Kerala’s Left politics and its presumed aversion towards industrial development are in the news again, owing to the crucial decision of Kitex Garments Limited, the second largest manufacturer of children’s apparel in the world, to withdraw from an investment plan worth Rs 3,500 crore in the state. The company decided to pull out from Kerala and invest in Telangana, alleging that Kerala’s political climate is not conducive to their business.Kerala is a stronghold of Left parties, and many believe that the anti-capitalist position of the communists should be held responsible for this standoff. The local media has also been keenly debating the flows in Kerala’s investment policies and the inability of the government to attract new investments. Critics argue that Telangana’s business-friendly policy of single-window clearance has to be taken as a model for Kerala. Such investor-friendly policies allow entrepreneurs to get land and clearances from various departments within the stipulated time.According to the Ease of Doing Business Index, established by the Reserve Bank of India to rank Indian states, Kerala is placed in the 28th position while Telangana occupies the third position. This juxtaposition of the two South Indian states encourages us to ask a compelling question – what makes Kerala a less preferred destination for investors, in spite of achieving the first rank in NITI Aayog’s latest Sustainable Development Goals Index? Is there anything other than the political ideology of the Left or the inadequate policies of the government that made Kerala less-industry friendly?Also read: Kerala: How COVID, Gulf Returnees Adversely Impacted Migrant Construction WorkersKerala is confined to an area of 38,863 square km, with a population of 3.5 crore as per the last census. Telangana too has approximately 3.5 crore population but the state is spread across 112,077 square km in the Deccan plateau. A close look at these statistics shows that the state of Kerala is almost three times smaller than Telangana in terms of the geographical area, but the population is almost the same in both states. This comparison is mentioned here only to show that the major hindrance for Kerala in becoming a manufacturing hub is its high density of population and exorbitant cost of land.The population density of India is 382 persons per square km. However, the population density of Kerala is as high as 859 persons per square km. A careful scrutiny of the population density of major ‘business friendly’ states show that less population coupled with large land area is an enormous advantage for many of these states. For example, the population density of Gujarat, an industrial hub of India, is only 308 persons per square km. Furthermore, almost 30% of Kerala’s land is forest and no manufacturing industry is allowed in such places.As stated in a study conducted by the Western Ghats Ecology Expert Panel in 2011, under the chairmanship of the eminent ecologist Madhav Gadgil, many places in Kerala are ecologically sensitive and not suitable for industries as it would adversely affect the environment. Therefore, the peculiar nature of Kerala’s geography should be taken into account while comparing and contrasting Kerala with other states.Although the unavailability of land and high density of population are the major reasons for the absence of big manufacturing industries in the state, there are also other factors which contributed to the paucity of such enterprises in Kerala. Higher labour costs are seen as a grave problem by many investors. As per the Kerala Post Disaster Needs Assessment, a study conducted by the Government of Kerala and experts from the UN, following the disastrous flood in 2018, 3.5 million skilled as well as unskilled migrant labourers are already working in different sectors in the state. This is almost 10% of the total population of the state and this high rate of migration is encouraged by higher wages.A report published by the Labour Bureau, Ministry of Labour and Employment, confirms that the average wage of a male unskilled labourer in Kerala is Rs 700.7, while the national average is Rs 286.6. This is the highest wage paid to the unskilled labourers in the Indian subcontinent. On the contrary, the average labour charges of unskilled labourers in the top states in the Ease of Doing Business Index are appallingly low compared to Kerala. Andhra Pradesh and Uttar Pradesh occupy the first top positions in the Ease of Doing Business Index, but the average wages in these states are as low as Rs 301.3 and Rs 257.7 respectively.A study conducted by the Centre for Socio-Economic and Environmental Studies, an organisation focused on action-oriented research in Kerala, says that the higher wages in the state attracted massive inflow of migrant labourers from even faraway states such as Assam, West Bengal and Orissa. Interestingly, some of these states are known for their ‘industry-friendly’ political climates and policies. High wage is evidently an attraction for the workers but it is invariably a deterrent for investors.Also read: Here’s Why Pinarayi Vijayan Can’t Be Called a ‘Modi in a Mundu’High literacy rate of a state should be regarded as a sign of social development, but Kerala’s high literacy rate is seen as a potential risk for investors. This is because investors often believed that people are aware of their rights and too quick to fight for the same. This has led to conflicts between managements and workers in many organisations in the past, which sometimes led to the closing of companies permanently. In some instances, even big business tycoons were forced to shut down their operations in the state.The permanent closure of Grasim Industries Limited, a company owned by Aditya Birla, in 2001 is an irrefutable proof of this political activism. The closure was the culmination of people’s protests against the company for several years for environmental pollution and the violation of employees’ rights. Likewise, there were many protest by local people against the existing manufacturing units of Kitex Garments in Kerala against environmental pollution. The company is also facing a case in the Kerala high court for the violation of minimum wages to their employees. Nevertheless, it is an arduous task for anyone to endorse it as a manifestation of social awareness or excessive politicisation of issues which could have been settled amicably. But it is certain that such political mobilisations of workers undeniably unnerved the investors.Every state in India has its own unique resources and features. Therefore, it is unscientific to use the same yardstick to classify a state as ‘pro-industry’ or ‘anti-industry’. The Ease of Doing Business Index should not be decided based on the perspective and convenience of the investor alone. Kerala is a small state, situated between the ecologically sensitive Arabian seacoast and Western Ghats, which cannot afford to do away with huge chunk of land for manufacturing industries. If Ease of Doing Business means converting farm lands or ecologically sensitive lands into industrial parks, then Kerala should not strive to find a distinguished place in that rank list. Kerala’s development plan should not be modelled on Telangana or Gujarat.Dr V.V. Abhilash is an Assistant Professor in the Department of English, School of Humanities and Social Sciences, GITAM University, Hyderabad.
