Sunday, December 30, 2007

Kerala economy: The NRI money pile

This post is inspired by an article on NRI remittances to Kerala in the Malayala Manorama of December 27. The thought provoking piece is written by C Sarathchandran who is Advisor to the World Bank – Indian Operations. You could possibly access it on Manorama Online.

The writer points out that 1.8 million Keralite NRIs (Non-Resident Indians) who work in other countries without the pressures of the political ideologies that plague their home state remitted Rs.64,400 crores in 2006. How much is that in US money? $16.1 billion? The estimated income in the current Kerala budget is only Rs.21,000 crores!

What happens to this colossal amount? Only a fraction of it is used in the state and the rest goes to other parts of India. The explanation for this is the dearth of bankable projects in Kerala. Why is it so? One reason is that Keralites generally lack entrepreneurship. They are still oriented towards land and in building fabulous houses with their hard earned money.

The second reason is that most Keralites do not feel secure about investing in industrial ventures in their State. The major contributing factor for this apprehension seems to be the State’s history of industrial unrest. Since Apollo Tyres in the late 1970s, has another private sector project of that magnitude come up in Kerala?

The successful implementation of the Apollo Tyres project was made possible, apart from other factors, because of the total cooperation by the State Government led by C Achutha Menon and the people of the State. In the equity base of Rs7.5 crores, the State Government invested Rs.50 lacs and individuals Rs.50 lacs more, under the Promoters’ Quota.

The approximately 100 acres of land identified for the project at Perambra, Trichur District belonged to forty-two people. A Special Thahasildar was appointed for land acquisition. The owners were magnanimous in giving us advance possession of their properties. Construction started even before the land acquisition process was completed.

In an era when ‘Single Window Clearance’ was unheard of, TV Thomas, the then Industries Minister convened a meeting of all Department heads, with the full support of the Cabinet. He instructed that Apollo Tyres files should be given top priority. Not a single hitch came up during the project implementation.

There was a time like that in Kerala – just three decades back, when so much money was not floating around.

What about today?


Also see:

Quo Vadis, Kerala?


Anonymous said...

"There was a time like that in Kerala – just three decades back, when so much money was not floating around"

The ramifications of so much money floating around are that even tens of Rupees these days do not go very far. Tracing back the last 30 years, the Rupee is now probably equal to a naya paisa then. The question that immediately comes to one's mind is how are the poor who make up 40% of the population are coping? My relatives tell me that a 100 rupee has become the basic currency unit, and they take thick wads o 100 Rupee bills whenever they go even to local shops! The other danger that India is facing is that with so much dollars pouring in to country, in serious business transactions even inside the country, "the dollar has become the preferred currency", say my business friends in India. The only other country in a similar but much stronger dollar remittances is Israel with their global Jewish dispora concept. The NRIs (the non resident israelites) there pour so much dollar into the country that the local sheckle has lost its presence completely. With every Israelite handing out the green bill, the value of dollar inside the country has depreciated! The result is they look for Euros now!

Just a tail piece: I still remember the wonderful 5-6 course vegetarian lunch with 'avial' as a speciality (which only a Kerala chef can prepare) I had in Palghat in 1960 for a couple of Rupees!

Pran Kurup said...

Kerala might not be known for entrepreneurship but there are plenty of Keralites the world over with the spirit, the resources, the experience and the right ideas. The huge amounts of incoming $ is a great asset to the state. This can be leveraged appropriately provided there is dynamic leadership at the state government level (as you have pointed out from the past). It all boils down to sound progressive leadership to transform the state.

Unknown said...

Guru, what you say see true. The value of money is diminishing.

Today people may not believe when I say that in 1961 or 62 I have stayed in Ashoka Hotel, Delhi for Rs.50 per day five star food included. Add 10% service charge and it was Rs.55. George Verghese was the General Manager then.

Taj Bombay room only was Rs.85. Eros Bombay executive lunch in the 1950s was three and a half rupees.

About 'avial', I think central Kerala makes the best.

Unknown said...

pran kurup, you are absolutely right. The required ingredients for development are available with the Keralites at home and abroad. What is needed is effective leadership, commitment and the political will.

It is gratifying that a group of powerful friends of Kerala have organized Kerala Global Support Network (KGSN) and is approaching the matter with dedication. Please read about it in my post 'Onward, Kerala'

althea said...

The astute investors in Kochi have joined the top league of wealth management gurus who vie to get a bigger pie of the shares and stocks. Though Kochi flaunted the celebrity tag of being the commercial capital of Kerala it could not make much an impact on the investment scenario all these years due to an array of factors. However now the tide has turned in its favor thanks to a booming and buoyant economy, people are eyeing maximum returns and attractive investment options as never before.