The Hindu Business Line : `Prime agri land not for industrial use'

State Governments should not give away prime agricultural land for industrial purposes, said Mr Kamal Nath, Union Minister of Commerce and Industry, on Monday at the sidelines of a conference here.

This comes a day after the Congress President, Ms Sonia Gandhi's statement indicated that her party might seek a review of the norms governing land acquisition for setting up Special Economic Zones (SEZs). "The Board of Approval for SEZs has made it mandatory that no proposal for setting up SEZs on prime agricultural land be cleared," pointed out Mr Nath.

He said that, as land is a state subject under the Constitution, the Commerce Ministry has written to the State Governments that they should not get into land acquisition for private players. Mr Nath added that he totally agreed with Ms Gandhi that no good farmland be diverted for industrial purposes. Wherever possible, SEZs should come up only on wasteland or on not very good farmland.

The Congress President, last week at a meeting with the Chief Ministers of Congress-ruled states, had warned against diversion of farmland for non-agriculture uses. She had also said that farmers must be properly compensated when their land is purchased and advised industry to make farmers stakeholders in the projects.

On the Reserve Bank of India's decision to treat SEZs as similar to real estate projects for lending purposes, Mr Nath said that RBI had applauded the SEZ scheme for accelerating economic development in its annual report. "The RBI in its report had itself termed SEZs as an engine of growth. Now it must ensure that it does not contradict itself," he said.

On the impact of RBI statement on SEZ developers, Mr Nath said, "industry will have to take up this issue with the RBI." The central bank had directed all commercial banks to treat exposure to SEZs as lending to real estate projects in the previous week. This move would increase the cost of lending and restrict the flow of funds to these zones.

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