Oh Kolkata?: Bengal's Communist lineage scares investors, and Kolkata's a mess; but the state has stepped up its marketing

In June this year, a group of NRIs and other potential investors packed a room at the Marriott Financial Centre in the heart of New York city. Their object of attention, however, wasn't either Chandra Babu Naidu, Chief Minister of Andhra Pradesh, or S.M. Krishna, his counterpart from the neighbouring state of Karnataka. Rather, it was a plump woman with short hair-Uttar Pradesh Chief Minister Mayawati. Unusually, the 47-year-old cm was leading a high-level team from her administration to Europe and the US to attract investment into the state. After a forceful powerpoint presentation titled "Maya's Vision", Mayawati painstakingly assured her audience that her government was stable and that there were no threats to its survival. She spoke too soon. Barely three months later, in August end, not only did her 18-month-old government fall after coalition partner Bharatiya Janata Party (BJP) withdrew support, but Mayawati also quit the state assembly.

FACT SHEET

AREA: 89,000 sq km POPULATION: 80.2 million STATE DOMESTIC PRODUCT: Rs 1,43,411 crore PER CAPITA INCOME: Rs 18,021 ROADS: 57,600 kms POWER: 6,877 MW (installed capacity) MAJOR INDUSTRIES: Engineering, automobiles, chemicals and fertilisers, jute, tea, IT, electrical and electronics

But that's UP at its political best. In the past 10 years, up has had as many ministries, projecting the image of a state in constant turmoil, and hampering private investment. "UP politicians have failed to project a good image of the state," notes Sudhakar Tiwari, a Lucknow-based former senior executive of Indo-Gulf Fertilisers and currently a consultant to the company.

And image, as the survey unequivocally reveals, is perhaps more important than the actual availability of infrastructure, since a poor perception directly affects a state's chances of making it on an investor's shortlist. There are two more states, besides UP, that exemplify this statement: Kerala and West Bengal. In terms of their factual ranks, which are based on hard metrics of infrastructure availability, the three states are among the top 10. West Bengal is at a surprisingly high of six, Kerala at nine, and UP at 10. Excepting Kerala, the states have even moved up in overall rankings-UP from 19 to 15 and West Bengal from 13 to 11. But look at how poor the investor perception is: Kerala comes in at 24, West Bengal just below it, and UP barely two notches above the survey's consistently bottom-most state, Bihar.

Let down by politicos: UP's the biggest of them all, and the most fragile; its Greater Noida, though, is a big draw

The poor perceptual ranks are not without reason, though. Kerala and West Bengal are probably the last two bastions of Communist governments and are notorious for their militant trade unions, although the reality is that few strikes have taken place in these states in the last several years. As for UP, businesses hate the lack of continuity in political leadership. Worse, every time a new cm takes over, he or she feels obligated to overhaul the bureaucracy, too. For businesses chasing approvals and seeking a common face to the government, that's a nightmare. "When the new officers come in, they hardly follow up on the plans of their predecessors. They tend to start afresh," admits a top bureaucrat in UP.

The result: halting investment. In the last three years, UP has received just Rs 6,529 crore in private and foreign direct investment-one of the lowest in the country. Kerala has not managed any private investment worth mentioning (interestingly, Kerala State Industrial Development Corporation and the industries ministry do not have any figures readily available), while West Bengal has done surprisingly better with Rs 12,260 crore. Laments Somnath Chatterjee, Chairman of West Bengal Industrial Development Corporation: "There's such a lot of good work being done here, but only the negatives get highlighted."

