There was a time when being a Communist Industries Minister in Kerala was one of the toughest jobs in the country. Because, Communist Parties, especially Communist Party of India (Marxist) had always thrown their weight behind the state’s powerful trade unions led by its own CITU in any industrial tussle be it with private companies or with PSUs owned by Centre or even the state itself.
But times have changed, and to give credit where it is due, CPI(M) has been the enabler for major industrial infrastructure initiatives in the state like the Thiruvananthapuram Technopark. However, the policies of CPM and the Left Democratic Front (LDF) that it leads have little changed, even in recent years.
CPM does business, but on their terms. Current Industries Minister AC Moideen embodies this philosophy to the core, and he can emphatically explain why CPM’s terms are the best for the state, based on his holistic view that it is the interest of the workers that should come before the interest of investors.
Based on such lofty socialist ideals that are shared even by their arch-rivals UDF led by Congress, Kerala has emerged as the number one destination state for unskilled and skilled labourers from across India. It is no wonder really, as daily wages for labourers in the state are 4 to 8 times higher than in so-called industrialized states like Maharashtra, Tamilnadu, & Gujarat.
On the flipside, however, it has affected industrial growth in Kerala, especially in the heavy industries segment. The wages remain high in Kerala due to its unique revenue streams like Middle East inflows and its leadership position in rubber farming. This has led to a consumption boom as well as a residential construction boom that has sustained for decades now in this southernmost state.
However, in recent years both these revenue streams have started showing stagnancy if not de-growth, and Minister AC Moideen has assumed charge of the state’s Industries at such a difficult situation which almost is looking like an emerging recession.
CPM’s plot to counter this, led by Chief Minister Pinarayi Vijayan, Finance Minister Thomas Issac, Industries Minister AC Moideen, and others, is to come with an anti-recession package centered around a new Special Purpose Vehicle, the Kerala Industrial Infrastructure Fund Board (KIIFB) that plans to raise massive funds from multiple avenues including India’s bond market.
While the present LDF Government that completes its first year shortly, has been unable to attract any major private investors from India or abroad so far, it is too short a period to judge the Industries Ministry on that regard alone. Because, AC Moideen operates at a higher level of wisdom about Kerala, especially about its unique strengths and weaknesses.
He knows that the geographically small state with high density of population and high environmental concerns won’t be a right fit for heavy industries looking for thousands of acres. Rather than waste his ministry’s energy on such ambiguous possibilities, Moideen is focusing on the state’s unique strengths like its thriving MSME sector, its competent IT industries, the impressive distribution strength of its cooperative bodies, and its emerging strength in agro processing industries.
Even while the Central Government at New Delhi is accelerating the disinvestment or privatization of its PSUs, Kerala is following a different track of handholding its PSUs in hope of a better tomorrow. Minister Moideen has personally seen to it that Kerala’s PSU units work in optimum synergy with each other, so that each other’s business and profitability targets are met. Already 13 state PSUs which were making losses have been turned around in this first year.
He is banking high hopes on reviving the stronghold of traditional industries of Kerala like Coir, Handloom, Khadi, Cashew etc. The LDF Government has already made a breakthrough when it sourced one million metres of handloom textiles for school uniforms in the state. Textile units in the state have been revived with monthly incomes of dependent families registering a notable surge.
The state is also continuing earlier plans of creating major industrial infrastructures like the petrochemicals park, and several agro processing parks in various parts of the state.
A man of few words, who opens up only when speaking about the passionate work that his team is doing, AC Moideen spent nearly an hour with Seasonal Magazine’s team answering our queries eloquently. Hidden beneath his words is a deep understanding of the Kerala situation, which is a personal strength of this grassroots level politician hailing from Wadakkancherry in Thrissur District.
Entering politics while still a young student, Moideen has worked in almost all CPM organizations like SFI, DYFI, CPM Area Committee, Block Committee, District Committee, Grama Panchayat, Cooperative Societies, Kerala Karshaka Sangham etc in leadership positions. A three-time MLA, this is AC Moideen’s first stint as Minister, and he is likely to leave a mark in the Industries sector in the years to come.
However, the all important question that remains is whether the well-meaning efforts of the Minister and his team would be sufficient for Kerala in a new highly competitive Indian and global scenario.
Seasonal Magazine in conversation with AC Moideen, Minister for Industries, Sports, & Youth Affairs, in Government of Kerala:
When the Government completes its first year, what would you consider as the main achievements of your three ministries – Industries, Sports, & Youth Affairs?
During this first year, we have turned around 13 Public Sector Units from losses into profits. In the still loss-making PSUs, we have cut the net losses from Rs.131 crores last year to Rs.70 crores now. This has been possible by tackling the inefficiencies prevalent in these public sector companies, and with the full cooperation of the employees. Secondly, we have made major strides in growing the Micro, Small, & Medium Enterprises (MSME) segment. Our annual target for the fiscal was 15,000 new MSME units, but we could surpass it and reach 16,000 units. From this, around 60,000 new direct jobs have been created. Thirdly, in Kerala’s once powerful stronghold of traditional industries like handloom, khadi, coir, & cashew nuts, we have taken giant steps. Over 10 lakh metres of handloom textiles have been sourced for school uniforms this year. Next year it will grow substantially as all students up to 8th standard would use this Kerala product. In Coir and Cashew industries we have provided for more work days, while in Khadi we have arranged for new Charkas and Tharis (hand spindles and looms).
