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Written By vinay_sreenivasa - 2 June, 2010

Bangalore Analysis Economy Others IDD GIM

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OPPOSE AUCTION OF KARNATAKA

Demand People Friendly & Environment Friendly Development

The Chief Minister of Karnataka has announced that the 2 day Global Investors Meet in Bangalore will bring 3 lakh crores of investment as well as around 3 lakh new jobs. The promise of 3 lakh jobs to be created by the GIM and the prosperity it will bring to Karnataka does not appear to be true. Read below to find out the real costs and real facts of the GIM.

False Promise of Investment and Job Creation

As per government data(from Department of Industrial Policy & Promotion, http://dipp.nic.in/fdi_statistics/india_fdi_index.htm ) the total FDI approved in Karnataka between 2000- 2010 is around 30,000 crores and the actual amount invested less than that. So how will 3 lakh crores be realised in 2 days, if the last 10 years brought in only 30,000 crores?

Further , the 3 lakh crores were supposed to bring in 3 lakh jobs. Now if the actual amount will be much lesser, how many jobs actually get created?

 

Also, here 1 job is being created for an investment of 1 crore (3 lakh crores = 3 lakh jobs)

However, for the same 1 crore which is invested in the small and Medium Industries , 20 jobs can be created.

 

Examples of Existing Investments and jobs created in Karnataka

The Government has approved MS Zuari fertilisers and chemicals ltd. to establish a urea plant in Mastihole Village, Hukkeri Taluk, Belgaum with an investment of 4565 crores. It is supposed to create1560 jobs. It means an investment of 3 crores for one job! Similarly, the Government has approved a proposal to M/S India Cements limited to establish a 2 MTPA Cement plant and 60 MW coal Based thermal Power plant at Ganapur, Burugupalli of Chincholi Taluk, Gulbarga District with an investment of 850 crores. The promise of job creation is only 175. It means that 5 crores are invested to create one job. (Sources : Government Orders - CI 27 SPI 2010, CI 32 SPI 2010)

Jobs Lost Due to the GIM

The government has already acquired 50000 acres and is in the process of acquiring another 100000 acres. Hence a total of 1,50,000 acres are being acquired. Even by conservative estimates, farming on 1 acre of land can support at least 5 people. Hence the 1,50,000 acres of land being acquired will support atleast 7,50,000 people! Now once this land is acquired, all these jobs are lost. Even assuming that the GIM really creates 3 lakh jobs and that all these jobs(including managers, technical experts etc) are distributed amongst those who lost jobs, it still leaves 4.5 lakh people jobless as a result of the land acquisition for the GIM.

In its defense the government has stated that mostly non-agricultural land has been required. However seeing the gazette notifications for the land acquisition, we see that the government is lying. For instance, one of the Government Orders ( CI66SPQ2010, Bangalore , dated - 17 Feb 2010) says that 1,542 of land has been acquired in Bailahongala, Belgaum. Out of 1,542 acres acquired just 25 acres of land is barren, the remaining 1517 acres or 99.8% land acquired is agricultural land.

What Else are the People of Karnataka Losing?

There is a net loss of employment due to GIM. In addition, we will also lose valuable capital, water and electricity. The 3 lakh crore investment will not come directly from private firms. A large part of that will be from bank loans. Money in the banks consists of the savings of people of the state or is tax money which is with state owned banks. So in effect it our own money being diverted to them and coming back in the form of FDI.

All these industries will require water and electricity. No new water can be created. So even though there is an existing water crisis, Billions of Litres will be divested to these new industries. We also already have an electricity crisis with many rural areas having 16 hour power cuts. Where will we get more power to supply to these industries. It is also a matter of shame that many of these destructive industries are provided massive subsidies of water and electricity, while the farmers in the state are committing suicide.

Karnataka for Auction?

