Kerala's crisis? Why?

Kerala’s notoriety of excessive Greed

Kerala does not have an economy of its own. Nor is there, any favourable industrial climate which attracts investment. Its insipid industrial Policy does not generate confidence amongst investors, while money order economy places lot of money in the hands of families who have workman abroad. Recently, Kerala based economists and broadcasters wanted Rupee devaluation to continue so that the remittances in foreign exchange from abroad will lead to more exchange rates when converted to Rupee. These experts even asked the Gulf employed Malayalees to raise loans and send the money to Kerala to beget higher returns.  Kerala’s thriving economy depends on the sweat of the brow of these hapless people who are all over the Middle East eking out their livelihood. Kerala does not labour, hence migration from Bengal, Bihar, Orissa, Tamilnadu, Andhra Pradesh, etc. This is cheap labour for you.

          How can you become an entrepreneur without a base? Kerala’s highly literate population can easily be fooled. That is Kerala model for you. Like the Dengi dengue, fly by night blade companies minted money from this highly literate people. These blade companies looted the public money, and left without a trace. No lessons were learnt from the fearsome collapse of the money lending blade companies which one after another failed in the 90s because, they could not afford to pay interest. Even top level companies which floated money lending companies fled, pulled their shutters and the middle class, pensioners lost a tidy Rs 10,000 Cr or more. There were many companies which promised plantation cum animal farms. There were multi level marketing firms, and money chain companies. Now, the green initiative companies have taken over. Why do all these companies flourish? Because they offer higher returns of around 30-50% against Bank’s 8.5% for a five year deposit.  It is because, people have corpus money, wealth, which they want to invest. There may be black money, too. Gold selling companies had variety of schemes; they offered gold by paying in installments.

          Take Kerala’s dubious business marketing strategies of some of the successful firm which failed to deliver after amassing wealth. Total 4 u scam consumed Rs 200 Cr with alleged cheating of investors of around 700 investors. Tycoon Money fooled  24,000 investors who lost Rs 410 Cr.Nans Excel, multinational marketing Company deprived 250 investors of a near Rs 500 Cr. Apple a Day, a construction company is alleged to have collected Rs 100 Cr by promising housing to around 700 people. All the cheated, belonged to the middle class. Why are they gullible? Greed?

          Today, if you want to make a fast buck, go for Green Energy initiatives. This is what Team Solar did. People are said to have been cheated to the tune of Rs 35 lakhs and Rs 40 lakhs. All these monies were collected by the Team Solar management in Cash.

          Literate Kerala, park their funds in dubious paper companies. People who have large liquid cash, which they want to multiply in good time select these companies unaware of the dangers. They lose lot of cash but never complain, because they have to revel the source of hard cash which they had.

          RBI has come out with stringent Gold loan policy. This has helped the private banker to double/treble his business. They seek 12-15% interest per annum. Before the granting of loan, they deduct 3-5% as service charges from the loan amount. The craze for gold goes on, inspite of the cost of glittering gold which no longer glitters.  In spite of higher Tariff value imposed by Customs, there are no diminishing imports. Why? In spite of higher prices, there is demand for gold. This is simple Economics, my dear Watson (PC).

          These incidents have brought bad name to the state; no genuine investor wants to come to Kerala to set up an industry. Entrepreneurial cult is conspicuous by its absence. With global recession, there is lot of investors including NRIs looking around. Nobody has in their list Kerala as a destination because of state’s poor entrepreneurial heritage. Money order economy may boost consumption because of excessive spending, which will post a higher State Domestic product growth but will not create permanent assets which will recycle investment and spending. No new jobs will be created because of absence of industrialization. The colleges who spun out more graduates add to the unemployment picture of the state. They desert the state to greener pastures.

          Kerala’s poor political leadership has been responsible for the mess it finds itself in. It needs people who will avoid chaos in the investment front