The Hindu Business Line : Stuck, for now

JUST about two months ago, landowners in Kakkanadu, an upcoming suburb of Kochi, thought prices of their properties were about to skyrocket. Real estate activities in and around the place boomed.

The reason: the State Government's announcement that the Smart City project, an infrastructure facility for information technology (IT) companies, would come up at Kakkanadu. Investment in the area was the wisest thing to do then.

But things have changed dramatically since.

The Smart City, to be set up by Dubai Internet City (DIC), the largest IT infrastructure provider in West Asia, has not only failed to take off but has also become one of the most controversial projects in the State in recent times.

The Smart City has been envisaged as a self-sufficient infrastructure facility for IT and business process outsourcing (BPO) companies. It is to come up 389 acres, at an investment of Rs 1,500 crore.

The project has been in the pipeline for a long time, but the Government formally announced the decision to set it up only on April 28 this year. An in-principle agreement was reached between the Government and representatives of DIC. At least 33,000 jobs would be created by the Smart City.

For a State grappling with a rising unemployment problem, any project that promises to generate such opportunities ought to, ideally, have had a red carpet welcome.

On the contrary, Smart City is at the centre of a storm in Kerala today with the opposition Left Democratic Front (LDF) crying foul over the project, saying it lacks transparency.

A closer look at the project would suggest that the Left's opposition is not entirely without reason. The main objection to the Smart City is the way in which the Government plans to set it up. First, the Government has to give 100 acres of land free of cost to DIC; second, the existing Infopark, where companies such as Wipro and TCS are setting up their development centres and many others are already functioning, will be transferred to the Smart City.

The Government argues that the 100 acres of land is being given free of cost as per the State's existing rules, which permit offering land in lieu of employment generation.

However, it is the decision to transfer Infopark to the Smart City that is the bone of contention now.

The Government's argument that the State would get a 9 per cent stake in the project in lieu of Infopark has not been accepted by the Opposition.

The question being raised is: Should the Government transfer an already established facility such as Infopark to DIC?

When Infopark itself has the potential to create thousands of jobs on its own, why should it be given to DIC on a platter? (Some media reports said the State on its own offered Infopark even before DIC made any such demand). The conceptual price of Rs 109 crore put on Infopark, set up in 100 acres, is rather low.

Also, it is being argued that the 9 per cent stake that the State would get will not entitle it to a place on the Board of Directors of the Smart City.

It seems that the State Government, wanting to showcase a major infrastructure project, has hurried through the deal. Most of the problems have cropped up because the Government failed to clarify the doubts raised by the Opposition. Call it bad public relations.

Instead of announcing the project and then letting the media leak details - much of it could be half-baked information released by vested interests - the Government ought to have published all the clauses of the memorandum of understanding.

All it takes is putting the information on Smart City in a Web site for the public to debate on it. Somehow, it did not happen.

The way in which the Government has handled the project so far has made people suspicious.

Many think Smart City is just another real estate deal and the Government is playing into the hands of DIC. The apparent benefits of creating such a large investment in the State have not gone down well.

It's time the State Government took a more transparent route and cleared doubts regarding the project. Else, the Smart City could well be yet another grand dream that remains on paper.

Picture by K. Ananthan

vipin@thehindu.co.in

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