Why not rain water harvesting in Kerala?

The story of depletion of flowing water in God’s own country is a classic example of excess water everywhere five decades ago , due to poor water planning caused water water no where. Kerala used to have an average 5 lakh million cubic meters of fresh water from its 44 rivulets and 19 lakes. Kerala has 44 rivers, 41 flowing westward and 3 flowing eastward cut across Kerala with their innumerable territories and branches. Periyar (244 Kms), Bharatapuzha (209 Kms) Pamba (176 Kms), Chaliyar (169), Kadaundi and Chalakudi (130), Achenkoil (128), Kalada and Muvathupuzha (121) etc are some of the important rivers that dot the Kerala landscape, flowing westwards. The three eastward flowing rivers are: Pambar, Bhawani and Kabani
[Quiet flows the Bharathapuzha, the Second largest river in Kerala with a length of 209 Kms. The river originates in Annamalai hills located in the Western Ghats. It flows in the western direction. The water has high mineral content. It is closely connected with Kathakali, the renowned dance form of Kerala. The Bharathapuzha is the backbone of Kerala.]
Kerala was the land of abundant water. It had ample rainfall. But this is old fable. Today, its per capita usage of Water is worst than that of Rajasthan! It occupies the 20th place amongst the States in India in the per capita usage of Water.

The Government of Kerala suggested that Rs 675 Cr hydro electric project be planned along Chalakudy-Anamalai inter state highway (Vazhachal forest division), a dam 23 m high and 311 m wide so that the Athirapally water falls be utilized for the dam projected as a peak load station expected to produce 163 MW. However, the Ministry of Environment & Forests,Govt of India refused it permission and clearance as the riparian ecosystem would affect 138.6 hectares of forest land, fish sanctuary, habitat of rarest and highly endangered species of birds and animals. It is a right decision taken to save the ecofragile ecosystem.

But Kerala needs development. It requires drinking water. A land of rivers and plenty of water, yet low per capita consumption per person during summer is a horrid tale. Some things need to be done. Something must be done.

Even this year’s monsoon which saw torrential rain and shortage of water during the summer which preceded it has seen the rainwater flow away towards the sea. The Water Authority sit on pins and needles during summer to get water projects that have Bharathapuzha as the source. To conserve water and save the endangered river from going dry when the heat rises, proposals have been made to construct permanent and temporary check dams across the river and its tributaries. But only four of these have been completed and another two are under construction in Shoranur and Ottapalam. Water from Bharathapuzha is supplied to nearly 170 grama panchayats on the banks of the river in Palakkad, Malapuram and Trichur districts.

Much of the water that is available in Kerala is washed down to the Arabian Sea owing to the lack of proper storage and distribution facilities. Most of the Schemes to cover the drinking water problem only exist only on paper. Rs 560 Cr Bharathapuzha action plan submitted to the State Government five years ago is in cold storage. The Plan envisages a Bharathapuzha Basin AUTHORITY, construct 453 check dams across the river and its four main tributaries at an estimated cost of Rs 157.5 Cr; 30 across Chitturpuzha; 60 across the Gyathripuzha; 10 across the Kalpathypuzha and 50 each across the Thoothapuzha and Kunthipuzha. Another 600 check dams have been suggested across the major stream of the Bharathapuzha. The Plan proposes setting up of 11 regulators at a cost of Rs 137.5 Cr. It is estimated that 4,000 million cubic meters of water flows from the Bharathapuzha a year and the quantity stored in all seven reservoirs on the basin is less than 10% of the wastage. The Report submitted in June 1997 calls for an autonomous river management authority with wide powers to manage various aspects related to the river system and its basin. No ecological damage, no submerging of riparian forest, no destruction of habitat of highly endangered species.

Bicycle Revolution will restrict traffic congestion?

Bicycles were introduced in the 19^th century. There are around one billion worldwide bicycles, twice as many as, automobiles. Bicycles form principal means of transportation in many regions. Today’s automobile industry has paced itself to manufacture half a million automobiles, apart from buses, three wheelers, lorry transport, etc. The roads are designed to carry a particular laden weight.Today, roads carry 4 times the load it is supposed to carry that the roads are likely to bust at its seems. The chaotic traffic has affected the speed of many of the modern day fast vehicles which needs to snarl on.

Shanghai has been a fascination for Indian businessmen, and often the conversations drift to India’s infrastructure comparison with that of China. A little known and unfashionable Shanghai suburb has an equally important lesson for Indian town planners in how to better plan its cities. Over a year, a quiet transportation revolution has been unfolding in sprawling Minhang district. This revolution has invested in a very low tech but extremely effective solution to battle the problems of crowing infrastructure bottle-necks that are so common to Indian Cities- the bi-cycle.

