Tuesday, April 21, 2015

Analysis: Kerala Politics - Emerging Political Realignment

The UDF needs an urgent re-working of its strategies with regard to the state’s economic development, entrepreneurship development and bettering of public perception about minority appeasement. 

An emergency cabinet reshuffling to save the disintegration of the UDF and further shrinking of its vote base is needed. The Congress should strongly assert its position regarding economy, finance, education and industrial development including taxation policy.
The Congress is the largest party in the UDF and the one party with a national outlook and a definite approach to all aspects and sectors of the nation, and is quite capable of moving alone, if needed. They should, therefore, retain the Finance, Industry and Education portfolios with them, apart from, of course, Home.

Unfortunately, Kerala has never had a sensible economic leadership during its UDF-ruled years, in the post 1991 era, in alignment with the Congress’ national economic agenda. There is a perception that the UDF’s finance, economic and educational policies revolve around a minimal regional agenda with a focus on BAR-Alcohol-Rubber-and the development of certain minority pockets. Take for instance, the case of the proposed Meenachil River Valley project, allegations about education ministry with respect to sanctioning of (unneeded) aided schools for minority sections.

This is a perception that can seriously damage Congress prospects in the upcoming elections, if not corrected with immediate effect. Further, factional feuds within the UDF should not affect Kerala’s economy. At present, there are disagreements regarding the presentation of the budget in the Kerala Assembly. The UDF should discuss this matter and urgently relook various budget proposals, but not nitpick on the technicalities of whether the budget was presented or not. It must be kept in mind that the Congress has lost several opportunities in the past to develop Kerala’s economy through better policies.

Since 1991, every UDF governments have organized investment summits, attended by corporate houses from India and abroad. These governments spent substantial amounts for those meets. But what was the outcome of those summits? How much investment could they garner? How many jobs did these projects create?

Congress led UDF has an economic agenda which is focused on economic centralization and large scale industry projects. Whereas LDF’s economic agenda was focused on building and supporting entrepreneurship among poorer sections of society, thereby democratizing market economy and enhancing people’s participation in it. And this approach would no doubt is even in line in Congress party’s national level outlook and economic policies, in letter and spirit.

The UDF focuses much on large investments, big projects, big corporate houses and those sectors and kind of business models which would be difficult to succeed in Kerala. The LDF’s economic policies, on the other hand, are more pragmatic, well thought-out and with a focus on local enterprise development.

Economic empowerment of their cadres and vote-base by building a ‘market democracy’ through developing their own small & micro enterprises is the hallmark their economic approach. Thus, small and micro enterprises and women entrepreneurs are a growing segment of enterprise population of Kerala. And more importantly, they get promoted and supported both at the policy and political front by the LDF.

Women entrepreneurs, Kudumbasree self-help groups turning into SMEs (Small and Micro Enterprises) and manufacturing cooperatives are the real success story of Kerala. Those enterprising groups are moving ahead with innovation and new marketing models. They create jobs, income and enhance the wellbeing of families. However, they are not at all at the center of economic priorities of economic policy makers of UDF. For them development is all about conducting Investment Summits, bringing construction companies from UAE to bid for IT industry real-estate projects, even while much better, experienced and eligible bidders are locally available. And the Janasree self-help groups, women self-help group movement promoted by Congress party, almost vanished from the scene.

Politics is good business in Kerala. Political patriarchs and political entrepreneurs can really thrive there, if they can negotiate well with any of the FRONT leadership, UDF or LDF, irrespective of how many voters vote for them.

Solar energy enterprises have immense job creation potential, apart from contribution. However, the word “SOLAR” is no longer a term that generates much interest among entrepreneurs and probable investors, thanks to the UDF leadership.

The time has come for dynamic and young minds in the UDF to assume leadership, who can understand contemporary social & economic challenges and design policies and present better budgets! Militant labour and costs arising from various aspects of trade unionism or environmental activism are not really the ultimate challenges that withhold job creation, enterprises and economy in Kerala. But it is also true that Congress leadership, often finding it difficult to enforce discipline so as to make ethically acceptable policy decisions, due to over ambitious and those alliance partners who mastered the art of managing political organization as a family business.

Some of the UDF partners and leaders, even those in the ministry, wanted to convince the public, for reasons best known to them, that the Kerala economy would collapse and the treasury would have to be closed down, sans tax revenue arising from the sale of alcohol. Is it that if Kerala stops consuming alcohol, pay scales cannot be revised and implemented for the government workers? They argue that the tourism sector would collapse without alcohol being made available, that Kerala is a destination for foreign tourists coming to get drunk and get sloshed. 

So in order to save Kerala treasury being closed down, with the probable shrinking of liquor revenue, in the last budget, the Finance Minister of the UDF government considerably increased the taxes of many essential commodities, including food items. In the budget before that, the UDF finance minister increased the cost of documentation related to registrations, in order to compensate revenue deficits on account of liquor ban, immediately after liquor ban implementation prior to 2014 general elections.

The rubber plantation sector plays an important role in Kerala’s economy. But Rubber-based industries are not really thriving in the State. On the one hand, the UDF budget (2015) allocated INR 300 crores, though it did not have the expected impact or benefit farmers in any way when it was done in the past.

Rubber sector is affected. Many have stopped rubber-tapping, as the prices for natural rubber has hit rock-bottom and nothing further to drop. One of the reasons that could be attributed to the falling natural rubber prices is free flow of synthetic rubber, in order to help local rubber based industry. One may blame Free Trade Agreements or concessions given to synthetic rubber import lobby for falling prices.

If it is free trade agreements, what are the efforts made by UDF and “rubber cluster parties and particularly their leaders” to put rubber in negative list. Now India- ASEAN FTA is already entered into force. Despite being in power and being in influential positions, they have failed to exert sufficient political pressure and succeed. Such leaders are a liability for the UDF and Congress party in Kerala.

Permitting synthetic rubber import, in better terms, was a long standing demand of tread rubber units and other rubber based units of central Kerala, especially, those based in Trissur. Those wanted free import of synthetic rubber succeeded, but under whose political patronage that they could successfully do it, causing the fall of natural rubber prices?

The Rubber sector can create local jobs through better product innovations and marketing strategies. These are serious issues and need more consultation. Sadly, however, there are not enough funds or proper focus on such important issues. All energy is being diverted to issues unrelated to economy, employment and development.

Businesses have to make happy all political constituents to start, sustain and survive. Here emerges the business potential of politics, which is now a successful commercial venture. This is a time when business entrepreneurs run away due to the expansion of activities by political entrepreneurs. 

This is a real challenge to be overcome in Kerala. An alternative force, either another front or a single party, may be the BJP, could challenge this TWIN FRONT model. However, successful political entrepreneurs of small parties may attempt to stop this!

Many are fascinated about the success of the Narendra Modi government. There are many signs that impact of commitment and seriousness shown by the Prime Minister on governance and development front is slowly starting to give results. Further, the BJP has considerable success in adding to its membership base in Kerala. 

Let’s hope that a third alternative will emerge. Or that there will be a new front without communal elements: a Congress- Communist alliance that supports and promotes “grassroots capitalism”, where micro enterprises, women entrepreneurs, youth innovators and returning NRIs thrive by doing their businesses?

Anyway, Kerala needs change.

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