Coming to the second year in office, what are the primary goals before the Industries Ministry?
The focus on MSME segment would continue. We have put a target of 20,000 new MSME units and 1 lakh jobs for this fiscal. Another major initiative is the creation of basic infrastructure development for industries. Towards this, we are in the process of executing several land acquisitions, especially of good lands with PSUs that are lying unused for years. The move to acquire FACT’s 600 acres land is already on, the funds have been allocated for that. New industrial parks are coming up at Ramanattukara, Chertala, Ranni, and a few other places, and land acquisition is being done for some of these. On a larger scale, around 4000 acres of land would be acquired for the Kochi-Coimbatore Industrial Corridor. These are being planned with funds from the new Kerala Industrial Infrastructure Fund Board (KIIFB), and the plans are by state’s development agencies like KSIDC and KINFRA. Thirdly, we will be improving the Ease-of-Doing-Business in Kerala to a much higher level by amending obsolete laws, creation of new laws, and implementing fast single-window clearances for industries.
What are your long-term development goals for Industries ministry, things that you want completed by the end of your term?
Our primary aim is to create 15 lakh new jobs during this government’s full term. This will be achieved through growing the MSME segment as well as by rectifying shortcomings in the public sector. There are 42 PSU units under Industries Department itself, most of which are now turning profitable or will be profitable within the next one year or two. Major units like Travancore Titanium Products Ltd and Kerala Metals & Minerals Ltd are given full support for their major development plans. KMML is putting up a new plant to process Black Sand, and has acquired 150 acres of the land for the same. Black Sand mining is being shifted to the public sector as it is a state asset.
Still, the state has been unable to attract any major private investor from India or abroad during this past year to start a new large-scale industry or venture. So, are you planning for any Investment Meet like how other Indian states have done?
We all know how past Investment Meets in Kerala as well as other states have fared. Keeping this in mind, we would try to organize an investment meet in a more effective manner. Our Chief Minister has already visited major investing nations in the Middle East, and has received several investment proposals. Former Indian ambassador KP Fabian is also helping Kerala Government in this regard. Before an Investment Meet is conducted, we want to amend some of Kerala’s laws and systems so that competitive Ease-of-Doing-Business is there. Labor rules would be modified without affecting the interests of the workers.
Is the state averse to attracting big industries?
No, but our scarce land availability and our genuine concern for environment make Kerala more suited to smaller industries and non-polluting industries like Information Technology, Biotechnology, financial services etc. Big industries tend to pollute more and need land in thousands of acres, whereas we are only comfortable in providing land in hundreds of acres. But this doesn’t mean that there aren’t any new large-scale industries happening in Kerala. The expansions by BPCL, IOC, & Cochin Shipyard are the best examples. We are fully supporting such initiatives with support infrastructure like the new KINFRA Petrochemicals Park. So far, the big industries in Kerala have been PSUs, but we are not averse to private investment.
What all would you consider as the chief roadblocks when coming to policy implementation by the Industries Department? Is it land acquisition?
No, I don’t think land acquisition is a major issue in Kerala anymore. It is time consuming of course as it has to be done through the Revenue Department, and through District Collectors, by following proper procedure. The main roadblock as of now is our obsolete laws that are hurting the ease-of-doing-business; those need to be amended. Secondly, some people are taking pollution concerns into their own hands; that can’t be allowed. Investors deploy hundreds of crores in investment, and suddenly on local protests, the panchayat issues a stop memo, and then the entrepreneur is stranded and suffers huge losses. That is totally unacceptable. Neither I nor you are the final word in pollution. For that there are scientifically trained professionals in the Pollution Control Board with the required mandate.
You mentioned that you could turn around some PSUs and more would be made profitable in the coming years. What is your main strategy for achieving this?
We have taken a novel approach of making the different PSUs cooperate with each other. For instance, KSDP the PSU drug manufacturer has obtained an order from Medical Services Corporation and PSUs from a couple of neighbouring states totalling to about Rs.100 crore. Based on such orders, the currently loss-making KSDP is likely to turn profitable next year. Similarly, we have asked KSEB to give 40% of their orders and 15% price preference to state’s own electrical companies like TELK, Traco Cables, KEL, and United Electrical Industries (Meter Company). We are also working with Central PSUs to tap synergies. Recently, we did an exhibition in Ernakulam with Cochin Shipyard. They source lakhs or tons of small parts like nuts, lights, handles etc, and this exhibition connected their huge needs with the hundreds of MSMEs which can manufacture these parts. Similar is the case with the huge expansion plans of IOC and BPCL; we are creating the petrochemicals park so that MSME units can work in synergy with these majors by working further on their by-products.