In an effort to coax the fast growing city’s middle class to abandon their gas guzzlers for two wheelers, the local government is making available free bicycles to residents. Free bicycle renting programme are by no means unique to Shanghai; New Delhi is also experimenting with this Scheme. But the sheer scale of the effort and the unprecedented public response has made Government sit up and take notice. Shanghai like booming world cities has seen its urban infrastructure stretched to its limits in the past decade. A programme attached to metro-rail terminals presently has a coverage of 230 stations with 12, 000 bicycles.. The bicycles are available 24 hours a day. Each resident is given an ID Card, with which one can rent and return bicycles at any of the stations, usually located near metro rail terminals. Private renting companies have also been roped in by the Government. This rage has spread to Xuhui district where another network has been created on similar terms. Residents are charged 2 Yuan (Rs 14/-) for every hour of renting. The Scheme works on the principle of seamless connectivity between metro network, the bicycle renting programme and bus routes.

Bicycle dedicated lanes- even at the cost of space for cars- and expanding space for pedestrians help disciplined movement of traffic. Car licenses are auctioned to the highest bidder at a average cost of the car, which dissuades buyers for going in for new cars, they revert to using bicycles. India, should take a leaf out of China to practice austerity at the same time an ideal way to reduce congestion. Our think tanks will they emulate the example of China?

Kochi calling- Winds of change?

A unifying theme will be the tension between two values; that of being scientific (scientificity) and that of relevance. These need not- and should not- be in conflict; an important goal for economics in the future is to bring them into better harmony. Circulating of the wagons was the creation of an outer circle of critics and dissidents: economists who thought of themselves as alternatives or heterodox. The outer circle, which contains many serious and creative thinkers, has continued to grow and pose serious challenges to the mainstream emphasis, assumptions, methods and conclusions.



Indian economy was opened up to the World 18 years ago. Tariffs were reduced, trade restrictions went down, and investment flows were allowed. This was the economic paradigm of 1991. India moved to progressive, transparent trade regime which stimulated strong increase in trade and investment.

Addressing a CII meeting, Mr Suresh Krishna, well known industrialist, recalled a visit to Wall-mart to know which are the Indian made items were on the shelf. He moved from rows to rows. He could find nothing. At last, in one of the rows, he found a Door mat costing$2 .40 cents (when 1$= Rs 13/-). That was the only Indian product that was sold in Wal-mart in the 90s. We can conclude, even ere liberalization, Coir Door Mats were popular in the United States. In the MBA syllabus, Door mat syndrome was a popular expression. In the entrance to any house, there was a door mat which was vividly used by the visitor, to dust his shoes, and then after entering, the services rendered by the door mat were forgotten. Many people use, but no recognition, that was door mat syndrome. In Kerala, almost 153 years ago, the coir industry took its formative birth, and grew itself as a traditional industry, and it did not mature as a vibrant modern industry. It is still traditional with obsolete machines.

India’s rates of taxation was the highest with each Finance Minister priding himself as an expert whose tally of taxation of different items should be higher than that of his predecessor. You have Personal Income Tax, Services Tax, professional Tax, property Tax, Motor Vehicles Tax, indirect taxes, and what not. The Central Excise tariff is difficult to comprehend, because the Finance Minister imposes Central Excise levy, but it becomes 0% because of a notification which has been issued by the Commissionrate of CE. There are some rates which are reduced by notification. There are certain items out of the tax net, but suddenly brought in. It is very difficult for the trader, to be a master of Central Excise formalities, procedures, and taxation. The Central Excise tariff codes are aligned to the ITC (HS) Codes at the six digit level, and Customs Tariff codes are aligned at the 4 digit level. In the 8 digit level ITC(HS) Code which is used by the shippers for shipping the goods, there are for some items, no entries, so they use the ‘Others’ category or the residuary category. Customs officials, do not part with the incentives meant for that product, because, ‘Others’ are not defined. The legal text of the Tariff consists of Sections, Chapters, Headings, Subheadings, subheading notes and the General Interpretative Rules (GIR). The Indian Customs Tariff has 21 sections and 99 chapters. A Section is a grouping together of a number of Chapters which codify a particular class of goods. The Section notes explain the scope of chapters / headings, etc. The Chapters consist of chapter notes, brief description of commodities arranged at four digit and six digit levels. Every four digit code is called a ‘heading’ and every six digit code is called a ‘subheading’. The 4 digit and 6 digit tariffs are approved by the World Customs Organization which meets in Brussels periodically, and there is an overhaul once in five years. All amendments are carried out by consensus. Product, sub product, spin off product, which are known by different names in different areas come under some other description which makes the shipper write a different product name which is universally accepted. When Customs goes for random checking, they give some other name to describe the product which is not in the Tariff, Harmonized Code of Nomenclature, nor in the ITC (HS) Codes. If these products are ‘Plant exports’, then lot of problems arise in the Port of Entry. The customs asks for innumerable identification documents. Transaction cost on account of delay increases making Indian goods uncompetitative due to higher prices.
Kochi Port grew by 17% in the first quarter of the current fiscal (2010-11) while overall cargo traffic went up 23% of the first quarter of the previous year. Container traffic at Kochi was 2.90 lakh TEUs for the whole of 2009-10. Inspite of the dip in the world economy’s growth, mostly contributed by America’s recession, Indian business was slightly affected and container trade grew by 4.5% over the figures of 2008-9. The Country’s container trade volumes have been growing at a steady 16.73 per cent in the first quarter. Volume for the first quarter of the previous year was movement of 1.8 million TEUs. The impetus for the container volume trade has been largely due to the fact that Kerala state was the only export state that achieved positive growth at 9.2%. Haryana came a poor second with 0.1% growth. In 2008-9, there has been 100% growth, with spices, cashew, marine products, engineering goods, coir, coconut, and exports from CSEZ registering impressive growth. It is a matter of great pride, they were able to continue the same impressive trend into 2009-10. The fist quarter has seen spectacular growth in spices exports to touch Rs 1025.30 Cr (against Rs 788 Cr) registering 30% in Rupee terms and 42% in dollar terms. Against last year’s figures of 81,950 tonnes, the volume exported was 1, 06,315 tonnes, a straight forward growth of 30%. The Port authorities have been requesting the Commerce Ministry to allow at least 10 lakh tonnes of import of palm oil to be routed through Kochi, so that the movement of containers would grow at a higher pace.

