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    CURRENT ISSUE MARCH 19, 2007
 
   STATES: KERALA
 
Playing The Smart Card

Once a bitter opponent of the Smart City project, the LDF Government is now determined to implement it on its own terms and has got the Dubai-based backers to agree to most of its conditions
 
  PICTURE SPEAK

INDUSTRIOUS: Achuthanandan has suddenly turned investment-friendly

It is a project that the Left Democratic Front (LDF), when in the Opposition in 2003, had termed "the biggest real estate racket in the state". V.S. Achuthanandan, then the leader of the Opposition, had even threatened that if and when the LDF came to power, he would "put all the backers of the project behind bars".

Now the chief minister of Kerala, Achuthanandan and his party have come a long way since then. The ruling CPI(M), once the most bitter opponent of the Rs 2,200-crore Smart City project, is now pursuing it with a zeal that would make any hard-nosed businessman green with envy. Although uncertainty marks the project in Kochi proposed by Dubai's Technology and Media Free Zone Authority (TECOM) even after two-and-a-half years, the LDF Government now appears determined to implement it-on its own terms. It has managed to get TECOM, who are also promoters of the high-tech 246-acre Dubai Internet City, to accept most of its conditions (see box).

But there's still one hitch: TECOM wants ownership of the land at the end of the 25-year lease period while the Government wants the land for itself. Before returning to Dubai last week, TECOM representatives said, "We have accepted all the other conditions of the Government. But if the ownership of land is not with the company, it would be difficult to attract top international majors to invest in the project." They added that the Government should take a decision within a month.

  PICTURE SPEAK

U-TURN: The Left's volte face on the ADB loan has angered cadres

"They opposed it then, now they just want to grab all the credit."
OOMMEN CHANDY, FORMER CHIEF MINISTER

For the LDF Government, the Smart City project is an absolute necessity in order to shed its image of being anti-investment. While leading the Opposition, Achuthanandan had specifically objected to three clauses that the then Congress-led government had included in the MoU: the government's offer to charge only a nominal price of Re 1 per acre for 100 acres being handed over to the project; handing over the Rs 100-crore Infopark (an existing infrastructure facility in the heart of the land proposed to TECOM) and the marginal share of 9 per cent for the state government in the new Smart City company. Disregarding all opposition, the UDF-led government was on the verge of signing the deal when polls were announced.

But the new party which took over power sprang a surprise by announcing that they would go ahead with the Smart City project. "We are not going to implement the project under UDF's conditions but on our own," said Achuthanandan. He insists that the project is a golden jubilee gift for Kerala, which celebrates the 50th year of its formation this year. What raised the chief minister's stock further was his success in making TECOM accept a new set of conditions which excluded all those the LDF had opposed in the MoU prepared by the UDF. The price of land has been raised, Infopark is not being handed over, the government's share would be 16 per cent, to be raised to 26 per cent after five years.

TURNAROUND
2005: UDF government proposes Smart City, LDF opposes
2005-06: Opposition leader Achuthanandan slams project, promises to scrap it when LDF comes to power
2006: UDF prepares MoU, refrains from inking it as polls are announced; Achuthanandan roots for Smart City
SEPT 2006-MARCH 2007: TECOM holds talks with the state Government
MARCH 2007: TECOM accepts all except one condition put forward by the state Government, wants ownership of land to attract investors

The only spanner in the works is the land ownership clause. The CPI(M) will discuss this issue soon, although its coalition partner, the CPI, sees nothing wrong in accepting tecom's demand. "The land is not being handed over to a private player but to a company in which the state government has a 26 per cent stake. Why worry?" asks K.E. Ismail, assistant secretary, CPI.

Expectedly, the LDF Government's near-success has left the UDF and former chief minister Oommen Chandy, the initiator of the project, red faced. However, they are putting up a brave front and are accusing the LDF of hypocrisy. "While in the Opposition, they opposed it tooth and nail. Now they are in the Government and are wooing Smart City. They don't want any other player so that they can bring in investors and grab all the credit," says Chandy. He also points out LDF's decision to avail Asian Development Bank's Rs 1,400-crore loan, which they had opposed while in the Opposition and which they are rooting for now. But the LDF retorts that they opposed it on the grounds that it was against the interests of the state. "In the cover of Smart City, the UDF was trying to help sell the state's precious resources for a song," says state Finance Minister Thomas Isaac.

What has made TECOM return to the state in spite of changed governments and conditions is also worth noting. "The main reason is that Kochi is less crowded and cheaper than Bangalore, Hyderabad or Chennai, the most favoured it destinations," an it mission official said. "Kochi can afford cost-effective bandwidth since it has a 15 GBPS international communication gateway; it is the only landing point in the country for three international submarine optic fibre cable systems."

NASSCOM ranks Kochi as India's number two destination for it and ITEs industry. No wonder the state Government made TECOM see reason and forced it to step down. The Government says it has 12 offers from top global companies to set up parks similar to Smart City. "We want TECOM to set up the project. But if they insist on difficult conditions, we'll have no option but go for other offers," said a top government official.

It's time investment takes off in industry-starved Kerala which earns just about Rs 500 crore annually from it exports, a speck compared to the huge windfall made by its neighbours. Maybe the Smart City project will morph into the biggest real estate "package" in the state.

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Index

Untitled Document
CURRENT ISSUE
MARCH 19, 2007
IN THIS ISSUE
  COVER STORY
ANYBODY'S GAME
  OTHER STORIES
 

Aussie Defeats Signal Hope

Bring on the Thinking Caps

The Cup's Comeback Story

"All We Need Is Momentum"

Stretching The Boundaries

Keeping Track of Local Flavours

A Cup Full of Cash

Why He May Get Away Again

End Of Ravelry

Wrestler On The Mat

Giga Bite Valley

Making Civic Sense

Playing The Smart Card

Not Made In India

New Truths About The Heart

Breaking The Mould

Who Are We?

The Runaway Rebel

First Sip From The Cup

Estates Of The State

The Unsuitable Boys

Will the steps taken by the Government to check inflation work?
 





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