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)
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