IMF is of the view that India’s growth in 2010-11 is predicted at 9.4% though our Finance Ministry and Planning Commission are more cautious and predict an economic growth of 8.5%. The opening of Vallarpadam Container will give greater impetus to the Cochin port in increasing the level of its operations. The optimum capacity of the Vallarpadam Container terminal is expected to be 30, 00,000 TEUs, when the birth length will be 1800 meters and dwarft will be 14.5 meters enabling ships having up to 8,000 TEUs to call at the terminal. The first phase is conceived to have a handling capacity of 1.4 million TEUs.

The terminal project cannot rest on its oars as the Cochin channel needs more dredging, taking care that the dredging do not create any Sea erosion and soil erosion. The land at Fort Kochi, Wellingdon Island, Vallarpadam, are susceptible to coastal erosion as the natural break waters off Cochin sea coast do not have resistance to the sea pressure.

It has been a dream for many Cochinites that mother ships call here, rather than feeder vessels. The Cochin Port was devised to receive passenger traffic as well. Apart for independent oil terminal, Cochin port can be a vantage Port, if more attention is bestowed to it by the authorities concerned. South India’s cargo business is slated to be nearly 2 million TEUs a year, which represents 25% of India’s trade.

With the heralding of Vallarpadam Container terminal, Cochin people believe that they have never to look back. The old days of aroma, pepper, spices, coconut, marine products will again beseech Kochi along with the winds of change.

Small & Medium Enterprises require govt. policy support

Some say businesses are about the idea of Power, while businesses are about the power of ideas. Micro, Small and Medium Enterprises is defined in India on the basis of investment. Micro (upto Rs 25 lakhs), Small (upto Rs 5 Cr), Medium (upto Rs 10 Cr). There is a MSME Act, 2006 which govern the enterprises, and MSME Ministry administers it. For all intents and purposes, MSME depends upon the scale of investment.

It is gathered that 40% of the total manufactured output and 45% of India’s exports of US $ 185 billion, is contributed by 26 million industrial units provding employment to around 60 million workers. 15 million units are registered including the core which is micro industries.

The task force on MSME under the direct supervision of the PM’s office, and Dr B K Chauturvedi’s commission appointed by the Planning Commission have come to the conclusion that tardy and needful Credit are not provided by Commercial Banks and Banks which are in the 2^nd Schedule of the Reserve Bank of India Act. In order to kick start, the commissions made it an absolute necessity that Banks will finance micro industry without collateral or third party gurantee upto a Credit of Rs 10 lakhs. That means units who have investment in plant and machinery upto Rs 25 lakhs, will get Credit upto Rs 10 lakhs without any collateral security or third party guarantee. That would also mean, that a Small industry having an investment in plant and machinery upto Rs 35 lakhs, wants a Credit of Rs 10 lakhs only, would he cover under the definition so notified by RBI? Coming to the benefits, when the investment is made the criteria, even in cases where the Pre-shipment Credit and post-shipment Credit, Schemes like Market Development Assistance Scheme, and other generalized Schems operated by the MSME, why do they insist on ‘turnover’ being the consideration for granting of loans., when the definition is built on ‘investment’ in plant and machinery. The Ministry’s benchmark thumb rule is the definition the Act prescribes and it cannot be changed by the administrative apparatus citing a slew of reasons. Basic structure of the MSME Act should be the depth and pattern of any scheme envisaged by the Ministry. Unfortunately, this discrepancy went unnoticed by the Task Force and/or the Planning Commission’s study.

