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Small to Medium Expressway to Jobs

Mohan Kumaramangalam, 04/08/2018 09:56 PM

A few days ago I watched the Chief Minister of Tamilnadu on Television tell reporters that there was a large number of young graduates entering the workforce in the state and that the eight lane Salem to Chennai expressway was part of the overall plan to promote new industries and secure jobs for these youngsters. I am glad that the Chief Minister of our state is for once talking about jobs for our youngsters but I think someone forgot to tell him that in Tamilnadu alone 50,000 Small to Medium enterprises had shut down and 5 lakh people had lost in their jobs in in the last year and none of this had anything to do with the lack of infrastructure.

Almost all politicians in Tamilnadu believe that there is straight line relationship between investment in industry and jobs. The bigger the industry, the bigger the investment, the larger the number of direct and indirect jobs generated. They fail to recognize that over 90% of non farm employment is generated by micro, small and medium businesses. These businesses are in apparel, leather, publishing, retail and many more sectors, none of which are capital or natural resource intensive. While automobile factories or steel factories generate 10 to 30 jobs per Crore of investment, apparel factories generate close to 2400 jobs per Crore of investment. These companies don’t demand huge swaths of land, millions of litres of ground water or large lines of credit from our NPA straddled banks to function and prosper. They demand a modicum of working capital credit, which they struggle to raise, small plots of affordable land and a friendly compliance regime that reduced their administrative overhead. The multi layered and onerous GST implementation places severe stress on these companies and under the garb of forcing them to be more organized, pushes them out of business.

I am not saying that better common infrastructure would not help small to medium manufacturers and exporters. However, the bottleneck for them is not the four-lane highway to Chennai but rather the time it takes from Chengalpet where the highway ends to the Chennai port. Once at the port, it takes 4 times as many days to clear customers and the port as it does in China. The time it takes to get to a destination like the east cost of the USA is almost twice what it takes from China or Vietnam, 25% more time than it takes from Colombo and 20% more time than from Bangladesh. Very few large capacity containers come to Indian ports to take cargo so that exports have to transhipped through Colombo which adds travel costs and hence reduced the flexibility for manufacturers. These are the pressing issues for small to medium exporters that the central government should focus on so they can grow and in turn employ young graduates.

The Chief Minister has also repeatedly talked about the savings in Diesel costs for commercial vehicles due to the reduced distance of travel on the eight lane expressway. In a country where the cost of road transport per Km is three times that of China and 2.5 times that of Sri Lanka, this is certainly a welcome result. However, what he leaves out is that while there will be reduction of close to 60 km in distance, there will be an increase in the tolls that one has to pay to get to Chennai. Over 40% of transport costs are determined by the cost of Diesel. If we are indeed concerned about the cost of logistics that affects the competitiveness of our small to medium exporters, maybe the state and center together can offer to waive their VAT and Excise portions on Diesel. That would most certainly provide the capital constrained exporters with some much-needed relief and would be a much better investment of the 10,000 crores that is supposed to be spent on the expressway.

Jack Ma, the founder and CEO of multi Billion dollar Chinese Company Alibaba has often said - small is beautiful and small is powerful. He has said that every country should do all it can to encourage small businesses as they are the engine of growth and employment of a country. It is unfortunate that in Tamilnadu we tend to focus on the large corporates and their investments while ignoring the self developed small to medium business clusters such as the textiles cluster in Tirupur or the motors cluster in Coimbatore. These are the clusters that employ lakhs of people from across Tamilnadu and are today suffering due to the twin impact of demonetization and GST. Mr. Chief Minister, if you truly are concerned about the jobs of our youth, turn your gaze towards these clusters. The Youth of Tamilnadu will thank you.

--- Rangarajan Mohan Kumaramangalam ,
President, Tamilnadu Professionals Congress

Category: jobs

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