Land scarcity not a reason for lack of economic development

One of the excuses often cited for the lack of economic development in Kerala is “scarcity of land,” which, of course, is utter nonsense.

The recent feature (“Malayalam Medium,” May 7, 2016) in The Times of India features this excuse. “The scope for large industry in Kerala is not as high as in some other states because of scarcity of land, high land value and comparatively high manpower costs,” according to K M Chandrasekhar. This is utter nonsense.

Take for example, the economies of Singapore or Hong Kong. Singapore land area is 707 sq. km, but has GDP of $307.86B (2014). Hong Kong land area is 1106 sq. km. and has $290.9B (2014) GDP.

Kerala land area is 38, 863 sq. km. with $59B (2014) GDP. If Kerala is developed like Singapore, then GDP could be $17 trillion! If developed like Hong Kong, then Kerala GDP could be $10.2 trillion! For comparison, the GDP for the USA is $17.4 trillion (2014). Clearly scarcity of land is a spurious argument.

K H Harilal says, “the state should reaffirm its confidence in the ‘Kerala Model of Development.’ There is no need to deviate from the from the fundamentals of Kerala’s development philosophy.” (Don’t throw out the baby with the bathwater, May 7, 2016)

Kerala Model of Development‘ consisted of gimmicks and shortcuts that are now catching up with the economy. So change is inevitable. And the only question is whether changes will be for the better.

Rajeev Chandrasekhar points out, correctly, “The only things that have grown rapidly are politically-linked businesses and consequent corruption, and migration outside the state, within the country and to the Middle East. Everything else has slowed down.” (Skills, startups and sanguinity, May 7, 2016)

Rajeev further recommends, “What Kerala needs now is a government and leadership that will transform the state economy and this requires an energetic and dynamic administration with a vision backed up a detailed road-map.” Amen.

Building malls and apartments will not result in a sustainable economy. Neither will exporting partially educated people. As experience has shown, IT Parks, as currently implemented, will also not provide intended results. So it is time for serious investment in core industrial capabilities. Electronics and ICT (information and communication technologies) are natural choices, initiated by KELTRON in 1973, but has failed to achieve its true potential.

Here is an outline of the priority areas for transforming Kerala economy to be sustainable.


A plan for economic development

A confluence of forces — increasing chronic budget deficits, declining agriculture, slowing tourism, reduced foreign remittance, among others — make it necessary to think about new ideas for developing Kerala economy.

It seems Kerala government gimmicks and shortcuts are catching up with the tourism industry, reports The Times of India (“God’s own destination, but heading nowhere,” Apr. 27, 2016).

“The problem is that what you see on the screen is very different from what a tourist experiences when they touch down,” says the report. Seems like the Kerala tourism department has been using the skills from the movie industry in the state to win awards, but lacks understanding of essentials for building a brand. Brand is about trust and promise. Marketing makes promises about future experience that must be fulfilled. Otherwise the trust is broken, and the brand withers. Apparently, Kerala tourism marketing was about “luring tourists,” and the methods are no longer working.

“The basic requirements are infrastructure development and capacity building. Government needs to ensure good quality roads, make tourist spots garbage-free, provide hassle-free inland navigation by mid-size boats from Kollam [2. 3] to Kottpuram, develop eco-tourism clusters to protect Kerala as a green destination, besides ensuring continuous quality audit of tourist facilities,” said E M Najeeb, president Confederation of Kerala Tourism Industry. Tourism cannot function in a bubble, but is enmeshed in the local economy. It is not viable or practical to develop good quality roads, make tourist spots garbage free, or provide hassle-free inland navigation for the sake of tourism. However, it would be feasible to achieve those goals as part of overhauling the Kerala economy for making it sustainable.

First step is to develop a plan for an optimum transportation network for whole of Kerala. Once different modes of transport suitable for different regions are identified and transportation networks are designed, they can be constructed as funds become available. It will not solve the problems immediately. But, over time, will provide adequate transportation — which will never be achieved with the current piecemeal, ad-hoc, fragmented approach. Here is an outline of the priority areas for transforming Kerala economy to be sustainable:

  1. Enhance quality of education
  2. Agriculture producing premium organic agro-products [2]
  3. Plan Kerala-wide optimum transportation networks for phased implementation
  4. Implement integrated wellness and heathcare solutions
  5. Implement integrated water distribution and management
  6. Implement integrated waste management and pollution control
  7. Develop electronics and ICT (information and communication technologies) industrial capabilities, beyond the current services focus

Building malls and apartments will not result in a sustainable economy. Neither will “exporting partially educated people.” As experience has shown, IT Parks, as currently implemented, will also not produce required results. So it is time for serious investment in core industrial capabilities. Electronics and ICT sectors can form core “market activities” for a comprehensive economic development plan, for example, using “Metropolitan business planning” methodology.

