fully utilised since it is not consistent with the
direction in which the local urban economy is moving.

The only check that a market economy would put on such projects is that sooner or later
they will be seen to be economically unviable. But one of the major objectives of the
National Urban Renewal Mission is to offer assistance to ensure such a stage is never
reached. Apart from the usual assistance to enhance the bankability of long-gestation
infrastructure projects as well as to enhance resource availability, the Mission will also
fill the viability gap of projects. In other words, once the Mission decides a particular
project is essential, it can put in any amount of public resources to make an unviable
project viable.

This unchallenged right to throw good public money after unviable projects necessarily
constrains the resources available to the urban sector. This increases the pressure to raise
user charges on basic services. While there is undoubtedly a need to ensure that prices are
used to prevent the misuse and wastage of scarce resources like water, a situation cannot
also be created where urban citizens cannot afford basic services. The Mission’s response
is to create a sub-Mission to provide basic services to the poor.

These projects will typically focus on slums. But often, particularly when the poor
migrate to the cities, they settle into clusters of huts that are not recognised as slums,
thereby keeping them away from these benefits. And there is also the challenge of
meeting the needs of those who are not below the poverty line but are not rich enough to
be unaffected by spiralling prices of essentials like water.

The possible inadequacies of user charges has contributed to the National Urban Renewal
Mission looking for other urban sources of revenue, with property tax being a prime
target. But here again the effort could be hurt by a lack of sensitivity to local economic
impulses. The real economic growth in a city like Bangalore has been occurring around
the IT industry on its periphery. But since the general tendency in property tax is to place
a premium on the city centre, there is a real possibility of this tax being iniquitous.