Small and Medium Enterprises are the most vulnerable to the vagaries of peaks and troughs and affected by the economic weather in the industrial landscape. Neo liberal policies in the context of abrupt bad weather in the global economy brought to focus that the financial crunch drove SMEs out of business. Credit Guarantee Schemes, tax concessions, priority lending, (abstract) marketing linkage, turning the course of the geography and direction of markets by re-routing the supply to the domestic market which remained untapped, inspite of plentiful space and market advantage, etc made a critical impact on the SME Constituency. Indian manufacturing sector with its highly distributive channels need to be programmed to focus on retail and village markets, which have high purchasing power, largely remain untapped with the result the stakeholders do their purchase from the up-country or a greater market which are set up without any tag to the market pull or market push. Many super malls in the medium scale have closed down operations in the metropolis. Why? Location of a retail shop plays an important role in its sales pattern. A medium size textile shop at one of the sub satellite towns’ closed shop even though a big sized mall is busy 12 hours a day, is situated opposite to this. If the textile shop owner had approached for a twin agreement with the large mall, and latest fashion quality products were displayed, the shop could have survived. In the case of fashion goods, people look to latest patterns, where small sized shops won’t attract buyers. People who buy modern fashionable dresses, often visit large textile shops, hence mini, tiny, shops in satellite towns, cities may not pay dividends.

Blanket freedom to import in some sectors is a key problem which has overshadowed the policy edifice of MSMEs. Indiscriminate import of edible oils have seen the death knell of India’s domestic oil industry. Corporate sectors vulnerable to shocks; however, the shocks do not straight away affect the SME sector. The causes that ruined the SME in America and Europe are a distinct policy in India due to distinct economies and sociology factors.

In the United States, 8, 50,000 small business loans were financed in part by Securities whose issuance was supported by Term Asset-backed Securities Loan facility (TALF).

No body can blame Banks alone for not providing Credits. Nobody can blame the system of banking that is responsible for micro, mini, small industries not getting proper credit at the needed time. Is economic downturn responsible for slowing of bank Credit? But it is too early to determine that how much of the reduction has been driven by weaker demands for loans from such business, how much by deterioration in the financial condition of such businesses during the economic downturn and how much by restricted Credit facilities? Unfortunately, SIDBI which is the watch dog for providing support to SMEs through refinancing has never conducted a study.

In India, the Cluster development was largely unintended growth which practically came up because of some advantage like raw material advantage, existence of a main factory which could outsource work, the location of intermediary industries who can support in the building of the value chain, talented workforce available in a particular region, excellent topography for moving the finished goods, good water, power, excellent roadways, proximity to sea ways, air ways, etc. However, when the Government tended to tinker with Clusters, it was always not a success story because of the flaws in the conceivement of the Cluster, its linkages, SWOT, etc. The diagnostic study does not form a pattern; it is evolution of the Cluster, its product base, with its particular programme that should form the Key. UNIDO pattern of Clustering is not objective for a Country like India. The interventions suggested are imagined and not the real needed requirement of different clusters. Competitiveness of individual firms on a collective basis which Clusters seek to achieve has failed in many of the Clusters, because the chosen Clusters did not have the objective to grow. Many distortions in public policy have been the bane of SME Policy. If India has to build a powerful MSE sector with linkages to credit-market-labour-competitiveness, it has to build powerful edifices, and re-structure its aims and objectives which are contemporary.

Is Athirapally hydro project desirable?

If you are very choosy about God’s Own Country, you will describe a number of positive things that is unique to the state. You will also list out Kerala’s negativity, which will consume a larger paper than all the good that you wrote. Kerala is nevertheless a tourist’s paradise, for every year, a large trek of people from countries across the globe which are not noticeable in the atlas, land, come and seem to enjoy.

Kerala’s past, in the opening years of history has been formidable. It was known to the ancient sea faring tribes, voyagers, traders, merchants. There have been regular plying of vessels carrying riches from the Orient, and they take back invaluable pepper, spices, and other remarkable crops, which had great value in the international markets. Kerala people knew the stories of Arabian Nights much before other parts of India and the world were aware of. But these traders came strictly to trade, make a barter trade, bring their goods, take goods from Kerala. When Jesus Christ introduced to the world, Christianity, his direct disciple St Thomas, came to Kerala. There is vivid history of Christianity having spread to the four corners of Kerala. Christianity came here, much before it went to Europe. Islam also spread to Kerala much before the world was aware of this religion. The Jews came here in herds, when they had to run away for their lives. In the 15th century, we have seen the European powers one on the tail of others, coming to trade, colonizing the country and looting its wealth for their well being. English, French, Dutch, Portuguese, all belonged to this School.