To sum up, trying to build the infrastructure needs of tourism in isolation is not viable. But it can be achieved by an integrated approach for transforming the Kerala economy to be sustainable.


A transformation opportunity

Realization that the education system in Kerala needs change is sinking in. The newly formed Kochi Metro (Kochi Metro Rail Limited, KMRL) has an opportunity to lead this transformation.

The Times of India reports, “Metro agency turns down Malayalis for crucial posts” (May 1, 2016), highlights the inadequate education system in Kerala. KMRL MD Elias George said that candidates from Kerala had poor communication skills. “They have very limited knowledge on urban transportation, railways, metros and trams. Compared to their counterparts in other states, they lack exposure as well as opportunities taking place globally,” he added.

Since Kochi Metro is first metro in Kerala (which is yet to be operational), it is not surprising that students from the state do not have knowledge about metro transportation. And KMRL needs to rethink its expectations. The whole education system in Kerala is controlled by the government, and lacks objective standards. Unless Kochi Metro takes proactive steps, the recruitment problems are going to persist. The program started at the APJ Abdul Kalam Technological University is a good start, but not enough.

KMRL needs to change its recruitment strategies. According to the report, KMRL “entrusted the recruitment of freshers through the banking recruitment board in Mumbai.” [2, 3, 4, 5] The recruitment process used for banking is not suitable for the needs of the metro. It is likely that those scoring high in the written tests have poor communication/ speaking skills, and those who have good communication/ speaking skills may be have poor writing skills. The net result is KMRL’s banking-style recruitment may be filtering out the very same potential candidates KMRL is interested in finding.

The problems with current recruitment efforts suggest that KMRL needs to take the initiative and work with universities and colleges in the state to meet its workforce needs. For example, provide internship opportunities. In addition, identify and offer projects that students can complete as part of their education. Using this approach, KMRL can build a pipeline of potential employees with the right aptitude and attitude. And KMRL can offer supplementary training to enable them to perform effectively in the roles that Kochi Metro require.

Kerala government could also start much needed education reforms, using KMRL as a reference model for making necessary changes in the education system.

Instead complaining about lack of qualified job applicants, KMRL should consider it as an opportunity to transform the education system in Kerala.


Wellington Island development requires imagination

The Times of India report, “A portal for Willingdon” (Apr. 13, 2016), illustrates lack of imagination and dearth of visionary ideas for economic development in Kochi.

Hotelier Jose Dominic says, “Willington Island [2, 3] is the most valuable resource that Kerala has but much of the land is lying vacant. There is a large tourism potential here.”

First, Willington Island not tourist destination. But it is centrally located in the greater Kochi area, thus has huge potential for development. However, the development planning cannot be restricted to Willington. Properly developed with water transport from surrounding areas, Willington can become a business, commercial and entertainment center for a greater Kochi metro region, extending all the way to Alappuzha [2, 3] in the south.

But the nearby Pathiramanal island [2, 3, 4] could be be a tourist destination, if developed sensibly. The report says, “The failure to conserve Pathiramnal, a picturesque island in Muhamma, has resulted in unscrupulous operators fleecing tourists who want to visit the spot.” The report also adds, “The island is home to 88 species birds, 58 species of fish, 23 varieties of spiders, 34 species of butterflies and more than 160 plant specieis” (“A fragile island goes to seed”). Clearly, Pathiramanal island with proper supervision and upkeep can be a tourist destination.

However, for plans to be viable, the first step is identifying “market activities” (“Metropolitan business planning“) to develop and promote that can take advantage of the unique geographical advantages of Kochi. Currently, the only market activity worth mentioning in Kochi is shopping [2, 3]. Since there is dearth of wealth generating market activities in Kerala, vitality of shopping is dependent on remittances from abroad, especially from the gulf countries [2, 3].

Wealth generating market activities require a skilled workforce, which is also lacking in Kerala. Hence, education reform is a prerequisite for economic development.

Unless a comprehensive approach is taken, trying to develop the Wellington Island in isolation will be squandering its potential.


