REBUILDING KERALA: BUSINESS PERSPECTIVE

BUSINESS ECONOMICS

Dr. Kochurani Joseph drkochurani@gmail.com

REBUILDING KERALA: BUSINESS PERSPECTIVE Business is a market driven phenomenon and when consumption is reduced it will adversely affect the production.

After the devastation caused by incessant rains and flood waters, Kerala is gearing up to clear the debris and rebuild everything that was ravaged by the waters. Now the need of the hour is to rebuild Kerala to meet the challenging needs of the society because the pillars like plantation, tourism and real estate in have been badly affected. Public health facilities too face a crisis as the floods recede. The major risks the State faces include water-borne and mosquitoborne diseases.

We need to rebuild the state wholesale into a New Kerala. There is also the need for more immediate issue of funds. The government has asked industrialists and business organisations to provide whatever help they feel is appropriate to facing a “humanitarian crisis”. Recovery efforts in various areas are about funds, inclusiveness and sustainability.

In the business sector the greatest problem is reduction in consumption. Business is a market driven phenomenon and when consumption is reduced it will adversely affect the production. Eventually when production is less, it means decline in employment and hence the income generation will be hampered.

So to boost up consumption is the immediate need. Follow a ‘‘new deal” plan as formulated by President Roosevelt to revive the economic depression that the American economy

KERALA NEEDS A NEW WORK CULTURE WITH THE STATE AS A CATALYST. GETTING THE FINANCIAL RESOURCES, EQUIPMENT AND MACHINERY IS NOT THE MOST DIFFICULT PART.

during the 1930’s. It was the application of Keynesian Economics, tackling macro problems at micro level. The money will be spent to repair and build roads and bridges, houses and business establishments, creating new jobs for carpenters, electricians, and engineers, which will trigger a consumption boom. The following areas need to be focussed for a revival.

Infrastructure The incessant rains and floods led to widespread destruction of property and displacement, the extent of which is yet to unravel fully. An assessment of the destruction, the economic costs and impact of reconstruction is a challenge given the scale and extent of the damages.

Among the various fields of renovation the construction sector is of prime importance. Especially the transport system because all other industries like tourism depends heavily on transport system. Kerala, an economy underpinned by construction, plantations and tourism is likely to face labour shortage owing to the sudden outflow of migrant labourers from the North East. Thousands have lost their jobs in construction, plantations, rice mills, factories and fish processing units. Kerala needs a new work culture with the State as a catalyst. Getting the financial resources, equipment and machinery is not the most difficult part. But getting people with the right skills

could be a challenge. The State needs people with skills to repair, refurbish, rehabilitate as well as build anew.

Tourism Tourism is an important contributor to the State’s economy and is estimated to account for about 10 per cent of the Gross State Domestic Product and provides direct and indirect employment to millions. We hope that tourism will soon

bounce back from the floodrelated damage with the State government giving

priority to this sector. The major challenge faced by the tourism sector is damage suffered

by roads connecting tourism destinations. The tourism trade has played a

commendable role in the rescue and rehabilitation operations.

Tourists flocked to the state

not just from various parts of the country but from several overseas locations. Most of the 10.92 lakh overseas tourists who visited Kerala last year came from the US, UK, Saudi Arabia, France and Germany. State needs to bring back tourists quickly even when its primary focus will be on rebuilding. It may also help if the State manages to attract business tourists, particularly get companies to hold their board meetings and off sites for employees.

Banking and finance Kerala’s financial position has been strained over the years. While expenditure towards flood relief and reconstruction would increase, the government income could see some moderation. The state debt too is likely to increase and may have to resort to increased market borrowings.

From a stock market perspective, investors will be worried about the listed companies having significant exposure to the Kerala. The NonResident Keralites have been reluctant to invest in productive activities. The devastating floods have pulled back the prospects of real estate markets. Architects believe that the demand for water-front properties, favoured by the rich will diminish.

Savings in the banks are reduced, but at the same time institutions like SBI, LIC, are providing loans for reconstruction of houses. Consumer purchase loans need to be boosted to purchase home appliances and office equipments. We expect a jump in the production of these goods.

So a combined effort in the business sector can help Kerala to come out of the tyranny within a short span of time. Remember every journey begins with a single step.

Dr. Kochurani Joseph is the Director of Institute of Public Speaking and Placements in Kochi.