It has been in the blood of Kerala people to voyage. Set sail by sea. This adventurous trait of the ordinary Kerala man, and the appetite to do hard work, and the vision to succeed, made him leave Indian shores in search of greener pastures. As a single person, the ordinary Keralite called mallu, in North India, always performed admirably, but as a team, there was always poor performance. This limitation of behaviour had strayed to every part of life of a Keralite. When six economists are gathered, there are seven opinions. But when six Keralites discuss, they will give ten opinions.

Opening up of educational institutions by Christian missionaries, had a large impact on the educational field. In the old Ernakulam, there were only two Government Colleges, one Maharajas College and another Law College. All the other colleges were privately run. There is a powerful educational lobby in Kerala, where education is both in private and public forms. Dr T M A Pai would have conceived the privatization of commercial education, but it was Kerala, who developed private education in such a big way. Though there was higher education, and many educational pursuits, there was no matching economic or industrial growth in Kerala, which could absorb the talents. Central investment was/is the lowest in Kerala. The private sector is also reluctant to set up their units in a big way. All these have made Kerala absorb consumerism, and not manufacturing activity. Trading is a way of life. There are more malls in Kochi than in a metro like Bangalore or Hyderabad. People’s craze for gold is higher here than in any other place. One Economist in a lecture pointed out that Kerala required more policing because of its craze for Golden jewellery which accounts for sizable investment in each household. His comment should be taken seriously. Second is fashion consciousness. I do not think, there is any other place in the world, where fashion is part of culture. Tradition is breadth. Festivities are part of every Keralite. Hospitality is a trade mark, special to Kerala. The religious cosmopolitan culture has held the state proud. But today, the name of Keralites crop up everywhere where a terror act has disturbed the public peace.

Militancy of labour has been benchmarked with Kerala, rightly or wrongly. This has been the chief reason, why industries fear to thread to Kerala territory even though they see lot of potential. In Kerala, they say there is rampant unemployment. But if I look around for a car driver, carpenter, plumber, electrician, I seldom get one. In Kerala, there is more Voluntary Unemployment than in any other state because the Gulf remittance from one member in the family takes care of the other members of the family making their both ends meet.

Vallarpadam Container terminal, growth of IT industry, growth in Kochi Export Processing zone, bio-technology and industrial hubs concept promoted by the Kerala Government has started yielding results. Cochin port, Nedumassery Airport, are all on their feet booking profits through improving their business. This is a good sign.

Then there was a Jairam Ramesh effect on Kerala based export merchandise. From 2007-9, when he was the Minsiter of State for Commerce, he highly patronized the Kerala sectors, tea, marine products, cashew, coconut, coir, and rubber. The price of 1 kg of rubber is Rs 175/-. This has been made possible by Jairam Ramesh effect. Every Saturday/Sunday, he used to tour Kerala, and actively participate in raising the standard and productivity of these industries. A tiny industry like Coir exports rose from Rs 475 Cr to Rs 800 Cr. Spices exports, got many schemes, Spices Park, branding of spices produce, participation in international exhibitions, developing use of vanilla, etc were outcome of his support.
Now let me come to Athirapally Project. The Kerala Government which never bothered to use Mr Jairam Ramesh, even though he was more than friendly to the Kerala crops, now accuse him of playing spoilt to Kerala’s development. When he was Minister of Commerce, I had taken him to Kodungallur, and showed him the historical monuments there, and explained to him. Based on his note, Central Government gave a bonanza of restoration of Kodungallur as a historical monument and sanctioned Crores of Rupees.

Athirapalli is one of the most bewitching waterfalls in Kerala having a high percentage of aquatic and eco diversity in the State. The outlay for the entire project is estimated at Rs 675 Cr. The expected power production is arrived as 163 MW. The dam is supposed to come up in the east of Chalakudi, along Chalakudi Annamali inter-state highway (Vazhakal forest division). The dam is expected to have a height of 23m and will have a width of 311 m. The dam is projected as a peak load station where Water will be diverted via penstock (pipe) to turbines downstream. A dam toe powerhouse downstream of the dam will be built to maintain Athirapally-Vazhachal Waterfalls. On the basis of the expert committee of River valley projects, power should be generated only between 7-11 p.m. during Feb1-May31 which are the driest months in the Kerala calendar. It has also ordained that 7.65 cubic metre/second (cumec) of water over the Atirapalli falls must be maintained always.