Lifecycle of a development project

The Times of India report about construction of a sewage treatment plant (Mundamveli in West Kochi) says, “At best you can call it official apathy or inefficiency and worst, criminal negligence” (“After sinking Rs 45cr ($6.8m), KSUDP dumps Rs 170cr ($25.6m) sewage plant,” Mar. 31, 2016) [2, 3, 4].

The problem involves deep seated beliefs. A common thread with development projects in Kerala is the way things are planned. Getting a loan is the goal. It is assumed that once the loan/finance is secured, everything else will workout. Getting the loan is considered an achievement. After getting the loan/finance there is little attention or follow through by leadership, resulting in projects floundering.

In this case, Kerala Sustainable Urban Development Project (KSUDP) secured Rs 170 crore loan from the Asian Development Bank (ADB). “As per the original schedule, work on the project began in November 2013, should have been completed in November 2015. After the agreement with the contractor expired in November 2015, KSUDP asked him to continue work. But the contractor demanded a cost revision by around 70 to 100%, despite a request from officials to continue work at the existing rate till the elections are over.”

In addition, “in January this year, the National Green Tribunal (NGT) had also quashed the tender procedures for constructing the treatment plan which was proposed on marshy land. This would have resulted in the destruction of mangroves in the areas.” And ADB, the funding agency, decided to back out due to the inordinate delay in executing the project.

This project planning raises several questions. What are the reasons for the demand to increasing project costs by 70-100 per cent? Was the estimates set too low to secure the loan? Or, was it the result of inadequate project planning skills?

What is needed in development projects is a clear vision of the future benefits the project will bring about. What are the goals? What are the benefits of achieving those goals? What are the steps necessary to achieve those goals? What capabilities are needed to complete those steps? What are the obstacles? What are the resources required? What is the estimated effort/budget? What are the contingencies and how to handle them? Who are the stakeholders? Are their interests aligned with the project goals? These are some of the questions to consider when planning for any project.

Defining the goal as achieving the benefits associated with project completion — not securing loan/finance — and developing a comprehensive operation plan will produce better success with project completion.

With the sewage plant project in disarray, the need still exists — garbage is piling up and pollution problems are getting worse.


A case for “Kerala Coffee” brand

The Times of India report, “A ‘coffee cure’ for adverse effects of climate change” (Apr. 13, 2016) describes a contrarian thinking that Kerala needs more of.

The report says, “Conservation and agriculture experts in Wayanad [2] are in the affirmative and have mooted revitalization of historic ‘shade grown coffee plantation’ system in Wayanad as the best defense against the adverse effects of climate acutely being felt in the hill district.”

It is a step in the right direction, and need to be taken further. “For centuries coffee used to be grown in an agro-forest ecosystem with coffee plants grown under the thick green canopy provided by tall shade trees,” said N Anil Kumar, director of the biodiversity program of M S Swaminathan Research Foundation (MSSRF.) However, reviving ‘shade coffee’ is only the first step. There need to be a robust framework for effective marketing of Kerala agro-products. Due to the unique geographic characteristics of Kerala, it must be possible to grow premium quality coffee and other agro-products. Then effective marketing programs and distribution channels need to be developed and implemented to obtain premium pricing for Kerala agro-products.

The report also says, “Experts say that shade grown coffee would provide enhanced income generation for farmers as it commands a premium in global markets.” Labor cost being high in Kerala, premium pricing is the only viable option. Also important is to identify coffee varieties that grow well in Kerala and have high demand. It would also be worthwhile to create new varieties.

Such smart agriculture methods can also be adopted for pepper. cashew, spices, and enhanced with promotional programs similar to those by the tourism department. The goal is to establish Kerala as a source for premium organic agro-products. Another brand enhancing activity is processing and packaging. Rather than exporting raw produce, processing and packaging facilities must also be established. Without consumer-ready packaging achieving premium branding is difficult or impossible. In addition, food professing, packaging and marketing creates job opportunities in the local economy. (However, Kerala government should not start new agencies for this purpose. Instead enable new and existing businesses to take advantage of these opportunities.)

‘Shade coffee’ product is a smart idea that need to be fully developed. And similar smart agriculture methods can help revive organic agriculture in Kerala.


An ecological destruction example

The Times of India report, “Bleak future for Rubber Board” (Mar. 25, 2016) describes the results of ill-conceived programs by governments in Kerala. The report says, “The research staff were forced to pay for their own expenses while traveling to far off plantations, says a senior scientist.”

While one can sympathize with the plight of the staff, the current situation is culmination of earlier mistakes and years of neglect.

