SEZs to cause Rs 1,75,487 cr loss

Finance ministry tabled figures to oppose move to lift the 150 cap on SEZs.

North Block may not have been able to convince senior ministers over its objections to special economic zones, but the loss projections that it has thrown up are mind boggling.

Four years from now, it claims the revenue losses will be a whopping Rs 1,75,487 crore. To put the amount in perspective, the revenue estimates for the current financial year stand at Rs 4,03,465 crore.

While it may be argued that revenue growth would continue to take place at a fast clip and the losses would therefore be much lesser in proportion, the revenue foregone on customs waivers on raw material inputs alone would be a staggering Rs 69,421 crore by 2009-10.

As against this, the projected investment inflow into SEZs is pegged at Rs 3,60,000 crore during the same period (2009-10). This figure alone should have settled the debate "" in favour of SEZ developers. But, here again, the finance ministry says the exchequer would stand to lose Rs 40,068 crore on account of excise and customs waivers that the developers get.

Interestingly, the assumptions presume that the SEZs will export 100 per cent of their production, while operational SEZs have around 17 per cent of their output being sold to the domestic tariff areas.

Also, the income tax exemption available to the developers appears not to have been factored in while calculating the figures, which could further increase the revenue loss.

These numbers are part of the comprehensive note circulated to the empowered group of ministers on SEZs that met last week under the chairmanship of Defence Minister Pranab Mukherjee.