The vision underlying the Jawaharlal Nehru National Urban Renewal Mission could thus
very easily result in a huge expenditure on under-utilised infrastructure, even as access to
basic services gets more difficult and urban taxes increase inequity. In other words,
existing urban problems can get worse even as they are hidden behind expensive
infrastructure projects.
 Perspectives
Whither Urban Renewal?
The Jawaharlal Nehru National Urban Renewal Mission is an
ambitious programme to build infrastructure in India’s cities and
towns. However, the mission does not sufficiently recognise that
the core urban deficit is not the lack of infrastructure but the lack
of local self-governance.
PARTHA MUKHOPADHYAY
T
he common minimum programme
(CMP) committed the UPA govern-
ment to “a comprehensive pro-
gramme of urban renewal and to a massive
expansion of social housing in towns and
cities, paying particular attention to the
needs of slum dwellers”.1 In apparent
pursuance of this objective, the govern-
ment of India launched the Jawaharlal
Nehru National Urban Renewal Mission
(JNNURM) on December 3, 2005.
JNNURM aims to create “economically
productive, efficient, equitable and respon-
sive cities” by focusing on “(i) improving
and augmenting the economic and social
infrastructure of cities; (ii) ensuring basic
services to the urban poor including
security of tenure at affordable prices;
(iii) initiating wide-ranging urban sector
reforms whose primary aim is to eliminate
legal, institutional and financial constraints
that have impeded investment in urban
infrastructure and services; and (iv) strength-
ening municipal governments and their
functioning in accordance with the pro-
visions of the Constitution (seventy-fourth)
Amendment Act, 1992”.2 It is divided into
two submissions, one for urban infra-
structure and governance and other for
basic services to the urban poor, which
will be administered by the ministry for
urban development, and urban employ-
ment and poverty alleviation respectively.
JNNURM will support 63 cities, which
include seven 4-million plus mega cities
(the four metros, Ahmedabad, Bangalore
and Hyderabad), 28 million plus cities,
e g, Indore, Jamshedpur and Pune and 28
other sub-million cities, which are either
state capitals or cities of particular cultural,
historical or tourist significance, such as
Pondicherry, Gangtok, Shillong and Ujjain.
JNNURM is still an evolving programme,
Economic and Political Weekly March 11, 2006
Thus, if one thought that urbanisation in
India is producing problems, the real big
wave is yet to hit, and our cities are as
yet unprepared for this eventuality.
There are two ways of responding to
this. One is to try and stop it from hap-
pening (or at least slow it down – which
has been the policy of government so
far).3 The other is to accept that “our
urban economy has become an important
driver of economic growth [and]…the
e g, cities like Jamshedpur and Gangtok, bridge between the domestic economy and
listed as eligible for JNNURM, do not yet the global economy” and that “urbanisation
have elected local bodies, which is a pre- is a relentless process, which has come to
condition for eligibility. stay and has to be factored into all our
Over the next seven years, a major developmental thinking and development
portion of the outlay on JNNURM will be processes”4 and prepare to manage the
in the form of central grants. Two ques- consequences. One should also recognise
tions arise in this context. First, do we that Indian cities grow because they have
really need to focus national resources on poor people, who lubricate and drive urban
our cities and second, if so, is JNNURM growth and also keep it manageable and
the right way of focusing it? relatively inexpensive. Over 81 per cent
of urban male slum dwellers are literate
Characteristics of as compared to 86 per cent of all urban
Indian Urbanisation residents and about three-fourths of them
are workers compared to about two-thirds
Over 1991-2001, our urban population of all residents. Further, there are strong
rose by about 68 million, to 284 million links between rural and urban incomes
(see the table). Of this, only 20 million that go beyond remittances. Rao et al (2004)
was migration from rural areas. The con- shows how urbanisation enhances and
trast with China, where migration accounts stabilises agricultural incomes by provid-
for 90 per cent of the increase, is striking. ing a market for diversified agricultural
Global experience indicates that rapid production. It can also raise income for
economic growth results in agglomera- rural labour, e g, the ratio of wage income
tions with large populations and high levels to total income for Chinese farmers has
of poverty. So, if growth is to continue risen from 13.2 per cent in 1985 to 30.4
at the current high levels, India will have per cent in 2001 [Angang et al 2003]. This
to learn to live with many “big and poor requires attention to local transport links
cities”. These will be resource intensive, and, over time, investment in rural edu-
as all big metropolises are, but even more cation, beyond simple literacy (79 per cent
so since they will lack the ameliorative of rural literates have a sub-secondary
concerns for environment that tend to education, compared to only 58 per cent
appear only at higher levels of income. of urban literates). To summarise, the rise
Table: Urbanisation in India and China
Popn Urban Change Increase Urban Migration Other Natural
Growth Popn in Urban in Urban Growth to Urban Urban Urban
(Per Cent) (2001) Share Popn Rate Areas Increase Growth
(in Million) (Per Cent) (in Million) (Per Cent) (Million) (in Million) (Per Cent)
China 1990-01 11.4 450 9.9 (36.1)# 157 53.5 141 (90.0)* 16 5.3
India 1991-01 21.5 285 2.2 (27.8)# 68 32.6 20 (28.6) 58** 16.2
Notes: Figures in brackets are percentages.
# share of urban population in total, 2001. * migration as a share of increase in urban population.
** See Kundu (2003). This includes about 13 million due to newly classified towns, expansion in
area and merging of towns, which is removed for calculating the natural urban increase in the next
column. Chinese urbanisation data is often criticised for not clarifying the extent of growth due to
reclassification.
879
of big cities in India is an inevitable
consequence of growth, but these cities are
productive, even if poor, and also have
strong existing and potential linkages to
rural areas. The choice is between retard-
ing urbanisation by slowing down growth
or accepting the challenge of managing the
urbanisation consequences of rapid growth
such that the benefits from growth are
optimised.
Indian cities do not as yet have the fiscal
strength to cope with this test. This is in
part due to their limited taxation powers
due to insufficient decentralisation and
inadequate use of user charges5 . Further-
more, their administrative capacity is low
because the cities have not been expected
to take major decisions. As such, both the
political leadership and bureaucratic
machinery have a low profile compared,
for example to China, where many mem-
bers of the central leadership have served
as mayors of major cities, and consequently
do not attract suitable talent. Thus, the
challenge is to manage rapid urbanisation
with limited financial and administrative
capacity. Hence, an intervention that
responds to these gaps is sorely needed,
but is JNNURM the one that we are
looking for?
Basic Features of JNNURM
The JNNURM walks on two legs – one
of reform of legal, institutional and finan-
cial constraints and the other of providing
funding for infrastructure building. The
reforms are separated into mandatory and
optional,6 which apply to both state and
urban local bodies (ULBs). They can be
conveniently grouped into a set of key
objectives. In addition to (a) decentrali-
sation through implementation of the 74th
amendment and assigning to or associating
elected ULBs with city planning, which
is a state level reform condition, the other
conditions seek to (b) increase participa-
tion and transparency, through accounting
reform and e-governance at the ULB level,7
and a public disclosure law and commu-
nity participation law at the state level;
(c) increase ULB revenue through reform
of property tax and levy of reasonable user
charges and reduce cost with the help of
VRS, so as to recover full O&M costs;
(d) improve services to the poor through
budget earmarking, enhancing security
of tenure at affordable prices, and
earmarking of land for the economically
weaker and low income categories in
all housing projects “with a system of
880
cross-subsidisation”8; (e) reform land
management with the repeal of the Urban
Land Ceiling and Regulation Act
(ULCRA), reduction in stamp duty, re-
form of rent control, streamlining of build-
ing approval, transparent procedures for
conversion of agricultural land, comput-
erising property titling and land registra-
tion; (f) conserve water resources through
laws for rain water harvesting and the use
of recycled water and finally; (g) under-
take “structural reforms” (an open descrip-
tion which is another example of an
evolving JNNURM) and encourage public-
private-partnerships (PPPs) to improve
services and reduce cost.
The other leg, i e, provision of additional
central assistance for infrastructure, is to
be based on a city development plan (CDP).
The CDP is aimed at helping the ULB to
(i) develop a vision for its city; (ii) ascertain
the gap between existing infrastructure
and investments; and (iii) set out priorities,
sequencing and timelines for undertaking
various reforms and specific investments,
including the means of financing them.
The two legs are joined by the execution
of a tripartite memorandum of agreement
(MoA) between state governments and the
ULBs (including parastatal agencies where
necessary) and the government of India,
which will indicate the state and ULB’s
commitment to specific milestones for the
legal, institutional and financial reform
conditions mentioned above.
Detailed Project Reports (DPRs) for the
identified investment projects would be
submitted along with the MoA. These DPRs
would be scrutinised by the technical wings
of the ministry or, if necessary, by
specialised/technical agencies before be-
ing considered for sanction by a central
sanctioning and monitoring committee
(CSMC) in the ministry of urban deve-
lopment, chaired by the relevant secretary
and comprising solely of officials in the
central government and the chairperson of
HUDCO.9 Projects of urban renewal, water
supply including sanitation, sewerage, solid
waste management, drainage, and urban
transport including roads would be ac-
corded priority by the CSMC, as would
projects with private sector participation.
Larger ULBs (cities with a population
above 4 million) are expected to contribute
(this can be in the form of loans from
financial institutions) 50 per cent of the
total cost, while the other million plus
cities need to contribute only 30 per cent.
The central government would contribute
35 per cent and 50 per cent respectively
Economic and Political Weekly
and the state government is to make up the
balance. For urban transport projects, the
central share can be even higher. In the
case of basic services to the urban poor,
the central share ever for the larger ULBs
is to be 50 per cent (there is no increase
for the other cities) and the contribution
of the state and the ULB are clubbed
together, i e, if the state is willing to
provide the necessary funds, the ULB
need not raise any resources, beyond a
minimum stipulated beneficiary contri-
bution of 12 per cent (10 per cent for
weaker sectors).
Central funds would be released as grant
to the state governments who have the
flexibility to disburse it to ULBs or
parastatal agencies as a soft loan or grant-
cum-loan or grant, taking care to ensure
that 25 per cent of central and state grant
put together is recovered. At the end of
the JNNURM, this recovery can be con-
verted to a state urban infrastructure fund.
The first instalment of 25 per cent will be
released on signing of the MoA. The
balance amount shall be released upon
receipt of the utilisation certificates sub-
ject to achievement of milestones agreed
in the MoA.
In each state, a steering committee, which
will be assisted by a state level nodal
agency (chosen by the state), would decide
and prioritise projects under JNNURM.
The composition of this steering commit-
tee, chaired by either the chief minister or
the housing minister and comprising
ministers, mayors, MLAs and secretaries,
has been prescribed in the JNNURM
guidelines. For infrastructure projects, the
state level nodal agency will also submit
quarterly monitoring reports to be reviewed
by designated central government officers
and CSMC. The monitoring of reform
implementation would be outsourced to
specialised agencies. In the case of basic
services to the urban poor, “the schemes
of health, education and social security
will be funded through convergence of
schemes and dovetailing of budgetary
provisions available under the programmes
of respective sectors (health, human re-
source development, social justice and
empowerment and labour, etc), but will
also be monitored by the ministry of urban
employment and poverty alleviation”.
This is an innovation in inter-ministerial
co-ordination!
On completion of JNNURM, the cities
are expected to have (a) a city-wide frame-
work for planning and governance,
(b) transparent and accountable local
March 11, 2006
services with e-governance in core func-
tions and modern and transparent budget-
ing, accounting, financial management
systems, and (c) financially self-sustain-
ing (through reforms to major revenue
instruments) agencies for service delivery
to provide a basic level of urban services,
especially to the poor.
Will JNNURM Succeed?
The JNNURM has been criticised, e g,
by Raghu (2005), for a adoption of a neo-
liberal reform trajectory and forcing uni-
form policy conformity among ULBs
through an executive instrument, overrid-
ing efforts at different types of decentrali-
sation in various states. A major objection
is to the effort to move towards full cost
recovery, commercialise urban and civic
services, introduce private participation
and make land management flexible. It is
useful to consider these in detail.
The cost recovery of infrastructure
through user fees is sometimes seen as an
anti-people measure. However, without
user fees, infrastructure will have to be
paid for through taxes. State level taxes
are usually regressive and thus fall dis-
proportionately on the poor. The use of
general state taxes to finance the provision
of infrastructure in urban areas, especially
to the non-poor,10 is particularly egregious
because taxes collected from the poor are
spent to provide subsidised services to
those who have the ability to pay. It is
necessary to realise that the non-poor need
to pay for provision of urban services
through property taxes and user fees – not
just for commercial sustainability, but
also for equity. A concomitant benefit of
imposing higher financial charges on
households that have high levels of con-
sumption is to help conserve resources
such as water and help to increase envi-
ronmental sustainability.
While the poor can be provided
subsidised services, many residents of low-
income slums, can meet the costs of O&M
(and sometimes even more). User fees at
this level will not only give them a stronger
voice as a revenue contributing consumer,
it will also safeguard against the deterio-
ration of the network, which forces them
to go to alternatives at much higher cost.
Experiments have now started with inno-
vative payment models targeted to poorer
residents. In this, community models
cannot only improve the level of urban
services, e g, metered water supply to
slums in Bangalore, they can also provide
livelihood opportunities, such as the
outsourcing of solid waste collection to
women SHGs by ULBs in Andhra Pradesh
and Kerala.
Before lamenting the introduction of
private participation in urban services
through PPP, it is important to recognise
that most expenditure on urban capital
investment is already executed by the
private sector, usually through the use of
small item-rate civil works contracts. The
use of such contracts allows the private
sector to escape accountability, for it bears
little responsibility for the facility after
construction. More often than not, water
and sewerage treatment plants lie unused,
consume much more electricity than ex-
pected, and roads are pitted with potholes.
The already strained budgets of the ULB
bear the burden of increased maintenance
cost and the citizens bear the burden of bad
service. By contrast, in a PPP, the private
operator is contractually bound to bear the
risk of service provision and its revenue
flows depend on meeting pre-specified per-
formance parameters. Used wisely, it can
be a strong tool for increased accountabil-
ity and better service provision, especially
to the poor since private providers are
more responsive to financial penalties as
compared to public providers. Furthermore,
the introduction of private participation
brings a higher degree of oversight from
regulators,11 media and more importantly,
consumers, who are unfortunately, other-
wise blasé about poor service delivered by
publicly-owned authorities.
The effort must therefore be to ensure
that this additional tool of accountability
does not become blunted. One wonders,
however, if JNNURM’s approach to PPP
is tokenism. For all the emphasis on “ef-
fective linkages between asset creation and
asset management”, the focus on DPRs to
be submitted with the MoA, and utilisation
certificates for monitoring projects, lead
one to suspect that their approach is still
mired in the bog of civil works contracts.
Monitoring is extremely important if the
private sector has to have the right incen-
tives. With credible oversight, long-term
concessions combining investment and
operations and management can be effec-
tive for water supply, wastewater and solid
waste treatment, roads, transport services
and service level agreements can be used
for citizen interfaces. Such management
has major implications for human resources
at the urban government level.
Allowing mixed development of ULBs
in JNNURM, along with the requirement
to repeal the ULCRA, has led to fears of
capture by the “land mafia”. The “land
mafia” has prospered by exploiting the
scarcity of land, which is often an admin-
istrative artifice, and their ability to have
deviations approved from often unenforce-
able land use regulations and city plans.
The approach so far has been to abandon
the older and inner cities and for the
development authority (usually a state and
not a ULB entity) to acquire land to develop
new urban areas. This benefits the “land
mafia”, who are able to corner adjacent
land in anticipation of development. Not
only does this lead to tension between the
city and those whose land is being acquired,
it also increases the cost of service because
only limited benefits of agglomeration are
realised. The alternate option of allowing
mixed development in existing older urban
areas, is likely to weaken rather than
strengthen the hold of the urban “land mafia”.
Another concern of some commentators,
like Kundu (2003), is the growing concen-
tration of urbanisation, which is now
focused in the more developed states. To
some extent, with the onset of liberalisation
and the greater freedom afforded to market
forces in economic choices, e g, industrial
location, a certain increase in concentra-
tion is to be expected as agents respond
by exploiting the benefits of agglomera-
tion economies. What should be avoided,
however, is a flight to the more developed
urban areas that is driven not by their
economic pull, but because the lack of any
viable alternative in the less developed
areas pushes economic activity away.
JNNURM, by focusing on all the million-
plus cities, makes such push-driven pri-
macy less likely, which will improve the
options for economic activity at these
non-traditional locations.
So, if these concerns are misplaced, can
it be expected to be a success? Unfortu-
nately, there appear to be other problems,
which are fundamental to the implemen-
tation of JNNURM.
To begin with, there is a basic disquiet
with reform conditionality based financ-
ing. First, if the same agency is responsible
for both monitoring the progress of reform
and for financing, the tendency is to
emphasise one objective or the other and
usually, the financing objective gains
prominence. When that happens, condi-
tionality is no longer credible since money
will be disbursed even though conditions
are not met, as has happened with, for
example, the World Bank.12 Hence, to stop
inappropriate projects from happening, it

