Chandy aims to create an investment of R1.18 lakh crore through public-private partnership for the project that has shuttled across India for years without reaching anywhere. For the feasibility study on this ambitious high-speed rail corridor, we have signed up Delhi Metro Rail Corporation (DMRC), says the Kerala Chief Minister. A study report is expected within six months.
The chief ministers excitement is far removed from the sense of gloom enveloping the Indian economy. The state government led by Chandy has named infrastructure and connectivity as the biggest development priorities, to back up the state's high social status in healthcare and education. For many years Kerala has been struggling with substandard means of mobility, which drove away potential investments.
The state hopes to turn that situation around with an annual plan outlay for 2011-12 of R12,010 crore, about 20% higher than last fiscals R10,025 crore.
In an interaction with The Financial Express, Oommen Chandy said no industry can develop without facilitating quick movement of people and cargo. "Kerala's 20 lakh-odd expats are backing the state in this regard. There is a king-size demand for building motorable infrastructure like quality roads, seaport and airport connectivity, he says, explaining the rationale for a fourth airport (Kannur International Airport in north Kerala) and a second international container terminal (Vizhinjam Deepsea Port, near Thiruvananthapuram).
Trains running at speeds of over 300 km per hour have, so far, been a distant dream to travellers in India.
And this is why Chandy is persuasively in pursuit of the technocratic expertise of E Sreedharan, the outgoing DMRC managing director, for the Kerala Planning Board. After placing former Union Cabinet Secretary KM Chandrasekhar as the vice-chairman of the state planning board, Chandy had recently roped in Sam Pitroda, chairman, National Innovation Council, to the panel.
"The work on the proposed high-speed rail corridor is slated to start on 2013, if generously nursed by NRI funds," says T Balakrishnan, chairman and managing director, Kerala High Speed Rail Corporation. The 580-km rail corridor is envisaged with a carrying capacity of 15,000 people per hour. The proposed infrastructure could take a passenger from Kasargod in north Kerala to the capital Thiruvananthapuram in the south in two hours. "We hope to get the high-speed rail corridor commissioned by 2020," says Balakrishnan.
Kerala's industrial growth, as everyone knows, has hardly been in tune with its social growth, where it has been continuously topping the country on HDI or human development index scores. From UN economic fora to India's Planning Commission, the little state keeps picking up shiny blue ribbons for high literacy rate and low maternal and infant mortality rates.
But then, the glow fades when it gets to job generation. In a sad paradox, the state grew into one of the biggest manpower suppliers to West Asian countries, because of its nearly 40% unemployment rate. The contribution of the manufacturing sector to the gross state domesitic product (GSDP) has remained less than 10%, according to Economic Review-2010.
In the IT rat race, Kerala is often caricatured as a tortoise. Although the state was the first in the country to put in place an IT park, more than a decade ago, Kerala posts Rs 2467 crore in software exports, less than 10% that of neighbouring Karnataka, Andhra Pradesh and Tamil Nadu, which had a much later start. It was only very recently that a big-billed US company like Oracle opened shop in Kerala.
"It is too late now for Kerala to turn the tables on its neighbouring IT achievers," admits G Vijayaraghavan, who is credited with the setting up of Kerala's tech park. "But there are several policy incentivisation issues that can be effectively addressed. For instance, the state's IT park plan has been too dependent on state-run parks like Technopark, Infopark and Cyberpark. There are few major private-owned IT parks, beyond that of Muthoot, Leela Group and L&T, within the state. The state has to accept its inability to attract major IT infrastructure builders and work on it," says Vijayaraghavan, who is also a member of the state planning board.
A coincidence that powers the Oommen Chandy government's oars is the reaffirmation of the Rs 1,500-crore Smartcity project this year, after a seven-year-long squabble with the Dubai-based Investors Tecom Holdings. This IT infrastructure project in Kochi is expected to generate about 90,000 direct jobs.
Kerala is also trying to shrug away its militant labour tag, which is stuck to its industrialisation sinews like a sinister embedded hologram. A remarkable step forward was when the government declared Thiruvananthapuram as the first district to be liberated from "nokkukooli". Nokkukooli is a kind of opportunity cost paid to unionised workers in a locality for letting an individual load or unload cargo. Once it got institutionalised, Left, Congress and BJP trade unions had been finding it tough to forgo the addictive kick of this toil-free fringe benefit.
That's the reason why Kerala needs to look forward and develop infrastructure, says the state's minister for ports, K Babu. "In 2011-12 alone, we have earmarked enough for Vizhinjam International Seaport (Rs 150 crore), Kannur airport (Rs 30 crore), Kochi Metro Rail project (Rs 25 crore) and Rs 5 crore each for the Hill Area Development Authority and Hill Highway. About Rs 200 crore as been set aside for improving bridges and about 1,000 km of roads".
Additionally, the first phase of Petronet's Rs 3,600-crore LNG terminal in the Kochi port SEZ is readying to be commissioned in March 2012. The project aims to supply regassified LNG (R-LNG) to the power, fertiliser and industrial sectors.
In December, the Kerala government formed a joint venture with GAIL to set up supplementary gas infrastructure in the state. The business plan includes promoting city gas distribution projects, laying of spur lines to provide last-mile connectivity to bulk/large consumers of natural gas, setting up of CNG stations at Kerala State Road Transport Corporation depots and for boat services, marketing of gas-related equipment, and setting up of captive gas-based power plants.
"The new JV is a Rs 2000-crore entity, where the Kerala State Industrial Development Corporation (KSIDC) holds a 24% stake," says Alkesh Kumar Sharma, the managing director of the industrial promotion body. The new company also intends to promote a gas-based power plant for the steel-based industrial cluster at Palakkad, jointly with the Steel Manufacturers Association.
Much of these parallel developments are climate-setters for the ambitious Investment Meet that Kerala has scheduled for the second half of 2012.
KSIDC is sitting on a happy heap of over Rs 1-lakh-crore worth livewire project proposals, but state industry minister PK Kunhalikutty prefers to go about it "more cautiously and studiously".
"The difference from the previous Investor Meets will be that each investment opportunity identified at 'Emerging Kerala' will be followed up in the subsequent months in fresh meetings. The idea is to go about each venture cautiously so that the new projects are not lost in the heat and dust of baseless controversies," says the minister.