How far do you think radical initiatives like KIIFB would help development in your developments?
A lot of our proposed PSU expansions and new projects are being funded through KIIFB. For example, the major KMML expansion, the petrochemicals park, the Kochi-Coimbatore industrial corridor etc are KIIFB projects. KELTRON, the pioneering PSU electronics major which used to have an early mover advantage is also planning a new unit after several years on KIIFB funds.
How will you respond to the criticism that KIIFB projects may lag due to non-availability of funds?
It is a totally wrong view. KIIFB is already operational post the new law enactment we did. The current corpus is only Rs.3000 odd crores because the fund requirements are only emerging. We can any day go in for diverse fund sources, and we aren’t doing it only because we don’t want to incur unnecessary interest costs. KIIFB is being funded by professionals of high reputation, and even the Opposition while having differences over KIIFB, has never asked to dismantle it.
In a new transparent environment dominated by RTI, media activism, and social media, don’t you think LDF Government’s policy implementations as well as management of public relations have been lacking?
I would say that the first year achievements of this LDF Government have been even better than the earlier LDF Government. Different missions being launched by this government – Education Mission, Life Mission, Haritha Keralam Mission etc are already revolutionizing development in these fields. We have created 2000 new postings in Health Department, which is coming after a long gap. Government Hospitals are being modernised on a war footing. Arrears of social welfare pensions have been cleared as a top priority. But various media houses have joined ranks with UDF and BJP and have inflated some controversies out of proportion. We won’t be distracted on such strategies. All controversies will die down sooner than later, and everyone will come to recognize this government’s achievements.
What all have been the major initiatives in the other two ministries that you head – Sports and Youth Affairs?
For sports development, this government is investing the largest amount ever, around Rs.700 crore. 14 district headquarters will get modern stadiums while 25 selected panchayats will get good playgrounds. We have identified 11 sports items where our youth have an edge, and we have launched Operation Olympia to coach 250 best athletes by the best domestic and overseas coaches, with an aim of winning medals in the next Olympics. The Youth Affairs ministry is working closely with the Youth Welfare Board and supporting all its initiatives.
With Gulf inflows, rubber revenue, and alcohol revenue getting hurt in recent years, what are all your ministry eyeing as revenue sources?
It is precisely due to this recession-like situation prevalent in Kerala due to these three reasons that we have announced two recession packages. The idea is to increase public spending through new infrastructure projects so that the market becomes live once again and private investors too start investing in a big way. This is basic economic theory. KIIFB which can tap into 50% of motor vehicles tax, petroleum cess etc will adequately fund this recession package.
With Kerala Bank on the anvil, are there are any plans to leverage it for the benefit of your departments, especially Industries Department?
Since it is an amalgamation of the cooperative banks, it will basically benefit the Cooperative Department which will be enabled to start their own ventures. They are already venturing out from their usual domain, and volunteering to invest for 1000 smart classes across the state. Kerala Bank will also help KIIFB source low cost funds, as well as provide lower interest loans to millions of consumers and MSME units.
How do you view the support of Central Government in the further industrial growth of Kerala?
The BJP government’s policies towards their own Central PSUs in Kerala have been very negative. They are pursuing privatization, and eyeing to cut their stakes or even exit fully from several PSUs in the state like Cochin Shipyard, Hindustan Newsprint, Palakkad’s Instrumentation Ltd, TELK etc. This is despite the state extending full support by way of land and low cost inputs. So, their policy is detrimental to state’s interests. We will consider whether to increase our stake in some of these companies when they exit partially, as it would require huge funds.
Based on your long years of experience in Kerala’s developmental issues, and your experience during the past one year as state’s Industries Minister, what all are you most bullish about?
Firstly, Kerala is a huge consumer market, and the state is a huge market for building materials consumption. We have several PSUs and thousands of MSMEs that can tap into this demand. For instance, we are reviving Malabar Cements to its past glory, by making it competitive again by sourcing laterite from outside Kerala and coal from overseas. By increasing their market share in Kerala from 6% to around 25% we will limit the influence of cement cartels in pricing. We have undertaken B2B meets where our MSME units including agri units have displayed their acumen in catering to specialist overseas demand like dried fruits etc. Unlike Central Government, we won’t forsake our PSUs but work with them closely so that they are productive to the state and job generators. We will extend cooperation to restart any closed private or PSU unit, even on PPP basis, as long as it generates thousands of jobs and not just end up as a real estate business. There is absolutely no labour issues in the state, and labourers from all over India are flocking to Kerala due to the better job opportunities and pay here. Kerala has a thriving cooperative movement the reach of which is unparalleled anywhere in India. Kerala youth is also proving their mettle establishing start-ups and government is providing all support including interest-free loans. Based on all these, and with proper planning and execution, I don’t find any reason why Kerala can’t make its aim of sustainable economic development a reality.
(Interview by John Antony & Jaison D)