Environmentalists and public spirited hydrologists argue that the river experiences the maximum flow during July (102 cumecs) During the dry months of Feb,March and April, its flow is reduced to 14-15 cumec, and if the water level be reduced to 7.65 cumec during the dry months, there will be no waterfall at all. It is also argued that for power generation, 7 Km long penstock will absorb 86% of water from the dam, which indirectly will leave people living upto 7 kms devoid of drinking water, as no alternate sources exist. The project being a peak loading station, Chalakudi River will experience heavy fluctuation in its flow during the 4 hours when power is generated during which time the release of water can be as high as 130 cumec. Overflowing problems and affliction to downstream Chalakudi River diversion scheme which irrigates and provides drinking water to way side villages and panchayats in Trichur and Ernakulam district will cease. The riparian forests of the Chalakudy River have revealed the existence of a thick riparian vegetation of more than 10 metres width for a distance of 10.5 km downstream from Peringalkuth, covering an area of 58.5 hectares. Out of this, 26.4 hectares lie within the Vazachal area, including three large islands densely covered by riparian forests.
The riparian forests of the area have been found to be characterised by the presence of typical riparian species of plants, in addition to evergreen and semi-evergreen species. Out of the 319 species of flowering plants identified from the study area, 24 are endemic species of the Western Ghats and 10 are rare and endangered.
Moreover, the Chalakudy River is known for its diversity, as it contains 85 species of fresh water fishes out of the 152 species known from Kerala. Among these, 35 are endemic species of the Western Ghats and nine are considered to be endangered. Highly endangered Cochin Forest Cane turtle and the river bed is the nestling site of Malabar pied hombele birds. The area is supposed to be the best elephant conservation spot. . Any disruption to this ecofragile ecosystem will spell disaster.

The Power Engineers also feel that reduced water flow would not even help production of 26.7 MW as against 163 MW envisaged (234 million units of energy). In such a case, the cost: benefit analysis vis-à-vis the investment costs, running costs, maintaining costs, and recovery of costs would be unviable. The notional cost for the destruction of ecology and ecosystem would be unimaginable. Kerala’s density of forests has come down because the estuaries have been destroyed. Sea and Coastal erosion is taking a heavy toll due to unscientific dredging. Our fish sanctuaries have vanished, and bird habitats have disappeared. As per the state records, there is a transmission loss of 3020 million units. Why don’t we try to curb transmission losses by at least 10 to 15%, which will allow a nett energy of 303 million? The other way, is increase productivity of the existing hydro electric projects by up-grading the machines. Hydro electric projects are no answer for restoring balance to the power needs of the state. Mr Nehru called Bakranangal as the temple of India. Today, there are many alternate sources to produce electricity. And the cost of producing power is also cheaper.

In view of so many negative features that deters go ahead for the Athirapally hydro electric power station, can we blamed Hon’ble Shri Jairam Ramesh alone. We have to give solid arguments countering each of the points. Our eco systems are already overburdened. Any callous attitude or action will cause catastrophe tomorrow? We do not have the right to destroy the fragile eco-system which belongs to tomorrow’s generation.

One size-fits all-solution for small enterprises?

The Government has conceded that Indian economy runs on the wheels of the micro, small units. It has accepted the fact that MSME sector accounts for about 45% of the manufacturing output, 40% of the total exports of US $ 185 billion, providing roughly employment to an estimated 60 million workers spread over 26 million registered and unregistered enterprises. The Government has reckoned that out of the 1.5 million registered units, 95 % of the units are micro enterprises (investment in plant and machinery up to Rs 25 lakhs) and 4.7% are small enterprises (investment upto Rs 5 Cr). It means only 0.3 million units are in the medium category (between Rs 5 cr- Rs 10 Cr investment level).

The prime Minister’s task force on MSME which submitted its report in January 2010 has nailed the claim of the banks that there was no impediment for these small and tiny units to avail bank Credit. As a matter of fact, the greatest problem faced by the MSEM enterprises was availability of Credit for investment, improvement and working capital. The Government concedes the superlative performance of the sector to the GDP and employment Growth against all odds including accessing funds at the right time unlike large companies who have various avenues like primary market, ssecondry market, debentures, commercial paper, foreign depositary bonds, listing in London/NY stock exchanges, etc.

The Indian government has accepted the view of the task force that commercial banks which include nationalized banks mainly give priority to the corporate sector with better credit rating and provide easy credit at sub prime rates. For this, one of the RBI Dy Governors said that the Banks were not loathed to give credit to these micro and tiny units. Their spread was in villages which were unbanked areas, as the Indian banking system covered only 25% of the districts in India.

