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Home >Home-page >Opinion | Kerala’s lessons on balancing growth and environment

Kerala is no stranger to torrential rain. The first crash of the monsoon is expected halfway through the Malayali month of Edavam, 1 June by the Gregorian calendar. For the next four months, the rain or the threat of rain is ever present. A wide-brimmed black umbrella is among the staple durable goods owned even by poor households. In marketing terms, Kerala must be the only state where the market for umbrellas is saturated, with purchases only coming from replacement demand and maybe from new migrants coming in to help out with agricultural operations.

Traditionally, the excess water in catchment areas went through flow zones smoothly into the ocean. The floods this year are attributed by experts to encroachments in those water flow channels. Poor dam management may have contributed, but if the flow zones had not been blocked, the damage would not have been so catastrophic. It is the same old story of what precipitated the floods in Mumbai and Chennai, coastal cities that had channels for drainage of excess monsoon rain into the sea. The difference was that Mumbai and Chennai are both urban areas with high land value, where commercial interests could pay their way out of any building bans. In Kerala, the encroachments have happened in forested areas, presumably tourist homes with sufficient profit prospects for developers to similarly pay their way.

As a nation, we have no coherent policy on environmental protection. On the one hand, the environment has been systematically disprotected, with developers buying their way into approval of projects with predictably damaging consequences. On the other hand, the constant lament of entrepreneurs attracted by Make in India and other such growth initiatives is that environmental limits are never made clear, officials never respond to queries, and the resulting delays to the start of commercial operations make for defaults on bank loans. When a clear environmental protocol is developed for a region, its very clarity will ensure that approval can be either granted, or denied, within a short period. Delay serves no one, neither the applicant for approval, nor the people ostensibly being protected.

For such a protocol to be defined, there has to be a lobby clamouring for it. The human cost of lives lost and livelihood-enabling infrastructure destroyed in a disaster like the Kerala floods will not particularly affect developers impervious to those things. What does need to be brought home to them is the huge damage to their own commercial interests from a calamity on the scale just witnessed, which may have been dismissed by them as a low probability event. Insurance companies facing huge payouts, banks facing defaults on loans, all need to be brought on board for a comprehensive environmental framework to get the support it needs. going forward.

The security aspects of projects also need to be spelled out in that framework. Some years ago, a hotel zone named Aerocity adjoining the Delhi airport had been approved, and the hotels constructed before they were subjected to security clearance. The new approval required that the window panes be ripped out and replaced with bullet-proof glass. The investor sees such a change not as a late bid to enhance security, but as a ploy to place power in the hands of those in charge of enforcing it.

Corporate entities generally function in an ethics-free manner. They believe in staying within the law by and large, but if the laws are lax in any part of the world, they have no problems exploiting that laxity. Corporate developers cannot be expected to have a social conscience over and above what the country’s own ruling powers have. In his recent powerful book titled Winners Take All: The Elite Charade Of Changing The World, Anand Giridharadas skewers the corporate elite, who do not do the right thing within their business models, but will then pretend to save the world through philanthropy. Giridharadas sees market pressure toward socially insensitive business models coming from chief executive officers (CEOs) looking to enhance their paychecks. It probably stems as much from assertive shareholders demanding higher value.

Corporate business caters to products or services for which there is market demand. The most difficult ethical issues arise when that market demand itself is for substances that do damage to the people demanding them. Curbs on these can only be imposed by governments concerned about their people. American tobacco companies moved aggressively into the Chinese mainland when the US market started closing in on them, opening parlours where tobacco products were offered free and paving the way for the current high rate of consumption in China. The government of the People’s Republic did not do a very good job of protecting its people in that particular instance.

There must be some exceptions in the corporate class condemned by Giridharadas, and I believe Indra Nooyi, who has just announced her resignation from the post of CEO of Pepsico, was one of them. She was appointed to the post in 2006 to oversee expansion of the global footprint of the company. She was ever mindful that the company purveyed a soda which, notwithstanding its attractions, was bad for the health. Many school and college cafeterias in the US have banned carbonated drinks outright, especially during the Barack Obama administration drive against child obesity. Even in India, soda beverages have come a long way from the days when Coca Cola and Pepsi were the principal sponsors of cricket matches, and college canteens were colonized by one or the other of the two, proudly advertising their allegiance. At the Wagah border just outside Amritsar, there is an evening ceremony when soldiers foot-stamp towards the arch marking the Indian side of the border, to close the gates and ceremonially lower the flag to mark the end of the day. I was astonished on a tourist visit in 1995 to see them marching towards an arch with Pepsi signs plastered all over it.

Pepsico’s strategic response to changed attitudes was to acquire health foods and diversify into the snacks market, like Lay’s potato chips (not a health food, but, perhaps, better than soda). Under Nooyi’s leadership, the move into snacks acquired a social responsibility crunch. Lay’s partnered India’s bid to raise farmer incomes by forging exclusive buybacks with potato farmers, many of them small and marginal, feeding into three manufacturing locations—in Howrah, Pune, and Sangrur. The farmers get the full package from weather risk insurance to quality inputs, extension and credit.

All cola companies everywhere have to use local water, for what is by volume the most important ingredient going into the beverage. Coca Cola has suffered the biggest dent in its image for overuse of local water, and the distress this caused in localities (in Kerala, for example) where the beverage was manufactured. In 2009, Pepsico achieved “positive water balance" in its Indian operations by recharging more water than it used in its bottling operations. Since then, this feat has been repeated in its other global manufacturing locations.

Some of Nooyi’s initiatives may well be reversed under her successor, who may re-franchise bottling and pay less heed to the company’s water conservation record. If we in India want our water to be used in a sustainable manner, prevent industrial poisoning of our air, soil or water, or preserve water flow channels, we have to enact and enforce our laws ourselves. The onus is on us.

Back to the Kerala disaster, the critical issue now is the funding needed for rehabilitation. The decision to reject the offer of aid from United Arab Emirates (UAE) would have carried legitimacy in a federal system only if it had been jointly taken by the Centre and the government of Kerala. External financial aid brings in dollars for expenditure, which will entirely be on non-tradables—nationally-sourced construction materials and wages. The immediate impact, therefore, will be dollar conversion into rupees, surely welcome at a time when the rupee is falling. The rupee funds become immediately available for a quick start to local expenditures, unlike fiscal provisions from either the Centre or the state, which carry process delays. Immediate repair of damaged roads and bridges will generate jobs and local purchasing power, and be good for morale. It will generate demand upstream for cement and steel, at a time when Indian manufacturing is still at the beginnings of a revival and is facing a difficult global market. The alternative of fiscal funding from the Centre or the states will either build up public debt if deficit funded, or come from expenditure re-allocation, which makes the sacrifice for rehabilitation capricious in its incidence. Kerala’s decision to launch a new lottery scheme is an innovative idea, but the net yield from it is pegged at a mere 100 crore.

There is a lot of private money pouring in through multiple channels. I hope the Kerala government has a strong overseeing mechanism to ensure that private contributions by well-meaning people are not diverted by unscrupulous elements. Power utilities in other states have flagged off trucks carrying gifts of power cables and meters to Kerala. The nation-wide response has been heart-warming.

The renowned expertise and speed of engineers from the Indian army could be pressed into service. Because of the excellent organization of the civil administration in Kerala under the District Disaster Management Plan (DDMP), there will hopefully not be a repeat of the situation in the aftermath of the Chennai floods, when the army had to stand idly by while confusion reigned in the civilian line of command.

Indira Rajaraman is an economist.

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