Economic and Political Weekly March 11, 2006 881

is important to bring the due diligence
exercised by financial institutions (who
admittedly will only consider the financial
appropriateness of the project) to achieve
separation of financing and conditionality
and the JNNURM is doing this to some
extent. Second, at the other end, a strong
conditionality focus may filter out good
interventions with the potential to benefit
the poor, from happening in unhelpful
environments. This is an admittedly more
risky strategy (for it is difficult to sustain
even well-designed approaches in such
environments) but, if successful, can lead
to the establishment of institutions that are
insulated from their environment – and
can, by their very presence and activity,
create a constituency for positive change.
Third, a salutary lesson from World Bank’s
conditionality experience is that reform is
unlikely if there is no strong intrinsic
constituency for change. If so, the primary
benefit of conditional finance is that they
provide a means by which reform-minded
ULBs can distinguish themselves from
others by being able to publicly commit
to a set policy measures. Given the ten-
dency of financiers to relax conditionality,
such commitment can be measured by its
willingness to meet certain preconditions
before disbursement. It is here that
JNNURM’s principle of MoA before
money is important, but its strength is
diluted since ULBs are permitted to com-
mit to a schedule of implementation rather
than undertake up front reform. However,
in what follows, we will consider issues
that go beyond these concerns and focus
on issues relate more to implementation.
The beginning of any sensible planning
exercise is good data. The investment
programme of JNNURM is critically
dependent on the quality of the CDP. As
of today, few ULBs (Bangalore is a not-
able exception) have a digital cadastral
map13 of reasonable accuracy and none
have a process of updating it, were such
a map available for such a process would
require a complete digital property titling
and computerised land record registration
– one of the objectives under the JNNURM.
The creation of such a map in any major
city is not expensive (of the order of a few
crore rupees), but it is beyond the budget
of any preparatory support from JNNURM.
Thus, a ULB has either to spend its own
money or go through the quasi-subterfuge
of proposing to commission a cadastral as
part of a property tax enhancement project.
In the absence of a cadastral, the CDP
submitted by the city can only be based
882
on broad parameters. Thus, if a city were
serious about effecting a change in its
planning and project identification and
development process, it is unlikely to be
able to prepare a CDP and submit DPRs
in the next few months, for a good cadastral
survey itself would take some time, even
if done expeditiously. By contrast, CDPs,
for cities such as Indore, have reportedly
cleared the state approval process and have
been sent onward to the central govern-
ment for consideration.14 It is difficult to
envision how sensible DPRs can be pre-
pared without an accurate cadastral. How-
ever, business-as-usual DPRs are possible
and the JNNURM, by ignoring the need
for a good cadastral appears to encourage
this. This appears to be a dangerous trade-
off in favour of speed of implementation
over the quality of infrastructure invest-
ments.15 This may be an example of the
bias towards financing mentioned above.
However, it is not that JNNURM cannot
be operationalised until cadastrals are
completed. Not all types of projects are
critically dependent on such information.
For example, installing sewerage treatment
plants at the outfall of existing nullahs may
possibly be a sensible project requiring
limited data to justify. Similarly, the long-
term contracting out of maintenance for
roads that form the core transport corridor
is also possibly a good decision in terms
of investment priorities. But, planning any
major transport investment or investment
in water distribution or sewerage collec-
tion networks would be much better if the
relevant decision-makers had access to
accurate information. A benign interpre-
tation of this neglect of data is that
JNNURM continues the hoary Indian
tradition of decision by Delphi rather than
by data.
‘Centre Knows Best’
A less charitable interpretation would
argue that, despite the call for decentrali-
sation, the short shrift being given to the
CDP reflects, in part, a tendency of the
central government to arrogate the respon-
sibilities of the ULB. The focus of
JNNURM is more on the provision of the
infrastructure projects, rather than the
strengthening of municipal governments,
which incidentally is the last of four
objectives in JNNURM. A reading of the
emerging documentation from JNNURM16
seems to indicate the implementation of
the programme looks no different from a
standard centrally sponsored scheme for
Economic and Political Weekly
supporting capital works. The relationship
between the central government, state
government and the ULB is similar to that
of a refinance institution, a lending insti-
tution and a borrower, rather than that of
three levels of government working in
tandem to provide services to urban citi-
zens. Even the composition of committees
at the state level to decide on projects is
specified by guidelines issued by the central
government.17 Rather than building genu-
ine decision-making capacity at the ULB
level, the impression created by the
JNNURM project approval process is still
that “centre knows best”.
As an example, consider the JNNURM
mission objective to plan development such
that “urbanisation takes place in a dis-
persed manner”. Indian cities are much
less dense than other cities elsewhere in
the world [Bertaud and Malpezzi 2003].
Since the fixed cost of service provision
per unit area can be spread over a larger
number of consumers, some amount of
“concrete jungle” may be more cost-effec-
tive to provide essential services in dense
areas as compared to dispersed settlements.
A significant part of urban renewal is to
redevelop existing areas and equip them
with the kind of infrastructure that is needed
to cope with higher densities, e g, wider
roads, electricity, water and sewerage lines
that can bear a heavier load, etc. But the
guidelines convey the impression that this
decision on density is not the domain of
the ULB but that of the central govern-
ment. On the ground, if ULBs are allowed
to decide, some may increase density
while others will not. This decision
would ideally emerge out of a construc-
tive debate between proponents on either
side, in the context of local conditions.
Nurturing such decision-making capacity
is critical to the sustainability of the urban
renewal process.
Some would argue that it is premature
to talk of decentralisation when the central
government is providing most of the fi-
nance. But, while own sources of revenue
for ULBs are an integral accompaniment
to decentralisation of authority, it is im-
portant to remember that the need for
financial devolutions from state and even
central governments arise because the
Indian tax collection system is centralised
at the state or central level, unlike for
example, China, where the city collects the
taxes and sends it up the administrative
hierarchy.18 In this context it is important
that the central support be viewed less as
a handout, and more as an entitlement and
March 11, 2006
it is precisely this that central and state
finance commissions seek to achieve.
Furthermore, for those who argue for
stronger conditionality and a simple but
significant financial incentive, it may be
difficult to impose too many conditions
on ULBs until they acquire sufficient
authority, i e, after the state decentralises
the administrative machinery. For example,
APRDP-type incentive payments (as used
in the electricity sector) for own revenue
increases or reduction in unaccounted
for water (UFW) may not be useful if
the ULB has only limited revenue sources
(as a result of inadequate decentralisation
by the state) or if the water supply system
in the ULB has been constructed and is
being managed by a state-level water
utility, outside the administrative control
of the ULB.
It would therefore appear that there is
no substantial case for continuing with
the current slow and measured pace of
decentralisation in JNNURM. There are at
least two other areas where the design of
JNNURM leaves a feeling of discomfort.
Consider its attitude towards the poor.
Is separating JNNURM into two sub-
missions, one on urban infrastructure and
governance and the other on basic services
to the urban poor a matter of administrative
necessity, given the political need to have
two separate ministries? Or does it separate
the poor and the city by failing to recognise
them as an integral part of the urban
economy and reflect the old mindset that
the rich need infrastructure the poor need
amelioration? It is particularly worrying to
note that, though JNNURM does refer to
security of tenure as a key reform, putting
in place mechanisms to ensure the continued
supply of low cost housing19 does not appear
to be of high priority, beyond a misplaced
suggestion for financing through “cross-
subsidisation”. This lack of thought is also
evident in designing a uniform central
share of grant (i e, 35 per cent) for all large
cities, regardless of their population com-
position, which varies from over 50 per
cent slum population in Mumbai to less
than 1 per cent (!) in Patna.20 However,
the proposed single-agency (MoUEPA)
monitoring mechanism can be a singular
institutional innovation.
Finally, beyond a desultory nod to sus-
tainable development, there is little men-
tion of environmental issues in JNNURM.
However, the prioritisation of water, sew-
erage, solid waste and transport projects
holds out hope that better sense may pre-
vail during the project preparation process.
Economic and Political Weekly March 11, 2006
As noted earlier, given the state of data of
our cities, environmentally sensible
projects, like sewerage treatment plants
are perhaps among the few least likely to
become stranded.
Conclusion
It is evident that our cities do not have
adequate infrastructure. That is merely the
symptom. The disease is that they do not
have a government that can enable the
citizens to decide to provide themselves
the infrastructure they need and the financial
powers to pay for it, if they so decide. In
an ideal situation, an elected ULB would
base its investment programme on a data-
rich CDP, work out the financing mix of
taxes (including statutory devolutions from
the state finance commissions) and user
fees based on their citizen’s response and
participation. They would be supported by
a cadre of professional urban managers,
who will be capable of responding to the
expressed wishes of the urban citizen. The
role of the state and central governments
would be to provide additional funds,
especially for specific projects of regional
or national importance and transitional
support for the ULBs as they take on move
to full self-governance.21
While it may be utopian to expect this
transition to happen overnight (as other
countries are discovering in an international
context!), and while it may be unwise to
immediately hand over all decision-
making to an elected ULB with patently
little capacity, we can surely trust our demo-
cratic ethos a bit more. Managing a big and
poor city requires voters to have the po-
litical will and the ability to punish. The
right to information and public disclosure
laws should help in this process
(JNNURM’s own document dissemina-
tion policies are a good beginning22 ), but
currently, the urban voters cannot vote out
the real decision-makers for their locality,
since the critical decisions are still being
taken at the state level. A clear and short
road map to genuine participative demo-
cracy in the ULB where a strong and pow-
erful elected government is responsible for
its own successes and failures is what is
needed for sustainable urban renewal.
It is this fundamental transformation in
governance, where it is conceivable that
a politician would rather be mayor of
Bangalore than chief minister of Karnataka,
which will bring sustained urban renewal.
Such change is unlikely to emerge from the
bureaucratic processes of government. One
must look for it in the political processes of
democracy. As mentioned earlier, a salutary
lesson from World Bank’s conditionality
experience is that reform is unlikely if there
is no strong intrinsic constituency for
change. The beginnings of such a constitu-
ency are already evident in many cities,
but it is as yet out of the mainstream agenda of
political parties, where the current electoral
system, focused at the state-level, produces
political leadership and an agenda that is
more reflective of the rural electoral base.
But, just as panchayati raj has come to be
seen as essential for better rural gover-
nance, it needs to be appreciated that the
core urban deficit is not the lack of infra-
structure but the lack of self-governance,
as envisaged in the 74th amendment to the
Constitution. Until that happens, the legacy
of JNNURM, focused as it currently is on
infrastructure provision, may unfortunately
be limited to water and sewerage treatment
plants that remain unused, and iconic metro
railway systems that do not address the
transportation needs of the poor. One hopes
to be proven wrong. EPW
Email: partha@earthling.net
Notes
1 “Urban renewal”, which came to be associated
with the redevelopment of inner city neighbour-
hoods, has often been criticised for the
relocation of the poor and powerless, without
adequate thought to alternative opportunities
for these communities. The CMP is sensitive to
this aspect for it goes on to say “Forced eviction
and demolition of slums will be stopped and
while undertaking urban renewal, care will be
taken to see that the urban and semi-urban poor
are provided housing near their place of
occupation”.
2 Preface to the JNNURM Toolkit. See http://
www.urbanindia.nic.in/moud/programme/ud/
jnnurm/Preface.pdf
3 A sophisticated version promotes dispersed
urbanisation, but by many standards, e g,
Henderson (2003), India is already quite
dispersed, with only a quarter of the urban
population in the million-plus cities. Indeed,
it may be at a sub-optimal level of primacy for
its level of development. Trying to design
urban growth in India such that they reflect
small and genteel European towns is not only
unlikely to succeed, it may also not be desirable
as it implies dispersed provision of urban
infrastructure, which may not be affordable at
this stage of India’s development.
4 Quotes are from the prime minister’s speech
at the inauguration http://pmindia.nic.in/speech/
content.asp?id=235. See also Mohan (2006).
5 ULBs are particularly disadvantaged because
land taxation invites relocation to the periphery,
leaving few factors of production to tax as
capital is already internationally mobile and
labour has low income. Between 2001-02 and
883
 2002-03, their revenue (both own and total)
declined by over 15 per cent and consequently,
expenditure, including revenue expenditure,
declined by over 12 per cent.
6 The nomenclature of mandatory and option
reform is misleading since both have to be
implemented over the duration of JNNURM.
The schedule of implementing mandatory
reforms has to be pre-specified by the state in
its MoA while the timing of optional reforms
is flexible within the seven-year duration of
the mission.
7 Technology is critical to planning and
monitoring, e g, digital cadastral for land use
and property taxes, planning for road
improvements based on traffic flows, etc.
8 The guidelines for the two JNNURM sub-
missions are available at http://muepa.nic.in/
programs/bsup.pdf and http://urbanindia.nic.in/