FACT SHEET

AREA: 2,94,000 sq km POPULATION: 166 million STATE DOMESTIC PRODUCT: Rs 1,64,630 crore PER CAPITA INCOME: Rs 9,765 ROADS: 1,84,000 kms POWER: 6,159 MW (installed capacity) MAJOR INDUSTRIES: Sugar production, handloom, cotton & woollen textiles, leather & footwear, distilleries, and breweries

Needed: A Makeover

Chatterjee has a point. It's not that the three states are caught in a time warp. UP, for instance, is stepping up on its infrastructure investment. Recently, the state received a $488-million (Rs 2,238 crore) World Bank loan, which it will use to widen and improve some 2,800 kilometres of roads. It is also adding 1,420 mw to the existing capacity in the public sector. Says Vijay Sharma, Principal Secretary (Power): "Industry need not worry about the availability of power." Partly based on that promise, Samsung Electronics India chose to open early this month a $25-million (Rs 114.6 crore) refrigerator manufacturing facility in Noida and not Delhi's other bustling suburb of Gurgaon. Says the company's Director, Ravinder Zutshi: "Noida offers better power and infrastructure facilities than Gurgaon."

The two communist-ruled states are also quietly wooing industry, and if they aren't any more aggressive it's because they have their political planks to protect. They can't be seen as overtly industry-friendly-a reason why West Bengal cm Buddhadeb Bhattacharya is calling the state's disinvestment programme "joint venture transformation". Says the Industries and Commerce Minister, Nirupam Sen, referring to West Bengal's gain in overall ranking: "It's only in 1994 that we embarked on our new industrial policy and it is already bearing fruit." The new priority, according to Sen, is image management and greater marketing push-more roadshows, more business delegations, and more media briefings.

Sleeping Buddha: While Kerala has set up technology parks like this one in Thiruvananthapuram, its pace is unhurried

Meanwhile, Kerala cm A.K. Antony is taking his first steps towards wooing investors. Early this year, the state held a Global Investor Meet in Kochi. It is said to have attracted investment intentions worth Rs 26,000 crore. Memoranda of understanting (MoUs) for 96 projects worth Rs 11,160 crore were signed immediately after the conference, and those included a private airport at Kannur from the Leela Group, an amusement park and ropeway at Thiruvananthapuram, an information technology (it) city in Kochi, and proposals from several it companies such as Microsoft, Infosys, and Tata Consultancy Services. Says C.J. George, Managing Director, Geojit Securities, a leading stock-broking firm based in Kochi: "Even the Marxists (in Kerala) have become investor-friendly."

Yet, how genuinely and effectively the states court investors will determine their future growth. In UP, for instance, Rajive Kumar, an IAS officer and an alumnus of Harvard's Kennedy School of Government, has been given the task of spreading industrialisation evenly through the state. On his part, he's doing the job diligently. Kumar's nondescript office near Mayawati's residence in Mall Avenue has no security guards and no front office, and visitors can walk right through to his room. But just how long Kumar, who was the MD of upsidc before taking over as Secretary (Industrial Development), stays on in the job is anybody's guess.

FACT SHEET

AREA: 38,863 sq km POPULATION: 31.8 million STATE DOMESTIC PRODUCT: Rs 69,602 crore (2001-02 at current prices) PER CAPITA INCOME: Rs 21,310 ROADS: 1,37,678 kms POWER: 2,600 MW (installed capacity) MAJOR INDUSTRIES: Tourism, IT, rubber, healthcare, mineral-based industries

In other states like West Bengal, the problem maybe of pace. While some industry captains like Harshvardhan Neotia of Ambuja Cement feel that serious investors would look at fundamentals and not perception, others like RPG Enterprises' Vice Chairman Sanjiv Goenka agree that perception is important. "Kolkata as the state capital has to be showcased as a thriving metropolis; the city should be illuminated, roads improved, and hawkers and other squatters removed," says Goenka, who otherwise is a die-hard Kolkatan.

Similarly, while Kerala has defanged its infamous "headload" workers (read manual coolies) through a legislation six months ago, there's very little local entrepreneurship. Says Nissim Mannathukkaren, a researcher on Kerala at Canada's Queen's University: "The blame does not lie on labourers alone. There are also not enough risk-taking entrepreneurs." Agrees Rajeev Chandrasekhar, whose BPL is one of the rare successful Malayalee-founded groups: "Local entrepreneurship never really took off."

Maybe for that reason alone Kerala-and the others-should learn to market their states harder.