July 27, 2021
either/view ⚖️
Kitex or Kerala?
To: either/view subscribers
Good morning. Gone are the days when parents used to send children to residential schools for discipline. Instead, children now run off to such schools to break free from online classes. Can’t believe it?
A brother-sister duo, aged about 9 and 11 years left their home in Mathura because they got ‘bored’ of online classes. They were planning to go to a residential school for underprivileged children in Uttarakhand. However, a travel agent saw them roaming around without elders and informed their parents. Ironically, their parents run two degree colleges in Mathura and are now being lectured about helping children cope with stress.
So, in case your child is bored with online classes, you now know what to do.
📰 FEATURE STORY
Is Kerala investor-friendly or not?
When the economy is not-so-great, everyone becomes interested in what businessmen have in the pipeline. How are companies going to create job opportunities; will it generate more money?
Just as people were looking up at Kitex Garments for their massive ₹3,500 crore investment in Kerala, the company called it quits. Kitex walked out of their plans for an apparel park and industrial parks in three cities. Think of how many jobs this move would have provided. Well, the jobs aren’t going far away as the company has shown the green light to invest in Telangana. So what’s exactly making the headlines?
Kitex Group revealed that they were harassed by the government and moving out was the only option left. This has made us raise eyebrows on whether Kerala is investor friendly or not. If we go by what the company is saying, the state is not so open to investors. But the government rebuts that Kerala is one of the most investor-friendly states and Kitex has been intentionally tainting their image.
Context
Kitex Garments is the second largest manufacturer of children’s clothing in the world. They are also Kerala’s biggest private sector employer. In January 2020, the company had signed a ₹3,500 crore deal with the state government at the ASCEND Global Investors Meet. The deal promised nearly 35,000 jobs in Kochi, Palakkad and Thiruvananthapuram.
Fast forward to June 2021, Kitex Garments was raided over 11 times within a month. The Pollution Control Board, Department of Labour, Factories and boilers, you name the government department and it’s likely they visited the company.
The government claimed that the raids were done on the basis of several complaints against the company. But Sabu M Jacob, the Managing Director of Kitex Group stressed that the raids were nothing but harassment from the government.
Kerala is not investor-friendly
What we can gather from Jacob’s statements is that everything was set for the apparel park in Kochi. They had acquired 30 acres of land, completed the project report and made plans for the industrial parks too. But they were pushed to the brink with the raids. The everyday inquiries and complaints made them look like frauds and exploitative capitalists. The climate, he felt, was not conducive for business.
One of the inquiries was that Kitex did not pay the minimum wages as per the norms. But Jacob easily refutes this by saying there is a stay in the Kerala High Court, so the matter was not worth an inquiry. Only after he sent a legal notice, did the Labour Department withdraw their notice. Such continuous worries would trouble an entrepreneur’s peace of mind, says Jacob.
Not just the MD, even 9,000 employees of the company criticised the government for its attack. They staged a huge protest urging the government to ‘Save Kitex, Save our family.’ They noted that all allegations were fake and it would only work against their families.
Jacob commented that the government held onto policies that were over 50-years-old. Many critics also bet on this claiming that the Left government was against business principles. They expressed that this was the ideology that triggered the series of raids in the Kitex factory.
Interestingly, there is another political twist to this issue. In 2015, the company’s CSR wing named Twenty-20, won the local body elections in a Panchayat. Again in 2020, they won the polls. This time they had won in the neighbouring Panchayats as well and showed the gate to all major political parties. So it’s not too wrong to speculate that the project was abandoned because of political differences.
Add to this, there are reports floating around that Kerala is ranked 28th among the 36 Indian states and Union Territories when it comes to Ease of Doing Business (EoDB). Maybe Jacob is right that Kerala must learn how to be investor-friendly from its neighbouring states. Is it time for them to change their policies?
Kerala is investor-friendly
Even before the government reacted on the issue, industrialist Harsh Goenka tweeted that the local government was very supportive in their business. He also noted that they were the largest employers in the state. This has certainly started the talk that if the largest employer did not face such problems, then the raids against Kitex were completely genuine.
In response to Goenka’s tweet, CM Pinarayi Vijayan, asserted that Kerala was one of the most investor-friendly states in the country. He said that there was no need to worry about Kerala’s EoDB as his government encouraged sustainable and innovative industries.
The CM claimed that Niti Aayog reports showed that Kerala was ranked among the top 2 investment-friendly states. He stated the business climate was favourable to investors as the government has been taking several steps in that regard. He also clarified that it was the duty of the government to raid Kitex if complaints kept pouring in against them.
