Fiscal Implications of Special Economic Zones (SEZs) Expansion in India: A Resource Cost Approach

This paper analyzes the fiscal implications of special economic zones (SEZs) on the government exchequer. The analysis is based on aggregating data collected from seven conventional SEZs and taking 1990-1991 to 2007-2008 as the reference period. The exercise reveals that the government has spent huge sums of money to play the role of a trade facilitator and has, in the process, lost considerable revenue as a fiscal manager. This, in turn, has affected both revenue and capital expenditure of the government's budget. Given the magnitude of these costs, one cannot but raise questions about the actual contributions of these enclaves to the national fiscal health and the feasibility of relentlessly adopting measures that seeks to promote these zones across the nation.