moud/programme/ud/jnnurm/
guidelines_jnnurm.pdf. Unattributed quotes are
from them.
9 The CSMC chaired by the secretary (urban
development) would comprise the secretary
(urban employment and poverty alleviation), the
principal adviser (housing and urban develop-
ment) in the Planning Commission, the joint
secretary and financial adviser, the chief planner,
Town and Country Planning Organisation,
Adviser, CPHEEO, chairman and managing
director, HUDCO and the joint secretary (urban
development) as member-secretary.
10 The urban poor rarely benefit from these
services. According to the Census of 2001, less
than half (49.7 per cent) of urban households
have a drinking water tap within premises, even
less have a water closet (46.1 per cent) and just
over a third (34.5 per cent) have closed drainage.
11 Monitoring is extremely important if the private
sector has to have the right incentives. With
credible oversight, long-term concessions
combining investment and operations and
management can be effective for water supply,
wastewater and solid waste treatment, roads,
transport services and service level agreements
can be used for citizen interfaces. Such
management has major implications for human
resources at the urban government level.
12 See World Bank (1998), which argues that the
effort of donor agencies “buy reform”, by
offering assistance to clients that were not
otherwise inclined to reform, has failed.
13 A cadastral survey is one on a scale sufficiently
large to accurately show the extent and measure-
ment of every field or other block of land.
14 See ‘JNNURM okays City’s Development
Plan’, Hindustan Times (Bhopal editon) January
29, 2006. http://hindustantimes.com/news/
5922_1611101,0015002100020000.htm
15 Another issue is that the CDP is not at the level
of an urban agglomeration, but at the level of
city. At this time, JNNURM is not contemplat-
ing any institution to coordinate the CDPs of
ULBs in a single urban agglomeration. This
is likely to become a problem sooner than later.
16 See http://urbanindia.nic.in/moud/programme/
ud/main.htm
17 There is some limited attempt to ensure that
the capital works being financed emerge out
of a consultative process (including a national
advisory group headed by a technical adviser
drawn from civil society) and the projects are
focused on addressing key gaps in public
transport, water and sanitation and providing
services to the urban poor.
884
18 During the initial period of post-1978 reform
cities like Guangdong and Shanghai were
allowed to keep very high shares of revenue
collected. See Wong (1997).
19 For example, in relocating existing slums, it
is important to focus on building neighbour-
hoods instead of simply building houses. A
neighbourhood, along with appropriate
financial and administrative mechanisms for
allotment of housing, decreases the probability
that the persons would re-sell a subsidised
allotment and reestablish a slum. Furthermore,
the continued supply of low-cost housing that
is usable by the poor is an issue of land
management, transport networks and financial
mechanisms to target subsidies, all part of
overall urban governance.
20 Besides, the challenges in each ULB will be
different. In some, special effort will be needed
to reach water, sanitation, health and education
to the slums, in others the general service
delivery mechanism will do. Decisions as to
the mix of user fees and taxes and extent of
community development will also differ from
one ULB to another.
21 ULBs should be able to decide the extent of
public transportation, the choice of mass rapid
transit systems, whether high capacity bus
systems or metro rail, and use the transport
networks to try and shape what their city looks
like. They should have the capacity to decide
whether to build flyovers or hire better trained
traffic police instead. To finance all these, they
should have, for example, the ability to tax
gasoline purchase in the ULB.
22 See http://urbanindia.nic.in/moud/programme/
ud/jnnurm.htm and http://muepa.nic.in/rti/
rti_index.htm
References
Angang, Hu, Hu Linlin and Chang Zhixiao (2005):
‘China’s Economic Growth and Poverty
Reduction (1978-2002)’ in Wanda Tseng and
David Cowen (eds), India and China’s Recent
Experience with Economic Growth, Palgrave
Macmillan.
Bertaud, Alain and Stephen Malpezzi (2003): ‘The
Spatial Distribution of Population in 48 World
Cities: Implications for Economies in
Transition’, University of Wisconsin at
Madison, Centre for Urban Land Economics
Research.
Henderson, J V (2003): ‘The Urbanisation Process
and Economic Growth: The So-What Question’,
Journal of Economic Growth, 8, 47-71.
Kundu, Amitabh (2003): ‘Urbanisation and Urban
Governance’, Economic and Political Weekly,
July 19.
Mohan, Rakesh (2006): ‘Managing Metros’,
Seminar, January.
Raghu (2005): ‘Urban Renewal Mission: Whose
Agenda?’ People’s Democracy, December 4,
Vol XXIX, No 49.
Rao, P Parthasarathy, P S Birthal, P K Joshi and
D Kar (2004): ‘Agricultural Diversification in
India and the Role of Urbanisation’, IFPRI-
MTID Discussion Paper No 77, November.
Wong, Christine P W (ed) (1997): Financing Local
Government in the People’s Republic of China,
Oxford University Press.
World Bank (1998): Assessing Aid: What Works,
What Doesn’t and Why, Oxford University
Press.
Economic and Political Weekly March 11, 2006
Special Article
Space Relations of Capital and Significance
of New Economic Enclaves: SEZs in India
Swapna Banerjee-Guha
This paper examines the evolution of the new
development enclaves – special economic zones – in
India in the light of the space relations of capital.
The process of establishing sezs in India is essentially a
classic unfolding of the process of “accumulation by
dispossession” which is part of the recent strategy
of global capital to overcome the chronic problem of
over-accumulation. The paper throws light on the
ongoing reorganisation of the space relations of
capital in India.
Swapna Banerjee-Guha (sbanerjeeguha@hotmail.com) is with the the ultimate owner of the land and it can take over any tract
Tata Institute of Social Sciences, Mumbai.
Economic & Political Weekly  EPW   november 22, 2008
“Space is political. It is a product literally filled with ideologies.”
– Lefebvre 1991: 101
Introduction
A
large number of erudite, critical writings are being
produced on the current economic growth process in
India and the official policy of establishing development
enclaves in different parts of the country. Most of these writings
have deftly exposited the fallacy of the present path and its exclu-
sionist framework that has largely been seen as a part of the
contemporary process of economic globalisation. This paper,
while sharing the critical perspectives of such writings, attempts
to examine the evolution of these new economic enclaves/spaces
in the light of spatiality and space relations of capital. The inter-
relationship that exists among space, spatiality of capital and the
globalisation process happens to be the premise of this paper.
In several states in India, specific areas – large and small, rural
and urban, are being identified as special economic zones (SEZs)
to carry out modern hi-tech corporatised activities with promised
(sic) returns at a high rate. They are mostly located in function-
ally active spaces, barring a few that have less habitat or occupa-
tions. Essentially global, these new economic spaces, are being
carved out from agricultural areas, forests or coastal fishing
zones, at times located near big cities or communication networks,
in semi-rural areas, in the outer peripheries of metropolitan
regions, in villages, also in slums, dilapidated/less-used areas in
cities of all sizes. In the process of converting old/active economic
spaces into newer ones, a large number of farmers, agricultural
labourers, fisherfolk and allied workers are getting displaced
from land and livelihoods that is leading to fierce resistance
movements in different parts of the country and resultant state
atrocities and violence. According to the official argument, as
India cannot grow fast without foreign investment for which
“world class infrastructure” is an imperative and which the state
possibly cannot provide throughout the country in a short time, it
is necessary to invite private capital to provide it initially in
chosen pockets. While private capital agrees to do undertake this
task, it becomes obligatory on the part of the state to offer them
various concessions and subsidies in their pursuit of establishing
economic and allied activities within such zones. In several
states, land acquisition for creating SEZs is being undertaken by
regional governments by invoking the colonial Land Acquisition
Act (LAA), 1894. As per the provisions of this Act, the state is
for “public purposes”, if it pays reasonable compensation.
51
Special Article
Enclave development, that was once a mainstay of the colonial
state, has thus surfaced as a major policy of the contemporary
Indian state with the latter emerging as an active partner in
corporate growth.
The above process of opening up of new territories – within old
ones by replacing the existing land uses – to not just capitalistic
development but to capitalistic forms of market behaviour –
needs to be viewed as a part of a larger process of progression of
global capital and its strategy to industrialise the south. The
obvious contradictions of these spaces should not be seen as one
between industry and agriculture, or modern and backward, as it
gets officially projected, but more importantly as one between
the nature of industrial development in the less developed part of
the world and the historically evolved region-specific socio-
economic activities and related livelihoods; the latter, in other
words, a niche, an interrelated cultural landscape that is now
becoming expendable in the name of “creative destruction” by
citing a “globally hegemonic discourse”. The depth of this
discourse and its intensive regulatory power resides in its ability
to restrict serious, responsible, alternative viewpoints of a larger
body, and also specify a parameter of the “practical” and “sensi-
ble” among linked groups of theoreticians, policymakers and
practitioners [Peet 2002]. Following this, I would argue that the
entire process of establishing SEZs in India needs to be seen as
essentially a classic unfolding of the process of “accumulation by
dispossession”,1 the recent strategy of the global capital to
overcome the chronic problem of over-accumulation.
How does one look at this process as a part of the ongoing
reorganisation of space relations of capital? For that, there is a
need to revisit the concept of space and spatiality that have
always been a key construct of capital’s operational framework
and therefore a key element in the understanding of the process
of accumulation by dispossession in contemporary times.
Space Relations of Capital and Globalisation
The last 100 years of capitalist development have involved
production and reproduction of space at an unprecedented scale.
The renewed importance of geographical space is reflected in the
drastic redrawing of economic and political boundaries based on
international political economic relations. Phrases like “shrink-
ing of the world” or evolution of a “global village” thus need to be
understood in terms of the specific necessity of a mode of produc-
tion based on the relation between capital and labour expressing
a time-space compression. The universalising tendency they
project, primarily concerns the goal of equalisation with unhin-
dered movement of goods, services, technology and selective
humanpower, for the need of a constantly expanding market. I
argued earlier [Banerjee-Guha 2002a] that it is essentially a
levelling of the globe at the behest of capital, exacting equality in
the conditions of the exploitation of labour [Marx 1867 (1967)] in
every sphere of production. The above phrases, begotten from
such levelling, project a one-dimensional geography of sameness
in which actually all facets of human experiences are degraded
and equalised downward [Smith 1986], hiding the fact that the
premise of this equalisation rests on a strategy of dividing relative
space into many absolute spaces of differential development, all
52
tuned to the requirement of global capital [Banerjee-Guha 2002 a].
The international economic space thence created is characterised
by a divergent use of space and spatial attributes reflecting
contradictory tendencies of concentration and dispersal and
hence a space-specific valorisation and devalorisation,2 as seen in
the recent statist logic in India supporting land acquisition in
agricultural areas for establishing SEZs. Space in such cases needs
to be seen as absolute, relative and relational – all three together
in dialectical tension with each other and in interplay, depending
on circumstances [Harvey 2006]. In the light of this, the rapid
and dramatic changes that are taking place in the regional space
economies in India due to national and international restructu­
ring of capital become extremely relevant.
As capitalist activity is always grounded somewhere, it is found
that the diverse material processes in a given spatiality continu-
ously get appropriated by the process of capital accumulation.
The construction of globalisation thus is found to have largely
depended not only on geographical reorganisation of economic
activities but also historically evolved cultural landscapes. In the
process, it has built and rebuilt geography of regions in its own
images, creating newer socio-economic landscapes with produced
space of infrastructure and institutions for the purpose of facili-
tating capital accumulation [Harvey 2000]. In analysing the SEZs
in contemporary India, the post-1980 operational strategy of
global capital can be the base point. The strategy tangibly repre-
sented a contradictory, uneven and crisis ridden process that
incessantly explored the possibility of reorganising space
relations to create more surplus that could be subsequently
undermined or even destroyed for newer accumulation
[Banerjee-Guha 1997]. It brought in its wake dynamic changes in
production and labour processes. While the pre-1980 relocation
process of production from cores having skilled and highly priced
organised labour to peripheries with skilled but cheaper
organised labour aimed at higher profit by way of reduction of
input cost (that on its turn led to labour aristocracy in poorer
countries), the subsequent reorganisation rested on disaggrega-
tion and fragmentation of a single production process into differ-
ent modes accompanied with a rigid and centralised corporate
control. Because of technological innovations and revolutionary
development in transport and communication over which global
capital had a total control, production could be made more
fragmented, homogenised, suitable to many sub-processes and
spatially separated too [Banerjee-Guha 1997].
This “partial” production process distributed at various
locations became the hallmark of the post-1980 spatial organisa-
tion of global capital [Thrift 1986] involving large-scale and
simultaneous small batch production, achieving efficiency by
externalising economies of scale (in complete contrast to large-
scale, factory-based mass production achieving efficiency
through internalisation of economies of scale). Because of its
simultaneous accommodation of modern and pre-modern
production systems than having a unilinear, evolutionary
progression of production and technology together, Ettlinger
(1990) preferred the term “non-Fordist” than post-Fordist for the
newer strategy. Its success lay in subcontracting, making the
non-capitalist territorial production areas coexist with capitalist
november 22, 2008  EPW   Economic & Political Weekly