Industries Minister P Rajeev said that the Kerala government did not have the habit of conducting surprise raids on industries. He said that it would happen only if the complaints were serious. He also hinted that while several companies are planning to invest in Kerala, only Kitex claimed that the state was unfriendly to businesses.
Rajeev made his point clear when he said that the complaints against Kitex were filed by several parties. One such complaint was issued by the National Human Rights Commission in February. Following this, a Congress leader had complained that Kitex was contributing to water pollution as they did not instal a liquid discharge system. There was also a complaint from a woman employee that the workers were being harassed. After laying down several such instances, Rajeev said that only in such cases were the raids being carried out. The government did not initiate any raid on its own. Hence, no political vendetta was involved in this situation.
Another argument made by the government is that if Kitex felt that it was being harassed, they should have taken it up with the government in a democratic manner. But they criticised the company for directly going online about their concerns. They said that the company’s actions would tarnish the image of Kerala in the eyes of prospective investors.
Nonetheless, the government is taking efforts to revise policies to improve EoDB. They have proposed a bill that will keep the industries informed about inspections and also stop multiple overlapping raids. The government assures that they keep prioritising ‘responsible investment’.
🕵️ BEYOND ECHO CHAMBERS
For the Right:
Strong-armed majoritarianism can never solve the challenges in India’s border regions
For the Left:
Bhagwat’s identity politics has a DNA of its own. Indian Muslims can’t ignore it in rush to gush
🏴 STATE OF THE STATES
Centre rules? (Delhi) – Remember how we would have a student representative in every class but the teacher’s decision would always be the final say? The banter between the Delhi government and Delhi Governor is just about it. Arvind Kejriwal’s cabinet had decided on a set of lawyers for the cases filed against the farmers over Republic day violence. However, Delhi Governor Mr Anil Baijal rejected this decision. He instead approved a team selected by the Delhi police. This stirred a war among the Delhi government and the Governor. Deputy CM Manish Sisodia questioned that if all decisions were taken by the Centre and the Governor, then what was the point of the elected government in Delhi. In line with this, the Chief Minister also claimed that overruling the elected government’s decision was an ‘insult to people of Delhi’.
Yediyurappa Resigns (Karnataka) – Rumours are mostly hidden truths. This has been proved yet again as Karnataka CM BS Yediyurappa announced his resignation on Monday after months of speculation. With a rising in-party political tussle due to allegations of corruption and complaints from BJP members against him, his fourth tenure as Chief Minister comes to an end. Speaking at an event, he said that he is highly indebted to PM Narendra Modi and Home Minister Amit Shah. He also termed his two years of tenure as ‘trial by fire’. With the resignation of Yediyurappa, all eyes are now on the BJP high command’s announcement about the next CM in line.
Pegasus Inquiry (West Bengal) – The surveillance scam was a bomb dropped off in the Indian society amidst pandemic woes. However, with no stringent action yet, the Pegasus row is either slowly developing or is being gradually put off. We do not know about the other states, but West Bengal is not going to let it go without a fight. On Monday, the WB government set up a two-member inquiry commission comprising retired SC judge M.B. Lokur and former Chief Justice of Calcutta HC Jyotirmoy Bhattacharya. The CM said that they hoped the Centre would start an inquiry but they did nothing and so WB had to set up a commission. Notably, West Bengal is the first state to set up an inquiry commission to probe into the Pegasus issue.
International Touch (Gujarat) – Going abroad for higher education is a dream for many of us that are often hindered by the standard of education we get locally. To put an end to this, the Gujarat education department has considered adopting an international curriculum in the state’s Secondary and Higher Secondary Education Board. The consultations have begun with multiple international boards including the Cambridge Board and the Council for the Indian School Certificate Examinations (CISCE). The state wants to match the 21st-century international education standards and help its students qualify for international exams.
Undermining Constitution (Assam) – We have seen people shift parties every now and then. But have you seen a Chief Minister advocating for opposition members to join the ruling party? The Assam Chief Minister Himanta Biswa Sarma has called out for all opposition legislators to join BJP, the ruling party. He also cited the recent shift of four-time Congress MLA Rupjyoti Kurmi to BJP to encourage changing of parties. The state’s Congress Chief Bhupen Bora criticised this gesture and said the CM was not just acting against the Congress but was indeed undermining the Constitution of the country by doing so.
🔢 KEY NUMBER
86% – Growth in government tax collections in the April-June quarter of 2021. The Parliament was informed on Monday that the total tax collections amounted to more than ₹5.57 lakh crore which indicated an 86% growth rate. The growth percentage of net indirect tax and net direct tax of 1st Quarter of FY 2021-2022 collections as against Q1 of FY 2020-2021 was recorded at 109.3% and 70.3% respectively.