Despite the grandiloquent announcements and rhetoric statements issued by Tamil Nadu Chief Minister Jayalalitha and a subservient media going all out of the way to present a rosy picture about her regime and suppressing genuine grievances of the people and factual criticisms of the opposition parties, harsh reality is telling upon the State.
While farmers are sitting fingers crossed due to successive droughts and failure of crops, agricultural workers have migrated to the neighbouring States in search of means of livelihood. So also battalions of industrial workers, who have lost jobs due to closures and lockouts in medium and small scale industries in western districts following severe power shortage have migrated to other States.
The proof of the pudding is in the eating, the saying goes. The growth and development of economy in the State was reflected in a report in January last. Tamil Nadu’s economic growth for 2012-13 is the lowest in the country at 4.14%, even below the national GDP of 4.9%.
The continuing power problem affected the manufacturing and services sectors, which are the backbone of the State. Tamil Nadu is the only State to fall below the national average, according to figures released by the Planning Commission. This is also the lowest rate the State has recorded since 2005-06.
“Tamil Nadu has been hit harder than other States by the national slowdown,” said Planning Commission member Abhijit Sen. “Had the power situation been handled better, it would have aided smooth operation of small and medium industries, which would have boosted the State’s growth rate.” The poor monsoon and lack of water for irrigation have affected agricultural growth. Agriculture has slowed in Tamil Nadu with a negative growth rate of 12%, while manufacturing has fallen to -1.3%.
The national slowdown and a range of local factors have turned the growth story on its head — traditionally high-performing states like Tamil Nadu and Punjab have recorded the lowest growth, while Bihar has outstripped the national average for the financial year 2012-13. Bihar’s rate stands at 24.9%, the highest among all the States.
But there’s no getting away from the fact that the State’s GDP has been dropping steadily for the past few years since the ADMK came to power. Tamil Nadu’s growth rate rose from 10.8% in 2009-10 to 13.12% in 2010-11 during the DMK rule. Since then, it’s been downhill — 7.42% in 2011-12 and now the drop to 4.14%.
All these factors should have weighed with Chief Ministers of other States in their mission ‘Target Tamil Nadu’ for investments in their States. Chief Ministers of some of the most developed States came calling on Coimbatore for fresh investment to spur growth.
On January 20 this year, Karnataka Chief Minister Siddharamaiah participated at ‘Chamarajnagar Investors Meet 2014’ organised in Coimbatore by the Federation of Karnataka Chambers of Commerce and Industry and the Karnataka government.
In his epistle to cadre on Jan 29, DMK President Kalaignar noted this development and stated, “It widely said that industries that are to come to Tamil Nadu are trooping out to other States and there are reports about it in dailies also. There is a report that Rs.12,000 crore investments of industrialists in Kongu region are to move to Karnataka, the main reason for the flee is the worsening investment climate in TN, that if this condition persisted industries in other areas also will move to other States.
The Karnataka government is setting up an industrial zone over 1,400 acres in Chamarajanagar district on the TN-Karnataka border. A ‘Chamarajanagar investors meet’ was conducted at Coimbatore on 20th last organised by Karnataka Chambers of Commerce & Industry, Bangalore which has attracted the attention and interest of many entrepreneurs of western districts in TN. Karnataka Chief Minster, Industries Minister and top government officials of that State besides participating in that conference also gave many promises. Speaking at the meet, Karnataka Chief Minister has appealed to industrialists in TN to come to Karnataka to set up their units promising to provide them all facilities. Possibly our Chief Minister Jayalalitha, staying in Kodanad near Coimbatore city, is also inviting Karnataka industrialists through video-conference facility in response to that invitation?
As a result of that conference of Karnataka in Coimbatore, about 200 entrepreneurs in Kongu region areas have come forward to invest about Rs.12,000 crore and start industries in Samarajanagar district.
Assistant Secretary Federation of Karnataka Chambers of Commerce and Industry Vijayakumar has taken pride in claiming, “This meet in Coimbatore was very successful. We are very happy that in one day industrialists of Tamil Nadu have come forward to invest over Rs.12,000 crore in Chamarajanagar industrial region. Particularly, an export company of Tirupur has agreed to invest Rs.2,000 crore. A woman entrepreneur of Coimbatore has expressed her desire to invest Rs.1,000 crore in that industrial region. We will provide al facilities and render all assistance for industrial development to those who have come forward to start industries in Karnataka”.
The reason for the flight of investments from TN to Karnataka is said to be power cut in TN, government administration failure, deficiency of infrastructure, inaccessibility of rulers and attitude not encouraging industrial development. After the ADMK assumed power, hundreds of industrial units in TN have been closed and several thousand workers have migrated to other neighboring States in search of means of livelihood. Now, the remaining industrial units have also started fleeing to other States.”
Now enthused by the response received by his Karnataka counterpart, Madhya Pradesh Chief Minister Shivraj Singh Chouhan met industry representatives in Coimbatore on Aug 28 as part of a road show for the Global Investors Meet to be held in Indore this October in which industry associations and industrialists participated.
Investor meets are held here as Coimbatore is known for entrepreneurship and as the district is a major hub for textile and engineering units which may look at expanding or starting new ventures, especially in the wake of crippling power cuts for the past few years.
In the 1980s during the previous ADMK regimes, several textile units in Tamil Nadu expanded to Andhra Pradesh as power was available at an attractive cost. In recent years, some auto ancillary units set up shop in northern States because they are suppliers to larger automobile manufacturing companies located in these States. There are also industries here investing in other States in sectors such as sugar and mining.
However, the solacing point is that still most of the investors in Coimbatore are not fully convinced in moving out, due to many advantages traditionally available here and wishfully think that with the change of the regime in less than two years, the situation would improve.
“At this stage, I do not see many industries from Coimbatore going out to other States,” says K. Ilango, chairman, Confederation of Indian Industry, Coimbatore. “Tamil Nadu still has several advantages for growth of industries, especially textiles, compared with other States,” adds T. Rajkumar, chairman, Southern India Mills’ Association.
A new destination will be attractive only if it has raw materials, power, cheap labour and availability of a strong industrial and investment friendly eco-system, industrialists point out. “I do not think even five per cent of the industries here will invest in other States right now,” says D. Nandakumar, president, Indian Chamber of Commerce and Industry-Coimbatore.
The units here are largely small or medium-scale and do not have the resources to operate from other States. They have all been affected by slowdown during the last few months and will not look at major investments outside the State at this stage. One major problem that industries were facing was power shortage, the sources say.
Talking about advantages, industrialists say the availability of technical manpower was a major advantage in Coimbatore, and this could be a problem in other States. As the industrial eco-system is well developed here, the units do not have to spend much on inventory. Thus, industries need a reason, such as a strong market, to move out. Otherwise, industries in Coimbatore may not invest outside the State, insiders say.
Thus, despite the presence of a totally indifferent and unhelpful regime led by an inept, impatient, inaccessible and inefficient Chief Minister, the industrialists are still wary of moving out of the State because of the traditional advantages here built over a period. However, the luring pressure exerted on them from outside will be difficult to resist for long necessitating the regime of the day to awake and act immediately to prevent them fleeing out in temptation.
But, as is her wont, Jayalalitha does not seem to take such developments seriously and take any constructive action to prevent fleeing of investments from the State by taking any confidence building measures for industrialists and entrepreneurs in the State and is living in ‘Fools’ Paradise’ concocted by her minions ably assisted and abetted by the docile media in Tamil Nadu.
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