It has to be seen how far the banking sector would provide Credit at affordable rate of interest that is after the introduction of the ‘base rate’ which should have come about. Already the big brother of Banks, State Bank of India has begun to murmur that the conditionality of fixing ‘base rate’ must be extended by at least an year for all the Banks to switch it, because the present borrowers would insist on the BPLR rate of interest be applied to their accounts. Surely, when the sub-committee of RBI meets on July 27, 2010, this amendment would be made in the notification because you cannot have two sets of interest rates for Credits.

Banks dependence on SIDBI to promote the SME industry has been found to be inadequate. Even the SHG concept of SIDBI, Cluster level funding etc have not been successful because SIDBI is yet to have a grip on the spread of tiny and micro industries. Their problems are not even, with different problems for different sectors. The expertise to provide escort service is not available with SIDBI. Government is also talking about NABARD which had focused on rural enterprises. Ditto is the problem here.

The SME-CDP programme of the Minsitry of Micro, Small and Medium Enterprises have been found to be a non starter for the SME Clusters. The basic problem with the Scheme is its inability to stretch to a geographical location having similar lines of segmentation of the enterprise. Its divisions like Development, Commercial etc are only theoretical abstracts, as any cluster should be a profit head by itself and it should have a commercial objective, otherwise it will fail. No body has bothered to evaluate the Scheme, because it is largely governed by the UNIDO Concept of Clusterization, even though India requires a different concept and model to create growth oriented Clusters.

It is an unfortunate fact, that MSMEs are not aware of the various developmental schemes, geographic specific interventions, and sector specific initiatives. It is true that the entire paradigm of development has changed and inclusive growth has to be achieved by participatory growth. The Ministry of Micro, Small and Medium Enterprises, need a total rehaul, if nearly half of India’s export and manufacturing output need to sustain the vigours of international and national competition.

In India, small businesses were an awesome lot, and the government and the Banks shunted it. But in the United States, the Government was keen to making credit accessible to sound small businesses which were crucial to their (US) economic recovery and so should be front and centre among our (US) current policy challenges. In India, the Bankers hold a grudge against SMEs as unviable.

The Federal Reserve had brought in capital from the securities markets to small businesses through the Term Asset-Backed Securities Loan Facility (TALF programme). In the United States, around 8, 50,000 small business loans were financed in part by securities whose issuance was supported by TALF.

While Indian Banks were keeping Crores of rupees in their currency chests, in the US, loans to the tune of $ 710 billion granted in the second quarter of 2008 had come down to $ 670 billion in the first quarter of 2010.

An important but difficult to answer question is, How much of this reduction has been driven by weaker demand for loans from small businesses, how much by a deterioration in the financial condition of small businesses during the economic downturn and how much by restricted Credit ability. United States is thinking of additional effective action hearing first hand from knowledgeable people who can speak with diverse perspectives about the challenges facing small businesses. The term ‘small business’ encompasses a heterogeneous mix of enterprises, so that one should be wary of one-size fits-all-solutions. But in India, knowledgable advice is unwanted. Secondry solutions are enough.

Finance Minister's Chicken Egg Economics?

On the one hand there is a clamour against price rise. On the other are various restrictions on imports. This way, prices will remain high and we will continue to see more and more tinkering with interest rates. The problem is that high interest rates raise the cost of capital and, therefore, discourage investment. When the rate of growth in investment reduces, growth suffers. Lower rates of growth are clearly unacceptable, so are high prices. But with high tariffs and high/vague protectionism, we will not be able to help neither the slowdown in growth nor increase in domestic prices.

Look at the recent hike on June 25, 2010 in Petroleum prices. The increase was (+) Rs 3.50 for petrol, (+) Rs 2/- for diesel, Rs 3/- more for kerosene, and (+) Rs 35/- per LPG Cylinder. The increase is across the board. According to Government, subsidizing Petrol companies which show book profits on sales price of petrol + Government subsidies which causes 5 digit profits cannot be afforded by the nation. The subsidy burden is transferred to the people, whom the Government feels, have paying capacity so that vulnerable sections who do not have paying capacity can be helped through specialized subsidy schemes. India is after all a benign socialist democracy. Economic pundits and intellectual economists who have been advising the Government have averred that the hike in petroleum products will have an impact less than 1% on headline inflation which is hovering around 10.16% making it rise to 11%. The disparity between the Wholesale Price Index and Consumer price Index which was very high has been narrowed down, and the food inflation has been brought down to 12.92% from 16%. To further counter check inflation, RBI has increased the repo and reverse repo rates which today stand at 5.5% and 4% respectively.

