Should IT companies get more concessions? Thursday, Nov 13 2008

Technopark in Trivandrum

The IT companies in the State has demanded concessions in rentals on space leased from the Government at Technopark and other facilities and reduction of power tariffs to face the impending impact of global economic crisis. The Chief Minister V. S. Achuthanandan has responded to them positively.

The IT companies are demanding their pound of flesh for Mr. Achuthanandan’s crusade for the employees of the IT industry to succeed. If the industry is to retain excess workforce, the Government should pay for it. The deal is just not worth it.

The IT industry is already receiving many concessions. There were tax waivers and investment subsidies (up to 40 per cent). The Technopark in Trivandrum has cost the Government about 100 crores (excluding the recently added facilities). It is also spending considerable sums for the maintenance of infrastructure. Considering the real estates costs and administrative expenses, the rentals being collected from the industry is low.

All businesses face ups and downs. There is no reason why Government should be there in advance to fend off troughs. When the farmers faced trouble because of globalisation, the government was late in stepping in. The IT units, which reaped the benefits of globalizations, are not in a worse position than the farmers are. (Now that the rubber prices are coming down, will the government step in to support their high income-levels?)

Rather the government should turn this into an opportunity. If the companies are going jobless, the government should hire them for its programmes for e-governance and IT infrastructure development. Naturally, that would and should come cheaper and the profitability of IT companies would suffer. However, that should be taken as inevitable when the times are bad. After all, they were the ones who made the big money until now. Now let them contribute to the State’s development. Give them work, but no monetary concessions.

The Government should not directly force them to retain excess staff. However, it could restrain them from over-working its so-called executives (software engineers). If a stop were put 18-hour working days, the companies would need more employees.

Let us also look at what would happen if the lease rentals are lowered. They would remain static for years to come. There would always a reason for not increasing it.

Take the instance of the plantation industry. The lease rentals, fixed before independence, remain at Rs. 5 a hectare or lower. Though the Assembly passed a legislation to increase it 28 years ago, it remains unimplemented. Corruption is alleged to be the reason. The revision proposed in the law was linked to profitability, and that provision attracted the bitterest opposition from the industry!

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Ommen Chandy’s disappointment or Smart City Wednesday, Oct 8 2008

Kerala Opposition Leader Oommen Chandy

Opposition Leader of Kerala Oommen Chandy has once again raised allegations directed against Chief Minister V. S. Achuthanandan that undue concessions had been made for the Smart City Project, jointly promoted by Dubai based TECOM Investments and the Government. This time, he is saying that the Smart City had been given higher concessions than those provided for in the SEZ policy adopted by the Government last week.

Mr. Chandy’s disappointment is understandable. He could not ink his dream project in 2006 because of protests from Achuthanandan who was then the Opposition Leader. When Mr. Achuthanandan became the Chief Minister, he could strike a deal which was far better than one contemplated by the Chandy Government.

Just to cite a few examples, the Government did not have to part with the Infopark or guarantee exclusivity to the Smart City in development IT infrastructure in Ernakulam district. Higher share was also specified for the Government in the company implementing the project.

Ever since Mr. Achuthanandan signed the deal, Mr. Chandy was trying to belittle Mr. Achuthanandan’s achievement by repeatedly making allegations. Thus he is hoping that he could divert public attention from his failure to strike a better deal and allegations that the UDF leaders were bargaining for kickbacks.

This is not to say that Mr. Achuthanandan had not conceded any benefits to the Smart City project. In fact, the promoters stand to benefit in terms of land prices and other concessions. However, one cannot say for sure that Mr. Achuthanandan could have struck a better deal under the given circumstances.

Some people in the Government opposed to Mr. Achuthanandan is now trying to create confusion that the terms of the new SEZ policy applied to Smart City. Even if the policy statement says so, it cannot override the terms of the agreement signed by the Government. Otherwise, the Government has to do so through legislation. Such a retrospective application of legislation to nullify benefits promised to entrepreneurs, that too within a short period, will send the wrong signals to investors.

There is indeed the need to bring down concessions being offered to the industry under the Information Technology policy. The concessions are often higher than what the State would get in return, especially when tax breaks are offered in addition to subsidy. So, the SEZ policy is a step in the right direction.

Smart City Project area

Related:

Government’s arguements

Oomen Chandy’s arguments

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Kerala fails to tap free bandwidth Thursday, Mar 27 2008

IT@School of Kerala State  Government (India) is hoping to enter the Guinness Book of Records for holding the largest practical examination in information technology using free software. Around 4.5 lakh students from the high schools, following the State syllabus in Kerala, took the school final exams in what is described as the largest deployment of free software for practical examinations.

The deployment covered 2486 examination centers in the State besides some in Lakshadweep and Gulf countries (where Malayalees take the test). The application software used was free software on GNU/Linux platform. There was even a version for blind students.

However, many of the schools are yet to have Internet connections. The Government has devised a scheme for extending connections to the schools. The rates will be Rs. 1000 for Government schools, Rs. 4000 for aided schools and Rs. 5000 for recognised schools for just for three GB. Additional usage may have to be paid for at 80 paise per MB.

This is fairly high price to pay considering the volume being purchased by the Government for the scheme though in retail packages from BSNL. It could have purchased bandwidth in bulk and distributed it to schools using the State-wide infrastructure under development as part of the Government’s egovernance programmes.

The bandwidth should have come to the State free if the Government would not have bungled agreements with service providers. As per Government policy, those using public roads to lay fibre optic cables were to provide free bandwidth to the State government, for use by its offices and schools, in return for the right of way. The agreements in this regard were signed with several companies seven years ago.

However, the government did not make use of the bandwidth in full for several years. The connections never reached the schools as the agreement was not very specific about that. One has to see whether auditors will catch up with those responsible for heavy losses to the government.

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Allegations and counter allegations Friday, Jan 25 2008

It has become a routine for the ruling Left Democratic Front and Opposition United Democratic Front to face allegations with counter allegations. This suggests that both are involved in corrupt deals.

The latest instance is the allegations relating to the land deal for the Cyber City in Kochi. As the Opposition took up the issue, the Cabinet immediately decided on a CBI probe into the contracts for the modernisation of Kerala Minerals and Metals Limited during the UDF rule. The Opposition Leader Oommen Chandy’s immediate reaction was to seek a probe into the contract for the Titanium Sponge plant entered into by the LDF Government. He also wanted a judicial probe into the Cyber City deal.

Keralites know that judicial probes had ever led to punishment of any politician. It serves just to press for resignation of Ministers if a judicial probe is ordered against them and in fueling political debates. The fact that the politicians are able to get away with allegations and counter allegations points to failure of our institutions. This situation needed to be corrected if democracy is to survive.

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