Wednesday, November 29, 2023

Business Unfriendly Kerala

Dr. Duggaraju Srinivasa Rao

It is hardly two months since Pinarayi Vijayan took oath as Chief Minister of Kerala, for the second term, the true Marxian colour of him is out in the open. Kerala is known as a militant trade union run state where business is seen as a sin and not as mean of profession. The role of business in the development was not accepted by the Leftists there. Businessmen are projected as exploiters by Left leaders unlike in other states where the investments from the business houses are welcomed. For the Left in Kerala it the interests of the party and its faithful cadre which are paramount rather than the development of the state as a whole.  This is evident from the recent controversy where the MD of a business group Sabu M. Jacob publicly accused the Kerala government of political harassment of his business group by CPM leadership and announced his withdrawal of the proposed investment in garment industry in Kerala and relocating that to Telangana.

The Chief Minister of Kerala Pinirayi Vijayan may not agree with the criticism of the MD of Kitex group and may accuse that move as “planned move to tarnish the image of Kerala and shame the brand of Kerala as an investment unfriendly destination”. Despite the vehement denial of state CM, the ill-famed business environment of that state which was summarized in a cartoon of late R.K. Laxman drew in seventies, where an industrialist performing ‘bhoomi pooja’ for his factory is encountered a by group holding red flags shouting slogans for higher wages.  That the trade unions in Kerala controlled by the Left threw out large number of companies including the likes of Gwalior Rayons (Grasim industries), Toshiba Anand, Madurai Coats, Premier Cables during the  pre-economic era. In many other states in the post-economic reforms period the trade unions got weakened but the Kerala Left has not changed in its outlook. During his first tenure of 2016-21 also the track record of Pinarayi Vijayan the image of business friendly was not that great. The Left union lead disruptive tactics lead the Synthetic industries, one of the largest producers of spice oils, to threaten the closure of their factory in 2018. The Muthoot Finance, the non-banking Finances Company, in 2019, also threatened to wind up its branches in Kerala as all the 300 odd branches of the company were disrupted through the CITU backed union strikes.

The problem with the Left lead Kerala government is its aversion for free-enterprise and innovative investments from entrepreneurs. Their Marxian philosophy blinds them to see at the employment and wealth generation through investment and focus very narrowly on the profit margins of the investors. Moreover the believers of Marxism, as is well known, carries the authoritarian streak in their genes and that ego blocks the rational thinking and bars the long term prospective. This summarizes the current Kitex saga.

Kitex group is a 53 year old Kerala based business group which produces a range of products from curry powder to garments. The founder of the group died in 2011 and his son Bobby Jacob. Perhaps the elder Jacob managed the Kerala political groups both Congress and Left with the contributions for the successful run of the Kitex group. The entry of second generation with a new concepts have alerted both the Kerala Fronts, LDF and UDF.

It is the decision of younger Jacobs to use the Corporate Social Responsibility (CSR) funds independently outside the influence of CPM and Congress which made the company to suffer. The company has operations in Kizhakkambalam panchayat area without any issues. But the Congress, which was in power, suddenly woke up in 2012 and made its MLA to complain against the company polluting the surrounding water bodies through effluents and then UDF government promptly issued a ‘stop production’ notice and then after ‘negotiations’ allowed the factory to continue the production. The CPM immediately got alerted and encouraged its trade unions to squeeze the Kitex.

Kitex caught between CPM and Congress thought of wriggling out by befriending the local panchayats through its funds. The company announced the grand plan of making the Kizhakkambalam panchayat into the ‘best in India’ by 2020 through a project named Twenty20. It was a semi-political unit which entered the local body elections and won 17 out of the 19 wards of the panchayat in 2015. That stunned both Congress and CPM. Despite the political hostility from both the main parties the company through Twenty20 carried out development in the area and won 18 of the 20 panchayat seats in 2020 elections. The group influence spread into the neighboring panchayats as the villagers welcomed the developmental initiatives without any corrupt political middlemen. With over 4 panchayts under its grip the Twenty20 of Kitex ventured into 2021 Assembly elections. Though none of its candidates won the election, the group Kitex has grown up in stature in the eyes of locals.

It is this political challenge from the Kitex which angered the CPM bosses that lead to the series of raids on the company establishments with a view to choke the company leading to surrender the Left hegemony. That the Kitex family of Jacobs ventured to fight back and expose the already established ‘un-friendly biz’ image of Kerala. The state which ranked at 18 before the Left took over the administration in 2016. Since then the rank has gone down to 28th tells the story of attitude of CPM towards the business and industry.

Pinarayi Vijayan disputes all the negatives on Kerala business environment by quoting NITI Aayog reports. As per him the said report rated Kerala was ranked second in business climate and presence of human resources and fourth in the investment climate. Neither statistics nor experts agree with the Chief Minister’s view. Kerala’s unemployment rate for age group of 15-29 years is 40.5% which is double the national average of 21%.  The experts are unanimous on the Kerala’s politician and bureaucracy’s left ideology which is anti-industry and anti-business. Without the removal of which many Kitexs may force to fly out of state hitting the progress of Kerala.

(Author is retired professor and occasional contributor for dailies and magazines on politics and environmental issues. The views expressed are personal opinion of the author. He can be reached at [email protected])

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