Rubber is not a native tree to Kerala. It was introduced in Kerala in 1902 by the British. Processing of rubber is environmentally damaging. And it has displaced cultivation of other crops such as tapioca, cashew and coconut. None of them generate the pollution similar to that generated during natural rubber processing. Other environmental impact include micro climate change, negative hydrological change/ drought, nutrient/ sediment run off, eutrofication and poisoning of rivers, and severe loss of species and extinction of local species. Kerala’s natural vegetation cover has reduced from 44% in 1905 to 14% in 1984. Rubber plantations are the main culprit.

Due to higher cost of natural rubber, search for synthetic rubber alternatives started as early as 1925. Now, industrial scale synthetic rubber production dwarfs natural rubber production.

In addition to these problems, most of the farming in Kerala is small scale, and cannot compete with efficiencies possible with large scale industrial farming. So it is high time Kerala woke up to the realities, instead of continuing to do what has been done in the past and expect different results.

The smart choice with the current “rubber crisis” [2, 3, 4] will be to use it as an opportunity to formulate and implement sustainable eco-friendly agriculture programs in Kerala. Being naturally fertile, there is no shortage of plants and crops that can be cultivated in Kerala. With small scale farming, the logical choice is to concentrate on high-value cultivation. Replanting cashews is a natural choice. Other choices include spices such as cardamom, pepper, ginger, turmeric, etc. In addition, commercial scale flower growing may also be feasible. Another worthwhile effort will be to implement large-scale reforestation to recapture the green cover that has been lost. Many small plants need or are helped by the green cover provided by trees. Besides, increasing green cover and increased biodiversity have obvious long term benefits.

Planning and implementing these programs require visionary leadership, which is sorely lacking in Kerala.


Smart City Squabbling

From the report in The Times of India, “Mayor given the short shrift at SPV meeting” (Mar. 29, 2016), it seems the Cochin Smart Mission Ltd. (CSML) is low on planning, but high on squabbling.

“The meeting which concluded without taking any major decisions also discussed the memorandum and articles of association, recruiting key managerial personnel in urban planning, engineering, urban transport/mobility, energy and environment, urban finance, capacity building and social development, IT and e-governance, and general administration.”

The report increases the troubling concerns about the project. Smart City Mission is for the existing city, and not creating a new city. So what is the reason to build up an entire city organization? Many of these functions must be existing, or should be existing within the current city organizations. Duplicating these functions for Smart City Mission is likely to create conflicts with existing staff and new staff, limiting the potential that could be achieved. Incorporating Smart City Mission into the existing city organizations will help revive and increase their effectiveness and efficiency, which itself will generate many benefits and advantages. And may help achieve breakthrough results with the Smart City Mission project. Kochi [2] has the geographical advantages for being a world class economic center. It would be a shame if the opportunity presented by the Smart City Mission is squabbled away.

Instead of squabbling, Smart City Mission project is an opportunity to institutionalize regional economic development capability using modern metro development methodologies. For example, Robert Weissbourd, President, RW Ventures, LLC, and Mark Muro, Senior Fellow and Policy Director at Metropolitan Policy Program at Brookings Institution, describes a new approach to planning for economic development and growth in “Metropolitan Business Plans.” According to them:

Metropolitan business planning adapts the discipline of private-sector business planning to the task of revitalizing regional development.

Such planning provides a framework through which regional business, civic, and government leaders can rigorously analyze the market position of their region; identify strategies by which to capitalize on their unique assets; specify catalytic products, policies, and interventions; and establish detailed operational and financial plans.

These plans can then, in turn, be used to restructure federal, state, and philanthropic engagement in ways that invert the current top-down, highly siloed, and often ineffective approach to cities and metropolitan areas while bringing new efficiency to development activity.

Also clear from the report is a leadership deficit for the Smart City Mission. There was hardly any discussion of the vision for the Rs 2000-crore ($300m) Smart City Mission project. What the project hopes to achieve? How it will change Kochi? Smart City Mission leadership must be thinking how to use the Smart City Mission project to transform Kochi into a powerful center for economic activity.

Without thinking along these lines, most that can be achieved from the Smart City Mission project are some construction activities resulting in buildings and technology pockets without creating an institutionalized economic development capability in Kochi as a world-class metro region. A compelling vision also will help unify the existing staff, new staff and residents of the city behind the project and provide cohesion to the implementation team and effort. Without such leadership, there will be increasing squabbles, wasted resources and effort, along with a lost opportunity.