Hence, by organizing the GIM the state government has sold Karnataka, piece by piece. People voted for a government to rule the state, and not sell the state and its resources.The entry of Special Economic Zones will be a major blow to the lands, environment and labour relations of the people of Karnataka. Already Orissa stand as a glaring example for us to understand what is going to happen in the investment friendly states like Karnataka. POSCO and Tatas have been targeted by the activists for their role in police firing and lathi charge on innocent people in Orissa. Over 100 people resisting POSCO in Orissa were injured recently and even their medical care is being denied. Over a dozen people were killed by police firing in Kalinganagar earlier and recently the police killed one more adivasi. We strongly object the entry of such a model of development which sheds human blood instead of human welfare.

If the state of Karnataka Is going ahead with the this kind of a development paradigm at the cost of the life and livelihood of the Dalits , Adivasis and the Farmers , the Global investors meet raises a set of questions like what will be social, environmental, economic and political costs involved in this entire process? Why is this whole process being rushed through without public consultations and political consultations ?

In order to achieve overall inclusive development, we need to look at it from the perspective of increasing the purchasing power of the people of the state. However, these foreign direct investments will actually decrease the purchasing power of the people. Keeping this in mind, people from across the country need to oppose this form of investor led development. We demand that the state works towards a development approach which is based on strengthening local economic systems. The GIM however does not do anything to strengthen the local economic system or the people and hence the government should immediately stop this mode of development. It is the responsibility of all of us, the people of Karnataka to force the government to abandon this destructive mode of development. We appeal to all citizens of Karnataka to join this resistance for a people friendly and environment friendly development policy. Ultimately, it is matter of our jobs, our money, our natural resources and our lives.

 

COMMENTS

Who is "we"

silkboard - 2 June, 2010 - 09:10

Some good points, but wanted to ask who is "we" here Vinay. Is this a note from Mr Leo Saldhana?

I do read similar objections from political parties as well. Was wondering if this note is from one of them?

re : who is we?

vinay_sreenivasa - 2 June, 2010 - 09:22

sorry. forgot to add that bit. this is a statement endorsed by various groups - pedestrain pictures, peoples union for civil liberties karnataka, open space, peoples solidarity concerns bangalore etc. and no, this is not from leo saldhana :-)

the laims of GIM are getting absurder by the day . yesterday murugesh nirani, industries minitser said we'll get 5 lkah crore investment. then katta said we'll get 10 lakh jobs!

ridiculous if you ask me!

 

Have they (the

n - 2 June, 2010 - 14:28

Have they (the groups) considered indirect contribution to the economy? An approximate 1:3 (1 directly employed indirectly employs 3) may be a good starting point. Unfortunately, in the current world, industries generate more income (read money) than agriculture, and services generate more income than manufacturing. Also, the knowledge gained in different areas cannot be ignored. A predominently agri-based economy would leave us "behind" scientifically in the long run.

Pinch of salt (updated)

silkboard - 2 June, 2010 - 17:48

The rhetorical note that Vinay has posted makes a good reading. "Auctioning the state", "what are we losing" etc all sounds fine in speeches. "False promises" abound in all areas, whether its GIM or anything else.

Honestly, I would prefer public statements that would show alternative plans on generating employment. Enough of Tata Posco Nano Singur etc. Need solutions, not constant reminders. Educate us on how to get this right, and not on masala worthy news items on how the state crushed the poor or the rich robbed the state.

Having said all of this, few points up there are valid. I am bothered as much on how the environmental clearances and needed resources (water, power) would come fast for all these "investment proposals". We should all be.

But not via notes like this, where the authors seem to be nitpicking on fancy statements attributed to the ministers via media But not their fault. By not providing clear information to public on projects and the mechanism for "clearing " them, more and more "we" are being encouraged to come out with notes like this.

My Assessment of the Statement!!

