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SEZs: panel against concessional loan

Special Correspondent

Finance for SEZs is alright: Ahluwalia

NEW DELHI: Planning Commission Deputy Chairman Montek Singh Ahluwalia on Wednesday endorsed the Reserve Bank of India's stand on Special Economic Zones, saying the Commission was not in favour of concessional lending for SEZ projects.

"Finance for SEZs is alright but not concessional finance," he told a press briefing here.

In a directive to banks, the RBI advised lending for SEZs at par with the real estate sector. In effect, it would render loans for these zones more expensive. On possible misuse of tax incentives for the SEZ projects, he said the Finance Ministry had given the assurance that all loopholes would be plugged.

Commerce Minister Kamal Nath had sought the Prime Minister's intervention against the RBI's directive to banks to treat SEZs at par with real estate projects for lending. He termed the central bank's stand on the issue "inconsistent".

On pushing through reforms, Dr. Ahluwalia sided with Finance Minister P. Chidambaram and said the growth target of nine per cent during the Eleventh Plan could not be met if the Government was not given "political space."

"I am in favour of the Government having more political space. If we do business as usual, then we cannot achieve the targeted growth of nine per cent for the coming Plan."

Dr. Ahluwalia pointed out that in a coalition, it was difficult to reach an agreement and, therefore, every effort must be made to create consensus.

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