The Finance Minister’s cautious budget had placed fiscal deficit at 5.5% of the GDP. His expenditure was estimated at Rs 11.09 lakh Crore, while tax and non tax revenue were expected to yield the state Rs 6.82 lakh Crore. Fiscal deficit for 2009-10 was 6.9%. Rolling targets for fiscal deficit for 2011-12 and 2012-13 has been expected to come down to 4.8%. Very commendable progressive budget compared to the deficit finance budget of earlier years. Forget, it was the Congress that ruled the country and the Finance minister was from one of its ranks.

Who said that the Public Distribution System is not in order? The 57% of the targeted 652.03 lakh Below Poverty Line people are covered for which an outlay of Rs 64,929 Cr was ear-marked. The Government has fixed Central Issue Prices (CIP) for APL at the purchase price of FCI, so that BPL could be supplied at 50%of FCI’s economic cost. But with all this spending the incidence of poverty should have come down. But it has gone up. Government wants to preserve money for the Food Security Programme to obliterate poverty by providing one square meal a day. Already 100 days compulsory employment programme has emancipated the capacity of many, claims Government. There are many who want to remain ‘voluntarily’ unemployed. These people are in the ‘you can take horse to water but cannot make it drink’. According to the study conducted by Dr B K Chaturvedi Committee, it was found that 39% of PDS was diverted and 18% reached the hands of those who used it for adulterating petrol. The Committee also observed that rural use of kerosene for lighting has come down to 40% to 51%, and hardly 1% is used by BPL families for cooking purposes. A shock assessment was that 24% of rural consumption going to states for lighting where there is 100% electrification. Often kerosene oil reaches the hands of the unintended. The difference between APL and BPL prices provide strong incentives for illegal diversions to the market. The number of BPL families varies according to the State list, Planning Commission figures, NCAER, etc. A new study-the multidimensional poverty index(MPI)- by Oxford Poverty and Human Development-UNDP initiative revels that there are 421 million MPI poor spread across Bihar, Chittisgarh, Jharkhand, MP, Orissa, Rajasthan, Uttar Pradesh, West Bengal(in India) compared to 410 million in the 26 poorest African countries put together. The MPI assesses poverty on the deprevations on a host of key factors. How can BPL inspite of heavy subsidizing multiply? Is Malthusian theory at work?

The prices of vegetables and other food items have been going up steadily. The manufacturing growth has been accelerating. Share market is steadily galloping. However, there is a short term shift is noticed from equity and reality markets to risk free, capital guaranteed deposits in India. This is the reason, that despite the purchasing power among the middle class, white collared, ethnic population, etc, invest in Fixed Deposits though the returns are marginal having eroded due to government’s wild fetched theory of low interest regime. When interest is lower than inflation, it is not a healthy sign, forgot the Economics studied rulers and advisors in the Government.

Surpringly for Government, Spectrum auction brought Rs 70,000 Cr to its coffers. Petroleum hike reduced the subsidy burden on the Government. Base rate will enable the Banks to squeeze the common man, advantage multinationals, so that more paper interest will accrue, and the balance sheet will be green. Even though all the bank top executives shook their head together when an internal committee of RBI had recommended replacement of erstwhile BPLR system with base rate regime. Now Bankers started having second thoughts. If the borrower refused to accept the ‘base rate’, there would be two set of interest bearing loan accounts- one with the old rate, and one with the base rate. The bankers have requested RBI to add a sunset clause to its earlier notification asking banks to benchmark lending rates on the base rate effective from 1 July 2010. It was announced that the RBI will give the Banks an extension of a year to follow the base rate. Should not the notification anticipate legal problems, before the announcement? Government bodies become wise after the event. That is what Harshad Mehta taught the Government. Limping export sector is grouping in the dark, awaiting Domiciles Sword at any time. Half of the Stimulus outlay will be removed says grapevine from Delhi. That would add to available surplus. Finance Minister has already announced disinvestment to the tune of Rs 24,000 Cr. Another shedding of 2.5% in the nationalized Banks, Insurance Companies and navaratnas would easily fetch him Rs 25,000 Cr. With all these monies on his chest, the Finance Minister is sitting on a chest of money. If P Chidambaram can write off Rs 70,000 Cr as farm loan waiver, why can’t his successor do much more? Provide Food Stability to the extent of Rs 1, 00,000 Cr?


Has the Finance Minister heard of Nils Gilman, who authored the ‘Deviant Globalization theory?’ In our economy, there are illegal unrecorded transactions like flow of unaccounted money, black money transactions in financial, real estate, energy, drugs, organs, hawala transactions, which can torpedo meticulous planning in the controlled economy. Swiss Bank accounts? Every body promises to bring the money, but nobody has. We need to vigilantly and vigorously pursue the agenda that we have written. Finance Minister should be slow when undertaking the exercise of taxation which he thinks is the only way to bring sunshine to India’s fragile economy, a philosophy exploded by Dr Montek Singh Aluwahlia at the Devil’s Advocate programme.