The Hindu Business Line : Learn from China and tap NRKs: Unido expert

KERALA has not been able to build on its success in human development to raise income levels. There is an urgent need for a critical scrutiny of the State's economic policies, particularly on private and foreign investments and incentives, according to a Unido expert.

Foreign investment from non-resident Keralites (NRKs) needs to be encouraged to build up the industrial and infrastructural base of the State, Dr George B. Assaf, Unido Representative and Regional Director for South Asia, said in his lecture on `Industrial Clusters: Opportunities and Constraints' at a function organised by Institute of Small Enterprises and Development (ISED) here recently. The State needs to take a cue from the success of China by learning how to tap non-resident investment, he pointed out.

"For this, more suitable strategies and innovative mechanisms need to be devised to encourage foreign investment through NRKs, who are doing business outside Kerala to establish businesses in their home State".

According to Dr Assaf, launching of a Kerala Business Portal and Web site is an exciting instrument in attracting FDI. But, attracting investments is a highly competitive international activity with increasing competition among Indian States themselves, he said.

"Kerala has fundamentally to answer the question often posed implicitly by foreign investors: Why Kerala? And why not Andhra Pradesh, Gujarat or Karnataka?" Even if a satisfactory answer is given, investors need to be sure that Kerala really does want private investment, Dr Assaf said.

"In this regard, Kerala has a lot to do to shake off its reputation and ideological baggage. It should be rightly proud of its achievements on workers' rights, but not push this so far as to deter workers getting jobs or employers not wanting to retain them." It needs to tailor its educational system better to the needs of a market-oriented economy.

The State could achieve this by realising the very positive role it could play through the Panchayati Raj institutions and local government and especially through the promotion of small and medium enterprises in a cluster-based approach.

However, "it needs to ensure that projects, which have remained on paper for some time, are actually implemented, particularly in the private sector," he added.

According to Mr Assaf, the State needs to do much more to achieve sustained economic growth and development. In particular, it needs to take a comprehensive view of its situation and adopt a multi-pronged strategy drawing on the lessons of international experience.

"In short, Kerala may need to re-examine its development paradigm," he said. Despite its undoubted achievements in the social sphere, development in Kerala has been hampered by retarded industrial sector growth and lack of drive and innovation in the micro and small-scale industry sector.