Model Answer

Introduction

Special Economic Zones (SEZs) are designated areas where business and trade rules differ from the rest of the country, offering special privileges to businesses operating there. Despite their potential to drive economic growth, SEZs in India have faced several challenges leading to slow growth and underutilization. The Development of Enterprise and Service Hubs (DESH) Bill, 2022 has been proposed to address these challenges and revamp SEZ legislation in line with global standards.

Key Reasons Behind Decline in SEZ Growth and Underutilization:

1. Inadequate Infrastructure and Services:
   • Many SEZs lack essential infrastructure such as proper roads, power supply, water resources, and efficient transportation.
   • Without proper facilities, businesses are reluctant to set up operations, leading to underutilization of these zones.
2. Land Acquisition and Rehabilitation Issues:
   • Acquiring land for SEZs has often faced protests, legal disputes, and delays, making the process difficult and time-consuming.
   • More than 1 lakh acres of land within existing SEZs remain unutilized due to land acquisition challenges.
3. Complex Regulatory Procedures:
   • The bureaucratic processes involved in setting up and operating in SEZs are cumbersome, often leading to delays in obtaining necessary permits and clearances.
   • These challenges discourage potential investors who seek a smoother business environment.
4. Global Economic Factors:
   • Economic downturns and fluctuations in global markets have reduced demand for goods produced in SEZs, leading to their underutilization.
   • Out of 272 operational SEZs, only a few have active units, accounting for less than 20% of India’s total exports.
5. Lack of Connectivity to Domestic Markets:
   • Some SEZs are located in remote areas with poor connectivity to domestic markets, limiting their access to consumers and hindering industrial growth.
6. Labour and Skill Challenges:
   • SEZs have faced difficulties attracting skilled workers due to factors such as location, poor working conditions, and competition from other sectors.
   • Despite 272 operational SEZs, they provide employment to only 28 lakh people, indicating underutilization.
7. Sunset Tax and Policy Changes:
   • The introduction of minimum alternate tax (MAT) and the sunset clause, which limited tax exemptions, has diminished the appeal of SEZs.
8. Outdated Legislation:
   • The SEZ Act, which was framed over 17 years ago, is no longer aligned with current economic and global trade conditions.

How the Development of Enterprise and Service Hubs (DESH) Bill, 2022 Addresses These Issues:

1. Paradigm Shift in Focus:
   • The DESH Bill aims to shift the focus from export-centric zones to hubs that promote domestic investments and economic activity.
   • It integrates multiple economic zone models, including SEZs, coastal economic zones, and textile parks, creating a more cohesive framework.
2. Single Window Portal:
   • The DESH Bill introduces a single online portal for time-bound approvals, streamlining the process for establishing and operating hubs, reducing bureaucratic hurdles.
3. Boost to Economic Activity:
   • The bill allows SEZs to sell in domestic markets more easily, transforming them into service hubs, and removing the strict export obligations of the past.
   • This transformation will foster increased economic activity and job creation.
4. State Engagement and Integration:
   • The DESH Bill empowers states to integrate industrial parks with SEZs, fostering greater collaboration and development across the country.
5. Tax Incentives for Developers:
   • Tax benefits for companies and developers will be provided, similar to SEZs, but without the export obligations, encouraging more businesses to invest in these hubs.
6. Transformation of Infrastructure:
   • Ports, airports, depots, and land stations will be transformed into Development Hubs, which will have both processing and non-processing zones, boosting their overall utility.

Model Answer

Gaps in Ensuring a Safe and Secure Railway Network in India

India’s railway network has seen efforts to improve safety and security, such as the establishment of the Rashtriya Rail Sanraksha Kosh and track modernisation. However, significant gaps remain in creating a fully safe and secure railway network.

1. Lack of Coordination

One of the major issues is the lack of coordination between the Railway Board and Zonal Railways, which has led to a shortage of resources. For instance, over 3.30 lakh wagons were operated without the necessary approvals after repairs, jeopardizing rail safety Backlogs and Delays The Indian railway system also faces considerable backlogs. Reports suggest that about 1.5 lakh railway bridges need urgent attention. Additionally, the replacement and renewal of outdated assets, which are vital for safe operations, are significantly delayed .

3. Rial Constraints

Due to heavy reliance on government budgetary allocations and a high operating ratio (107% in 2021-22), the railways face financial constraints. These limitations hinder investments in modernisation and safety infrastructure .

4. Inadety Systems

The lack of modern safety systems like fire detection systems and poor maintenance of tracks, particularly in regions with extreme weather, increases the vulnerability of the railway network. This compromises passenger and operational safety .

Internal Security

5. **Increase in Crrise in criminal activities, such as stone pelting and robberies, also poses a security threat. Over 1,500 incidents of stone pelting were reported in 2022, and robberies have also increased, further endangering passengers .

6. Human Errors

Human ern one of the leading causes of railway accidents, including mechanical faults, poor track maintenance, and even infrastructure failures .

Measures Needed

To address these gapsch as the modernisation of infrastructure, better internal resource mobilisation, increased R&D, and the creation of a Rail Safety Authority are crucial. Additionally, setting up State-Level Security Committees and enhancing employee training on safety can help mitigate human errors .

The implementation of these measures will be key tg a secure and efficient railway network in India, with a focus on reducing accidents and fatalities.

Model Answer

Prospects of Inland Waterways in India

1. Reduction in Transportation Cost: Inland waterways offer a cost-effective alternative to road and rail transport. According to a study, one liter of fuel can move 24 tons of cargo for 1 km on roads, 95 km on rail, and 215 km on inland waterways, highlighting the cost-effectiveness of water transport.
2. Environmentally Friendly: Waterways reduce road congestion and vehicular pollution by transporting goods across rivers and canals, easing the burden on highways. This shift not only benefits the environment but also enhances road safety.
3. Boost Economic Integration: Integrating inland waterways with national projects like the Dedicated Freight Corridors (DFCs) and the Sagarmala Project facilitates the smooth exchange of goods across transport modes. This connectivity can stimulate economic growth by connecting remote regions, such as the North-Eastern states, to global trade routes. The Kaladan Multi-Modal Project is a notable example, offering a more efficient route to the region.
4. Multiplier Effect and Linkages: Investment in inland waterways fosters growth across sectors, including port development, boat-building, and ancillary industries, creating jobs and enhancing regional development.

Challenges of Inland Waterways in India

1. Lack of Continuous Connectivity: While the waterway network spans across 15,000 km, it lacks continuous connectivity. For instance, in 2018, a cargo vessel got stuck near Ramrekha Ghat in Bihar due to shallow waters, highlighting the inconsistent navigability of certain routes.
2. Inadequate Water Channel Depth: Many national waterways suffer from insufficient depth, especially due to siltation and seasonal variations, making them unsuitable for large vessels. Approximately 20 out of the 111 identified waterways are deemed unviable for regular use.
3. High Turnaround Time: The absence of efficient material handling equipment and inadequate terminal facilities at key ports results in slow cargo evacuation, leading to congestion and high turnaround times.

In conclusion, while inland waterways have substantial potential in reducing costs and enhancing economic integration, addressing connectivity, depth issues, and port infrastructure is crucial for realizing their full potential.