production complexes as equally important entities that drasti-
cally brought down the cost of production, more importantly the
cost of reproduction and worked towards an absolute exploita-
tion of surplus [Chandoke 1991]. The geographical see-saw of
closing down production at one place and opening up elsewhere,
especially in a totally different mode were its common features.
The lost organised jobs of the rich countries did not necessarily
get relocated in the modern organised sector of the poorer
countries; fragmented and disaggregated, they got accommo-
dated in the unorganised sector. It did become a part of the
process of annihilation of space3 – the primary aim of the globali-
sation project – but with a simultaneous division and reconstruc-
tion of absolute spaces, disjointed from one another in terms of
wage and quality of life variations. Thus, on the one hand,
technological innovation made it possible to reduce manpower
requirement [Basu 2007] in skilled jobs located in modern
production complexes with developed infrastructure, and on the
other, with simultaneous disaggregation of production and
outsourcing of a large part of the same production process, the
possibility of engaging low paid, subcontracting, “footloose”
workers on flexible terms, increased by leaps and bounds. Tension
between fixity and movement of capital was internalised in the
above framework resulting in a distinct space-specific devalua-
tion that went to form a part of an internationally operative
human cost, social wear and tear and accumulation through
underdevelopment. Further, through deskilling of labour and
functional and physical separation of production, specific “roles”
were created for places in the world economy [Wright 2002].
The basic tenet of the above framework and the associated new
international division of labour (NIDL) rested on disaggregation
of production and wage differentials. For the purpose of increas-
ing profit, greater mobility of capital, goods and services was
pitted against the lesser mobility or near immobility of labour of
poor regions and a transnational economic space was carved out
in which a phase-wise separation of production between capita­
list and non-capitalist modes surfaced as a basic methodology.
There was a massive divestment of capital in old manufacturing
plants in the UK, USA, Germany, France and other countries
associated with a restructuring of mass production methods
towards a “flexible” model of customised production. In this
global industrial restructuring, the capital-labour relation and
production relations between the global core and periphery
underwent a drastic reconfiguration. ILO (1981) noted that global
corporations operating in Asia, Africa and Latin America, since
the 1970s, increased the size of unskilled workers at the cost of
large-scale displacement of production workers. During late
1980s, General Electric’s employment reduced by 1,00,000 while
its revenue increased by $ 13 billion, Fiat removed around 15,000
workers from employment while its revenue rose by 12.4 billion
lire [Lowe 1992]. In Unilever, cost per worker in Asia was drasti-
cally brought down while profit per worker rose by 50 per cent
[Elshoff 1988]. In the early 1990s, in Procter and Gamble in India,
the entire production of certain products like Crest tooth paste,
Clearasil medicated cream or Ultra Clearasil facial cream was
undertaken by contract labour located in Andhra Pradesh,
Gujarat or Maharashtra. During the same time, in the organised
Economic & Political Weekly  EPW   november 22, 2008
Special Article
garment unit of Hindustan Lever while the number of workers
was 250, it was 500 in the subcontracting units. Similar was the
situation in H L footwear units [Banerjee-Guha 1997].
Such negative correlation between increase in production and
decrease in organised factory employment distorted the concept
of increase in labour productivity and created a new labour divide
in which the concept of labour aristocracy got diluted with
expendability of labour. It worked towards a narrow sectoral
development of a high technology and information-based order
thwarting redistribution of income and economic benefits over
an expanded space [Kundu 1997]. The UNDP 1993 Human Develop­
ment Report noted that many parts of the world started witness-
ing a jobless growth during this period. The pattern of income
distribution showed that 20 per cent of the world’s population
had 83 per cent of the world’s income, i e, five times the purchas-
ing power of the poorest 80 per cent [UNDP 1993]. A number of
countries during this period started adopting supply side
economic policies seeking to derive efficiencies in service deliv-
ery by privatising public services. State-capital alliances started
becoming a common practice and as a supportive mechanism,
neoliberalism flourished, subsequently to emerge as an unchal-
lenged model of economic efficiency with its spite for those who
dared to challenge its revealed realities [George 1999]. Blind
faith on the market was preached with a religious fervour
throughout the world [Conway and Heynen 2006], emphasising
state fiscal austerity, market liberalisation and public sector
privatisation for the South, the three pillars of the “Washington
Consensus” [Goldman 2005]. It was accompanied with a consist-
ent assurance from the global North and the international insti-
tutions that economic growth and expansion would come only
from the above strategy. “The myth of the global market place”
[Sachs 1999] was finally institutionalised with signing of the
1994 Uruguay round of General Agreement on Tariffs and Trade
(GATT) and the emergence of the World Trade Organisation
(WTO). Neoliberal structural adjustment “solutions” further
exacerbated impoverishment, increased exploitation of extrac-
tive resources of the South and heightened iniquities in their
comparative advantages vis-à-vis the advanced capitalist core
countries and their transnational corporate partners [Conway
and Heynen 2006].
Opening Up of New Economic Spaces: SEZs in India
As a natural outcome of the above process, in a number of
countries of the global South including India, through global-
local interplay, a newer form of capitalist development gradually
came to emerge, using the dynamics of absolute space within the
parameters of relative and relational spaces and depending upon
globally networked flows of information, finance, technology and
a supportive neoliberal hegemonic discourse. It went beyond the
previous practice of production disaggregation and strategised
on a total appropriation of space and its attributes for a newer
form of exploitation. Set to mutate all existing social relations, it
modified the non-Fordist labour process, transformed relations
between the dominant and the dominated and alienated specific
space-economies from their respective social realities to
construct an economic system conforming to its description in
53
Special Article

