India flays IMF chief economist for remarks on SEZs

SINGAPORE: India on Saturday ticked off International Monetary Fund (IMF) Chief Economist Raghuram Rajan for his attack on India's Special Economic Zones (SEZ).

He said that these zones are being set particularly in the IT sector to take advantage of tax concessions impacting the economy.

"IMF should get its facts right. They should go to the field and not sit in Washington and criticise," India's Commerce Minister Kamal Nath said, strongly reacting to the IMF Chief Economist's criticism.

"SEZs are a success," said Nath, a strong advocate of SEZs for boosting exports and manufacturing in the booming Indian Economy.

"The Indian economy has been clocking over eight per cent economic growth" he added making the success story of India and China a focus of the discussion at the annual meeting.

Detractors of SEZs, a policy initiative taken last year, have been critical of the concept saying they would be revenue rip-offs and feared that ultimately industrial units elsewhere in the country would shift to SEZs to take advantage of the tax holiday given to them.

Kamal Nath said that there was no justification in saying that there would be revenue loss as it was notional.

"When there is no levy how can you say it could lead to revenue loss," he added.

The Government has already approved over 160 SEZs in the country and the Board of Approval is scheduled to meet in the third week of this month to clear 225 pending applications for the zones in the country.