Srivatsava - 2 June, 2010 - 17:22

SB,

You cant understand "we" easily!! Its a complex world of the same individuals in different 'banners'!! The decisions/actions of one group will be in line with that of another 'banner'!! Anyway, let me delve into those!! For now I will believe that Mr. Leo Saldhana has nothing to do - with the 'banners' mentioned i mean!!

(Apologise if I have overshot the comment guidelines, but coulndt resist being a bit tongue-in-cheek!!)

Vinay,

At the outset, I must agree that there are some excellent points and statistics in this joint statement. I must also complement you and the authors for basing the statement on some (though not all) govt statistics.

Below is my assessment of the statement posted above

1. The total investment numbers and employment potential should be taken with a pinch (not 'pinch' but 'tonne', some may argue!!) of salt. Also, we are not sure of  the timeline for the proposals to turn into reality. Large investments often take long time to come in.

2. 3 lakh crore of investment and 3 lakh job opportunities translate to a investment of 1crore per job. Its a interesting metric, but

  • If I am to consider minister Murugesh Nirani's statement (in TOI today), the job potential is 35lakh people with about 4 lakh crore of investment. That implies, with the same 1 crore, 10 jobs can be created. Surely, that skews the argument greatly!!
  • Why should we bother about cost of 'private investment' per job? ( 'we' here refers to the citizens of the state and the govt; Not to me or Praja or any other group). If the state can provide a 'cost' figure for the tax consessions, infra consessions, land aquisition costs etc, then we could contrast them against the 'benefits' - the jobs created, qulaity of jobs etc.
  •  
  • The statement clearly points out that the investment per job in the fertiliser industry is about 3 crore and about 5 crore in cement manufacturing. This indicates that the 'chemicals industry' needs to invest large sums of money. But since the investment per job is lesser ( at about 1 crore per job from your assessment and about 10lakh per job from minister Nirani's assessment), there must thousands of other jobs that happen at 'much lower private investment'. Those are surely comparable to 'small & medium industries' figures you have provided (5 lakh per job - not disputing your/author's estimate of 20jobs with a crore of investment). The statement conveniently ingores this reality - the investment/profit/resources/management dynamics of different businesses are simply different.

3. Job losses section - Is the statement making an apples to apples comparison? It suggests that 5 people can be supported by one acre of farmland. Is 'support' the same as 'employment'? 3 lakh jobs can actually support 3 lakh families (govt definition of family is over 5 people, but taking avg family size as 3, your job-loss theory falls flat).

     Also, it is pretty common knowledge that agriculture is very land-intensive. Industries provide lot more 'employment' with a given amount of land, compared to agriculture.. And that holds good irrespective of which industry one is talking about!!

     Now let me assume that one acre of land can support/employ 10 people. The statement estimates 1,50,000 acres to be acquired - a loss of 15 lakh farm jobs. Can these not be accomodated with the 35 lakh jobs to be created?

     Would the groups/banners mentioned above also consider the total income per acre of farm land? A farm labourer makes about 30,000 per annum. Contrast this with a unskilled labourer in the industry!! Who has a better quality of life? I am not bringing in the advantages of the organised sector - PF, insurance etc- into the discussion here.

I can keep writing more on this 'statement', and keep going on and on about agriculture ( the contribuition of agriculture to GDP, the income 'shortcomings' despite the 'tall' claims of the establishment on support prices, the need to move a significant portion of the farm-dependant popoulation way from agriculture, smaller landholdings etc). But, I dont see the need when either of us are not interested in heeding to the other or having some degree of flexibility in our opinions!!

 

There will be lots of negatives in the name of GIM - 'Money changing hands' in the name of ad spends, marketing etc of the event and 'percentage share' for approvals/clearances.

But the positive of the approach taken in this GIM are

  • There is clear focus on the sectors for 'hardselling'. And that it extends beyond the usual IT/BT mantra. Food processing, textiles, tourism , even automibles, are not sectors that make regular news.
  • Geographically, there is a clear focus for non-Bangalore investments. now, thats the way to go for the long run!!

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