pure theory [Bourdieu 1998]. The common, collective interest web sites [GoI 2007] on SEZs that are bursting with details on the
and the public good started getting negotiated away by ideologi- requirements and potential of these zones.
cal, political and economic power-plays that privileged indivi­dual Most of the SEZs are gigantic, requiring huge land areas
accumulation subordinating the common people and their rights (minimum 1,000 hectares for multi-product zones and 100 for
Figure 1: Sectorwise Distribution of Approved [Cox 1999] to the dominant the service sector ones). One must note the congruence of SEZ
SEZs in India 2008 power of market exchange functional policy of keeping only 25 per cent land reserved for
IT/ITES Biotech
5 %
Pharmaceutical [Hardt and Negri 2004] multi-product SEZs and 50 per cent for sector specific productive
62% 4%
Textile 4% that even went to under- purposes while the rest for development of real estate, potentially
Multi products write justification for exces- creating speculative real estate bubbles in an effort towards
5%
sive militarism and state absorbing surplus value, with the help of “neoliberal” urbanism
violence. Emergence of [Smith 2002]. This arrangement explains the urgency from the
Others
SEZs in India and associ- part of the government to set up such zones. The speed with
20% ated contradictions need to which they are being approved is alarming: 462 formally
be viewed in the light of the approved (Figure 1) till May, 2008 since the enactment of SEZ Act
above process. in 2005, comprising about 1,26,077 hectares. Out of these 462,
Source: Government of India, 2008
The contemporary space Maharashtra accounts for the largest number (89), followed
relations of capital represents a thorough reworking of innumer- by Andhra Pradesh (75) and Tamil Nadu (59) (Figure 2) (see the
able “regionalities” that had once been produced by the conver- Table, p 55) [GoI 2008].
gence of molecular processes of capital accumulation in countries
Figure 2: Statewise Distribution of Approved SEZS 2008
located in different parts of the world, characterised by territori-
alisation of resources, labour and mode of production. In all these
regions, over the years, hege­monistic class alliances were formed
as did a working class alliance, encompassing cultural and social
values, attitudes, beliefs, religious as well as political affiliations.
Punjab Chandigarh
As India is largely agricultural, many of the above “regionalities” 7 2
Uttaranchal
are embedded in agriculture-related activities and livelihoods, Haryana 3
38
identity of which cuts across the above characterisations. Drastic Delhi
Rajasthan 7
reorganisation of economic space and activities due to the estab- 8 Uttar Pradesh
26 Nagaland
lishment of SEZs is lending an ambiguous identity of placeless- 2
ness [Harvey 1982] to the above “regionalities”4 which is evident Gujarat Zharkhand West
Madhya Pradesh
in the conversion of active farmlands in many states into areas of 39
13 1 Bengal
22
high-tech corporate activities, in dissociation from the rooted Chhattisgarh
1
regional socio- economic formations. It rests on a contradictory Dadra and Maharashtra
Orissa
Nagar Haveli 9
framework of inclusion (of few) and exclusion (of many) and gets 4
89

directly related to the materialisation of uneven development at Andhra Pradesh

75
various scales involving integration of selective regions/areas Karnataka
and sections of societies in the globalised framework [Banerjee- 42

Guha 1997]. A destructive ensemble of obsoletism and rebuild-

ing, ephemerality and reinterpretation diffuses across the old
spaces, displacing the existing use values and altering the discur-
sive as well as the material geography of such spaces. “Space” in
this construct is used in a diverse manner giving rise to contra-
dictory tendencies of integration and segmentation, creating a
solid and material background for intense conflicts [Banerjee-
Guha 2002] that goes to form, inter alia, a part of a global hegem-
onistic cultural discourse [Gramsci 1971]. A typical neoliberal
construction of space, place and scale takes place that goes to
reconstruct a new geography of centrality and marginality
making the issues of production and capitalisation of space
extremely crucial. Landscapes of conflict that are produced as a
result, however, stand to be resisted and contested from below
[Conway and Heynen 2006] by those whose livelihoods get
jeopardised and who are systematically coerced by the state
apparatus in diverse ways thereby proving their vulnerability in
the current order. One thus finds no mention of the issues of
displacement, rehabilitation or compensation in the government
54
Pondichery
1
Kerala Tamil Nadu
1 59
Source: Government of India, 2008.
In 2000, the first SEZ policy in India was drafted and the SEZ
Act came up in 2005. The said zones systematically are being
projected as “carriers of economic prosperity” that would (i) boost
economic growth at an extremely fast rate, (ii) usher in affluence
in rural areas, (iii) provide large number of jobs in manufactur-
ing and other services, (iv) attract global manufacturing and
technological skills, (v) bring in private and public sector invest-
ment from both home and abroad, (vi) develop infrastructural
facilities, (vii) make Indian firms more competitive, and (viii) help
slow down rural-urban migration. In short, they are the officially
acclaimed carriers of India’s modern industrialisation that would
create an all round transformation and lead the country towards
november 22, 2008  EPW   Economic & Political Weekly

a modern mode of living. A number of state governments in India,
irrespective of their political ideology, are vying with each other
to woo investors to come into their respective territories for which
large-scale concessions and incentives are offered at both state
and the central levels. To mention a few: (i) recognition as duty
free zones and foreign territory in terms of trade operations,
(ii) exemption from income, sales or service tax: 100 per cent tax
exemption for the first five years and 50 per cent exemption for
the next five years, (iii) exemption from examination of export/
import cargo by customs, (iv) allowance to subcontract to any
extent, (v) freedom from environment impact assessment (EIA)
regime, (vi) allowance to bypass state electricity regulatory commis-
sions and state taxes on raw material, (vii) exemption from import
licence rules, and (viii) assurance of all basic infrastructure on
priority. Section 49 of SEZ Act, 2005 empowers the government
to exclude any or all SEZs from the control of any central law.
This means that SEZs will not be governed by the law of the land.
The incentives essentially speak of a distinctive status that the
SEZs enjoy as “spaces of difference” [Berner and Korff 1995] that
signifies them as autonomous functional units, delinked from the
surrounding areas on functional terms, simultaneously having
such links with faraway places through global networks. In
reality, they reflect spatial imbalances at local level associated
with economic decline, social inequality and fragmentation at
wider territorial scales. It is argued [RUPE 2008] that because
balance between requirements and incentives is grossly skewed in
these zones that are heavily subsidised by both the government
and public, huge loss to exchequers in tax revenues will occur.
Growth, Development and Distribution
The logic of establishing SEZs is resting heavily on concepts like
“growth” and “competition” and the supposed economic magic
they can achieve. It is now widely accepted in official circles that
to succeed in the global market a country must have competitive
advantage that they should utilise to the fullest. But who does not
know that competition in the globalised world itself is unequal?
While poorer countries find themselves pitted against global
corporations having the necessary technological advantages of
negotiating distance and locating economic activities anywhere,
the former only have a huge reserve of workers, at various educa-
tional levels, whose wage rate is extremely low compared to the
prevailing rate in the west. This may lead to high return on capital
but not with an associated increase in real wage and personal
income, as stated by several critics [Bhaduri 2007; Mitra 2006]. It
has already been seen how the operational strategy of fragment-
ing production at differential spaces of development became a
tremendous source of profit for global capital all the world over
and a factor towards exacerbating immiserisation of labour. The
latter while acting as a factor for the drastic profit rise, remained
out of the growth target.
Thus as growth does not necessarily ensure equitable distribu-
tion of well-being, the more important questions are how growth
is achieved and how far it gets distributed and reaches people at a
per capita level. A brief mention of the contradictions between
growth and well-being in China will not be inappropriate here.
The latter is acclaimed as a country signifying tremendous
Economic & Political Weekly  EPW   november 22, 2008
Special Article
growth with a booming export sector. However, she is a success-
ful exporter because her effective wage rate is significantly lower
than in the west. If this gap in wages between China and the west
got closed, or even significantly narrowed, then her growth
stra­tegy will no longer be successful. In the west, in the current
epoch of “globalisation” the wage rate of workers has been virtu-
ally stagnant. As a result, Chinese wage rates, which necessarily
have to remain persistently lower than the western ones for the
success of her export-led strategy, cannot increase much either.
No matter how high the rate of growth of labour productivity in
China in the export sector, since this rate of growth of labour
productivity is more or less what obtains in the west (because
China is not an innovator and only adopts technologies
innovated in the west), the growth rate of China’s wage rates
cannot move out of sync with that of western wage rates. If the
latter are stagnant then so must China’s be, even though labour
producti­v ity everywhere is rising at a fantastic rate’ [Patnaik
2007]. Harvey (2005) notes that hourly wages in textile
production in China in the late-1990s stood at 30 cents compared
to Mexico’s and South Korea’s $ 2.75. This incredible wage labour
advantage made China compete against other low-cost locations,
such as, Mexico, Indonesia, Vietnam and Thailand in low value
added production sectors and emerge as the major supplier of the
US market in consumer goods. From 1990s she started moving up
the ladder of value added production to electronics and machine
tools and competing with countries like South Korea, Japan,
Taiwan, Malaysia and Singapore that helped her earn the status
of an off-shore production centre of these countries, besides the
US, in a big way [Harvey 2005].
Also as low wage rates made capital saving innovations possi-
ble, highly productive Chinese factories reversed the process of
Table: State-wise Distribution of Approved SEZs in India (May 2008)
Sr State Total Area Percentage Share of Major Types
No in Hectares IT/ITES Biotech Pharma- Textile Multi- Others
ceuticals Product
  1 Andhra Pradesh 10,825.4938 13.18 0.47 6.19 3.73 63.15 13.28
  2 Chandigarh 58.4566 100.00 – – – – –
  3 Chhattisgarh 10.77 100.00 – – – – –
  4 Dadra Nagar Haveli 1,17.75 11.99 – – 67.94 – 20.07
  5 Delhi 3,86.04 19.38 17.83 31.92 – – 30.87
  6 Gujarat 33,803.1705 4.37 0.04 0.17 0.32 48.70 56.40
  7 Haryana 16,87.223 34.16 3.49 – 6.80 42.49 13.06
  8 Jharkhand 36.00 – – – – – 100.00
  9 Karnataka 27,12.2099 39.72 2.70 32.04 8.60 – 16.94
10 Kerala 6,19.1683 31.44 1.94 – – – 66.62
11 Madhya Pradesh 5,47.207 63.23 – – – 18.27 18.50
12 Maharashtra 11,361.0385 12.75 1.91 6.17 7.04 48.73 22.4
13 Nagaland 4,50.00 – – – – 88.89 11.11
14 Orissa 1,953.36 9.58 51.01 39.41
15 Pondichery 3,46.00 – – – – 100.00 –
16 Punjab 2,84.07 18.33 – 8.33 35.67 – 35.67
17 Rajasthan 541.10 18.33 – – 19.11 – 68.56
18 Tamil Nadu 58,500.724 58.44 – – 0.17 3.95 37.44
19 Uttarakhand 468.20 6.10 – – – 93.90 --
20 Uttar Pradesh 8,47.6706 37.50 – – 12.23 12.23 38.04
21 West Bengal 521.521 80.81 1.99 – – – 17.20
22 India 1,26,077.1732
Source: GoI, 2008.
55
Special Article
using expensive automated systems by taking capital out of the
production process (the total capital required was reduced by
one-third) and reintroducing a greater role for labour. How was it
done? Between 1998 and 2002, the state-owned enterprises (SOE)
reduced their workforce by 1,03,000 and the net loss of manufac-
turing jobs reached around 15 million. But, inside the SEZs, number
of jobs, albeit contractual, started to grow. In these zones, overtime
is usually compulsory and unpaid. Clark (2008) mentions, for
example, that overtime may last from 6 pm to 6 am in peak seasons
in the toy factories of Donguan in the Pearl River Delta where 80
per cent of the world’s toys are made by 3,00,000 Chinese workers,
many of whom are children. A minute’s delay in reporting for
work may reduce pay by two hours and never any compensation
is given for any work related accident or disease. Non-payment of
wages and pension obligations in China have led to fierce labour
protests in many areas. In 2002 in the north- eastern city of Liaoyang
more than 30,000 workers from some 20 factories protested for
several days that came to be known as the largest demonstration
of its kind since the Tiananmen crackdown [Lee 2004].
What needs to be stressed is that China, one of the world’s
fastest growing economies (with 9 per cent growth rate), has also
become one of the most unequal societies. The benefits of growth
have reached only a small section of the urban society. Some
studies compare China’s social cleavage unfavourably even with
Africa’s poorest nations [Wu and Perloff 2004]. Regional
inequa­lities, including intra-rural and intra-urban inequalities,
have intensified in China with a few southern coastal cities
surging ahead. At the same time, the interior areas and the “rush
belt” of the northern region [Harvey 2005] and many rural areas
get almost no support. They are forced to tax local farmers and
impose enormous fees to finance physical and social infra­
structure like schools, hospitals, road building, even the police.
Poverty and the resultant unrest are seen to be intensifying.5
There have been far-reaching shifts in Indian policy in the last
few decades facilitating large-scale entry of global corporate
capital in almost all economic sectors, downsizing of labour,
outsourcing of industrial and other economic activities and
promotion of an aggressive urbanisation by modernising cities of
different size, through direct policy interventions. Such policies
are systematically keeping out a large section of the population
from the growth process, creating a distinct space of the margin-
alised that has been steadily on the rise. A close connection is
seen among these policies and that of the international financial
institutions like the World Bank, the International Monetary
Fund, Asian Development Bank, the global corporate sector, and
quite significantly, the major capitalist countries. The role of the
state has also been redefined into a modern, vociferous one facili-
tating private sector operation and a developmental governmen-
tality, a “politically neutral” practice, pitched heavily on the
rationality of experts and professionals [Sanyal 2007]. An
increasingly irreversible production structure in favour of the
rich has started consolidating and economic activities catering to
the rich are being handed over to large corporations. Simultane-
ously a typical jobless growth is seen to flourish. To cite a few
examples: the number of workers in the Jamshedpur steel plant
of the Tatas came down from 85,000 in 1991 to 44,000 in 2005
56
while production rose from one million tonnes of steel to five
million tonnes. This means output increased by a factor of five
while employment decreased by a factor of half. Similarly, Tata
Motors in Pune reduced the workforce from 35,000 in 1999 to
21,000 in 2004 while increasing production from 1,29,000
vehicles to 3,11,500. Bajaj motor cycle factory in Pune reduced
the number of workers from 24,000 in the mid-1990s to 10,500 in
2004 while doubling the output with the help of Japanese robot-
ics and Indian information technology [Bhaduri 2008]. In Mahar-
ashtra, the leading state in terms of foreign direct investment
(FDI), the number of factory workers came down from about 1.22
million per day in 1989-90 to about 0.77 million per day in
2003-04, although the industrial output increased from around
Rs 78,000 crore in 1992-93 to over Rs 2,36,000 crore in 2003-04.
Even today Maharashtra is the leading state in the factory sector
in terms of investment, gross output and net value added; it is
only factory employment that has declined [Singhvi 2008].
This is only possible with a huge rise in labour productivity, as
mentioned earlier, that again is largely contributed by the
unorganised sector accounting for more than 90 per cent of the
country’s labour force. Ruthless exploitation of labour has thus
become the source of increased corporate profit as well as inter-
national price competitiveness in a globalised world [Bhaduri
2008]. While the country’s growth roars ahead at 8 per cent,
growth in regular employment is found to have exceeded not
even 1 per cent in recent years. Quite logically India accounts for
the largest number of homeless, illiterate and ill-fed in the world
[Bhaduri 2008]. A culmination of all the above processes, as
argued by many, is the recent decision of establishing SEZs – the
largest in number among all countries – that will help the corpo-
rate sector directly appropriate land and resources and open up
the possibility of having a huge army of cheap labour, a large
section of them comprising the dispossessed. Surveys have found
that workers in SEZs work 5.3 per cent more hours than those in
non-SEZs and at hourly wages that are 34 per cent lower [Sen and
Dasgupta 2008], obviously to offer labour power at a “competi-
tive price” in the global production system. To facilitate this, SEZs
are declared as “public utility services” with several exemptions
from the labour laws, including the Minimum Wages Act and the
Contract Labour (Regulation and Abolition) Act, and where
strikes will also be made illegal.
To recall, the Chinese state used its own uneven geographical
development as a competitive edge over other countries and be-
came a vociferous partner in facilitating the expansion of global
capital by using its incredibly low-wage labour advantages. In a
unique fashion, the state in China internalised welfare arrange-
ments and social provisions within provinces, cities and local
governments and relegated the rural dwellers as the least privileged
citizens, physically separating them from the urban population
by introducing residency permit systems. A state-mani­pulated
market economy was created that delivered specta­cular economic
growth for a long period for a significant pro­portion of the popu-
lation which, however, brought in its wake mounting social
inequality, declining per capita foodgrains availability for the
rural masses [Patnaik 2007], severe environmental degradation,
and finally, a revival of capitalist class power [Harvey 2005]. In
november 22, 2008  EPW   Economic & Political Weekly

India too, against a background of pervasive agrarian crisis,
conversion of farmland into SEZs will clearly aggravate the
problems of declining foodgrains availability. Already with a
sharp decline in the public investment rates and public develop-
ment expen­diture in the primary se- ctor, the consumption of the
poor in the country is sacrificed. The agra­rian crisis is getting
mani­fested through a sharp inc­rease in the number of landless
rural households (in Kerala, the rise was from 5.8 per cent in
1992 to 38.6 per cent in 2002-03) and the large number of farmer
suicides underlying which is a steep fall in the profitability of
production engineered by neoliberal policies [Patnaik 2008].
The nature of the land that is being earmarked for the purpose
of establishing SEZs in different states in India indicates to a large
extent the vulnerability of the rural poor engaged in primary
activity. The overall trend in all the states has been to acquire
agricultural lands for SEZ activities that are located close to trans-
port lines, highways or other infrastructures. Large tracts of land
in agricultural areas in various states like Maharashtra, Orissa,
Punjab, Haryana, Kerala and West Bengal (including multiple
cropped lands) have been earmarked for the purpose. The above
process of acquisition of farmlands for corporate sector, accor­
ding to Patnaik (2008), will facilitate the entry of foreign corpo-
rates into agriculture and related activities through contract
systems and domestic corporates into urban food retailing by
sourcing from agriculture that will aggravate the problem of
declining foodgrains availability and intensify the problem of
unemployment among petty traders, in the long run. Acquiring
wastelands for SEZs is also not a simple issue. Wastelands (India
has 55.2 million ha of wasteland) can be land with scrub, grazing
land, pasture or land on which shifting cultivation is carried out.
Who does not know that the poorest and the most marginalised
depend on these lands for their survival by way of collecting
firewood, fodder for animals and minor forest produce? Much of
the officially declared wastelands are actually common property
resources [Down to Earth 2006]. To cite examples, in Mahara­
shtra, ‘dali’ or ‘gairan’ lands, classified as wastelands and now
earmarked for SEZs were being allotted since long to landless
tribals or dalits for cultivation purposes. Similarly in Gujarat,
common grazing lands are being taken away. The LAA of 1894
seems to have superseded all such rights of the people along with
relevant progressive legislations like the panchayati raj (73rd
Amendment) Act of 1992 entitling rights to villagers to decide
their own course of development or the panchayats (Extension to
the Scheduled Areas) Act, 1996 empowe­ring the indigenous
peoples for self-rule. In compensation debates too, the above user
rights over land are bypassed while only owner rights are
mentioned. The preamble to the National Relief and Rehabilita-
tion Policy (NRRP), 2007 states that while acquiring land the state
needs to minimise displacement and promote, as far as possible,
non-displacing or least-displacing alternatives for which projects
may be set up on waste lands, degraded or unirrigated lands.
Acquisition of agricultural or irrigated land for non-agricultural
use may be kept to the minimum and multi-cropped land may be
avoided. Also, while acquiring land, adequate rehabilitation
packages especially for the weaker sections need to be ensured
and speedily implemented [NRRP 2007]. As none of these has
Economic & Political Weekly  EPW   november 22, 2008
Special Article
been followed in reality, fierce resistance struggles against “land
grab” have erupted in different parts of the country leading to
state atrocity and violence.
Underlying Logic: Legitimising SEZs
This brings us to the strategy of negotiating the contradictory
spaces that are intertwined with the process of establishing these
zones and its underlying logic. A careful analysis of the current
development patterns in the country will make things clearer.
There are three interrelated issues to take note of. Let us first look
at the type of activities being developed in the SEZs. Only 5 per
cent of the approved SEZs [GoI 2008] are multi-product while
information technology (IT)/information technology enabled
services (ITES) SEZs are 62 per cent (Figure 1). According to
Upadhya (2007), providing lucrative employment opportunities
for the above workforce contributes only to the reproduction and
consolidation of the middle/upper class from whom this
workforce is drawn. The total employment that the IT/ITES SEZs
will create is negligible and if the number of potential jobs is put
against the volume of investment one finds that one job will
require an investment of Rs 1 to 1.5 crore or even more [RUPE
2008]. In 2006-07 the IT/ITES sector (including engineering
services, R & D and software products) accounted for 4.3 per cent
of the country’s GDP, of which 80 per cent was from exports. But
it accounted for only 0.3 per cent of the country’s employment.
Even if employment in this sector doubles by 2010, it will still
account for a mere 0.7 per cent of the total employment but
accounting for more than 6.5 per cent of the country’s GDP which
will be nine times its share in the workforce [RUPE 2008]. This is
in addition to the fact that firms in this sector have strong
external but weak domestic linkages, with 75 per cent of their
output exported.
What else can be an enclave within the economy? Larger
income generated in this sector will mainly boost demand for
elite consumption like better housing, automobiles, organised
retail, hotels and entertainment, banking and share market-
related activities, etc, that will generate very low domestic
employment, even though there may be an addition of some
indirect jobs. Its enormous effect on real estate is evident which
brings us to the second issue, i e, the special status that real estate
enjoys in contemporary times in the country, in general, and in
SEZs, in particular. A major part of the growth envisaged in the
SEZs is through real estate and infrastructure. Huge tracts of
lands within SEZs are being reserved for real estate projects
involving “luxury constructions” that are being projected as
infrastructural development. For example, the 5,100 acres of land
to be given to the Salim group (of Indonesia) in West Bengal
where the investors will bring Rs 44,000 crore will mainly go for
making golf courses, hotels, recreation, commerce and world
class residential complexes, generating employment to not even
5,000 people [Mitra 2006]. The requirement of surplus capital or
profit to regenerate itself through fresh investments, given the
coercive laws of competition, is thus met through real estate and/
or “infrastructure development”.
One may recall Baran’s (1958) argument that the effect of
infrastructural facilities would be nix if they remain alien and do
57
Special Article
not become a part of an economic environment or a socio-
economic structure into which they have been built. In such
cases, they would only accelerate disintegration of the peasant
economy and contribute towards a more intensive mercantile
exploitation of the rural interior. Along with “industrialising” the
countryside, such infrastructural development serves to urbanise
and modernise the countryside as well, helping in the process,
the expansion of the space of consumption. In case of China, “real
estate” development in and around large cities and inside the
export processing zones became another privileged path towards
amassing immense wealth in a few hands. Since peasant culti­
vators did not hold title to the land, they could easily be dispos-
sessed and the land converted to lucrative urban uses, leaving
the cultivators with no rural base for a livelihood and forcing
them out of the land and into the labour market. As many as 70
million farmers may have lost their land in this way over the last
decade [Harvey 2005]. Acquisition of peasant lands in India
currently for the corporate sector and for SEZs has been identified
as a new phase of primitive accumulation [Patnaik 2008] whereby
lands are used more for real estate development and land specu-
lation than for new manufacturing activities.
The idea that urban real estate redevelopment has become a
central motive force in the age of neoliberalism [Smith 2002], fits
well with the fast pace of real estate development in SEZ enclaves
and in many large cities. The township of New Rajarhat in
Kolkata, West Bengal, built upon the displacement of an agrarian
community or the Maha Mumbai SEZ coming up on agricultural
lands in western Maharashtra in the periphery of Mumbai or the
2,500 acre new township being built in the Ghaziabad district of
Uttar Pradesh by the real estate developer Ansals are pertinent
examples. Merryl Lynch has recently stated that the growth of
real estate sector in India will be up to $ 90 billion in 2015. In
2005 it was $ 12 billion.
Finally, in close association with the above two, comes the final
issue of opening up of the internal market and helping a consumer
class grow, mainly in large cities, that would act as a forerunner
of the contemporary modernity and preclude large-scale social
unrest that may arise out of the displacement and dispossession
that the contemporary growth process leads to. Budget allocation
for large cities is a good indicator to understand this pheno­
menon. Enormous capital is pumped into the cities especially the
larger metropolises that are experiencing drastic restructuring
[Banerjee-Guha 2002] in order to be developed as an ideological
base of corporate capital that would work towards lending a logic
to the aggrandisement of economic globalisation in a garb of
modernity. One may recall the hype created about the importance
of mega cities by the introduction of the Mega City Programme in
1991, that renewed the flow of investment into these cities and
their regions. The same cities are now in the priority list of the
central government for large-scale gentrification through World
Bank-aided central government’s urban renewal programme, the
Jawaharlal Nehru Urban Renewal Mission (JNURM). Huge funds
are being allocated for the National Highway Project connecting
larger metropolises and facilitating expansion of interstate
automobile travel. The fenced off eight-lane Mumbai-Pune
Expressway, maintained by a private firm, cuts across agricultural
58
fields lying on its two sides, preventing villagers to reach their
field located across. The same is the case with the fenced off
Bangalore-Mysore Infrastructure Corridor Project Expressway.
Similar road rage [Low and Banerjee-Guha 2003] is seen in
the reorganisation of intra city transport focusing on flyovers,
metros and elevated channels bypassing the development of the
basic public transport system on which more than 80 per cent of
the residents in each city depends. A surging consumer culture is
engulfing these cities [Harvey 2005] in which material manifes-
tation of inequalities like “gated communities”, “edge cities” of
hi-tech activities, spectacular consumption zones, shopping malls
and theme parks heightens the logic of aesthaticising urban
development [Kipfer and Keil 2002] and dissociating it from
public discourses. The related cultural implications works
towards justifying a unified urban planning vision that is signifi-
cant for the construction of hegemony [Lefebvre 1991] and a
“dominant” culture comprising competition, modernity and
exploitation [Banerjee-Guha 2002]. With a flexist imposition of
global imperatives, these cities act as links between global
capitalist culture and local spatial formations prioritising grandi-
ose projects of infrastructure, cultural and commercial facilities,
all representing gentrification. Perpetrated in the name of urban
planning, in the present time it is helping to reconstitute
bourgeois hegemony and resonate an intensely polarised capita­
list urbanisation process having a range of impact. In India, it is
also reflecting the contradictions of state institutions that are
essentially a crystallisation of uneven development, indicating
towards a process of “rescaling”, “decentralising”, “localising”
and “internationalising” – a unified and a larger process of neo-
li­beral restructuring of contemporary times. It partly rests on
existing inequalities, but largely on the reproduction of newer
areas of decline and growth, based on contemporary forms of
economic momentum.
Together they work towards a process of accumulation by
dispossession at different socio-spatial scales and simultaneously
lend a theoretical justification to contemporary development
patterns. “With its monopoly of violence and definitions of
lega­lity, [the] state plays a crucial role in…promoting these
processes” [Harvey 2005: 159]. Concomitantly, it brings in its
wake, various institutional realignments and political adjust-
ments, imposing newer forms of market discipline upon global,
national and local social formations. Amidst the process of creat-
ing an “utopia” of a free market, in practice it shows up a dramatic
intensification of a coercive disciplinary form of state interven-
tion to impose market rule. Interestingly, while the majority of
the people, by this process, are subjugated to the power of market
forces, social protection is kept reserved for the strong [Gill 1995].
As Lipietz (1992) suggests, it is taking place on an aggressively
contested institutional landscape in which newly emerging
“economic spaces” interact conflictually with inherited regulatory
arrangements, providing a political arena through which
sub­sequent struggles over-accumulation by dispossession and its
associated contradictions are getting articulated and fought out
[Brenner and Theodore 2002].
It, therefore, needs emphasis that the contextual embeddedness
of the above processes as they are being produced within national,
november 22, 2008  EPW   Economic & Political Weekly

regional and local scales in India, are getting defined not only by the
nexus of policy regimes, disciplinary political authorities and their
regulatory practices, but also by resistance struggles, consoli-
dated grassroots movements and mobilisation of progressive forces
towards challenging the corporatised development paradigm.
Notes
1 Accumulation by dispossession, according to
David Harvey (2005) can take several forms in
the present time. Escalating depletion of natural
resources like land and water and their privatisa-
tion, degradation of land and settlements by
capital intensive farming that results from
commodification of nature, patenting of general
material and using them against people who
contributed in developing them, corporatisation
and privatisation of public assets, withdrawal of
social welfare laws (that were earned through
long struggles) protecting labour rights and rights
of the poor, pension benefits, national healthcare
all indicate towards practices and policies of dispos-
session pursued in the name of neoliberal ortho-
doxy. For further clarification, see David Harvey,
The New Imperialism, Ch 4, Oxford University Press,
UK, 2003. In a recent article on Indian SEZs,
Sampat (2008) has clarified the process.
2 The process denotes removal of all spatial barriers
to international production and exchange and
simultaneously entails space differentiation and
uneven development to exploit region and country
specific characteristics, such as levels of income,
wage rate, labour laws, laws related to environ-
mental impact assessment, etc. The upshot is that
the development of the space economy of capital-
ism is beset by counterposed and contradictory
tendencies. See Swapna Banerjee-Guha, Spatial
Dynamics of International Capital, Ch 2, Orient
Longman, 1997; David Harvey, The Limits to Capital,
Ch 13, Basil Blackwell, 1982; Henri Lefebvre, The
Production of Space, Basil Blackwell, 1991.
3 The point that needs to be stressed here is that
these changes in relative space are neither
accidental nor arbitrary but integral to the
production of the national scale and its differen-
tiation into rising and declining regions. See Neil
Smith, Uneven Development, Ch 5, Basil Blackwell,
N Y, 1984; Also, A Markusen, Regions: The Econo­
mics and Politics of Territory, Rowman and Little-
field, 1987.
4 For a detailed analysis on Neoliberalism and China,
see David Harvey, A Brief History of Neo­liberalism,
Ch 5, Oxford University Press, 2005.
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