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Business News/ News / India/  Inside India’s first corporate panchayat

Inside India’s first corporate panchayat

A village in Kerala rejected all political parties and handed over control to a private firm. Now, there is a pushback

The supermarket in the village sells staples at 20-60% markdown from the retail price (Photo: Melton John/Mint)Premium
The supermarket in the village sells staples at 20-60% markdown from the retail price (Photo: Melton John/Mint)

Outside a giant, sprawling supermarket on the eastern suburbs of Kochi in Kerala, a woman stops by briefly to say that she saw a glimpse of heaven inside. A few moments later, a pastor at a local church, Eldo Varghese, steps out of the same building singing praises to God, while sliding into his car with bags full of groceries. “It’s like a movie in there," he cheered.

Houses for the poor built at a cost of  <span class='webrupee'>₹</span>10 lakh each
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Houses for the poor built at a cost of 10 lakh each (Photo: Melton John/Mint)

The peculiar happiness exhibited by this phalanx of shoppers has an unusual backstory. The supermarket is located in a countryside village, called Kizhakkambalam, which has been under the grip of a silent revolution over the past five years. The dusty common corners have turned into neat wide roads lined by several freshly painted, new houses, as a race is on to turn it into a world-class—and the country’s No. 1—village by 2020.

According to some, however, the village is racing towards the 21st-century by back-pedalling towards the 19th century. It has effectively renounced some facets of democracy in order to be ruled by a billionaire businessman and the corporate company which he heads.

There are benefits, of course. The new houses for the poor, for example, built at a cost of roughly 10 lakh is a better deal than anything on offer from either a state or central government scheme at the moment.

The supermarkets are another symbol. At a time when prices of household items are skyrocketing in other parts of the country, the woman, quoted above, who described the outlet as “heaven", managed to purchase onions, coconut, oil, fish and chicken at an incredible 60% markdown from the retail price.

Behind these deep discounts is one man, Sabu Jacob.

One of the few Malayali businessmen who regularly finds a place in the annual Hurun list of billionaires, Jacob’s father founded Kitex Garments Ltd, and its associated Anna Group, with just eight employees in a small factory in Kizhakkambalam.

But it has now grown into an enterprise with an annual turnover of 1,000 crore, making it one of the world’s largest infant wear producers. The company also supplies to global brands such as Walmart and Amazon.

In 2013, after marshalling together a set of welfare schemes, Kitex rolled out a welfare arm fully financed by its corporate social responsibility funds. It was called “Twenty20", symbolizing the aspiration to turn the village into a world-class model by 2020. In 2015, the outfit captured power in elections to the local administrative unit, Kizhakkambalam Grama Panchayat.

Since then, Kitex has gained a virtual monopoly over every aspect of public life in the village—from laying roads to directing the electorate to vote for a particular party in parliamentary elections. Its high form of populism is driving out politics from governance... that is, every strain of politics except that of its founder, Sabu Jacob, who is known simply as “Sir" or “Company Chairman" or the man who built the supermarket.

In the corporate utopia he runs, laws are malleable, personal autonomy is, at times, a luxury, and traditional political parties are often compared to polluted rivers. Yet, many inhabitants still love the model, since there are giveaways and goodies, like the heavy discounts at the store.

But in 2020, the radical experiment is about to face its first real test. Panchayat elections are around the corner. And there are at least a few unhappy murmurs in the village about how many of the well-paved, new public roads have come up in the vicinity of Jacob’s company. The discounted supermarket was also shut for six months, say residents, after the village en masse voted against Jacob’s wishes in last year’s parliamentary elections.

The year in which Kizhakkambalam was supposed to achieve its milestone also got off to a rough start, when the panchayat’s president K.V. Jacob quit on New Year’s Day.

“He (Sabu Jacob) has become a dictator," said K.V. Jacob, who was one of the most public faces behind the Twenty20 movement. “The governance here is in violation of all established practices of administration in a democratic system," he told reporters while quitting on 1 January.

“Twenty20," he added, “will end in 2020."

At a time when many of India’s big cities are placing their bets of public-private partnership models in governance, the chronicle of this unfolding rural drama raises many puzzling questions. How much of governance can be privatized? What are the costs and benefits? And what happens when a private company uses democratic means to get its own members elected to public office?


Kizhakkambalam used to be a microcosm of Kerala’s politics. Every five years, the communists-led Left Democratic Front and the Congress-led United Democratic Front, the two dominant alliances in the state, returned to power in village elections since the early 1990s.

As a perception began growing about how traditional political parties—with their iron grip over trade unions and the panchayat—were throttling businesses, companies such as Kitex began to look for a workaround.

In the early 2000s, Kitex and its associated Anna Group were hit by 400 days of militant trade union strikes. In the next 10 years, Kitex bounced back from the brink by turning into a fully export-oriented firm and by heavily relying on migrant labourers.

However, in 2013, Sabu Jacob met with intense public protests over allegations of pollution by his firm, which he has since alleged was fuelled by a bitter rival within the family, who happened to be ruling the panchayat as a local Congress leader.

Unlike the earlier approach of a direct confrontation with the public, Jacob opted for a fresh start.

He set up Twenty20, which promised a set of lofty solutions to some of the village’s most pressing economic, social and environmental problems.

Nearly 80% of the village’s estimated 36,000 residents enrolled as members in the movement, which, at that point, was a non-governmental entity. They were all given an electronic card based on economic status. Several benefits, from free medical treatment to discounted groceries, were delivered based on this categorization, undertaken solely based on the company’s internal surveys.

In 2015, probably for the first time, a corporate house directly entered the electoral arena in India. It was Kitex. Despite a unified opposition, Twenty20’s candidates won 17 of the 19 gram panchayat seats, cornering over 70% of the polled votes.


An eerie silence resounds inside Jacob’s office, which resembles a royal durbar hall. Sitting inside his sprawling factory in Kizhakkambalam, Jacob explains that he started Twenty20 to end what he describes as political and economic oppression of the people.

“They (politicians) are looting the country. Simply, they’re fooling the people. And they are all making money," he said.

On the other hand, he funnels money into public projects. Jacob claims that in 2019 alone, he pumped in 1.5 crore from his personal fortune into Twenty20. That is roughly the same amount a panchayat in Kerala gets from the government annually to fund development.

The spanking new panchayat office
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The spanking new panchayat office (Photo: Melton John/Mint)

While there is no publicly available data which can be used to verify Jacob’s spending claims, it’s hard to deny that things have indeed changed. Baby, an autorickshaw driver, pointed to small things like how government officials now wear badges that say “How may I help you", or that there is a coffee vending machine in the dreary panchayat office.

Twenty20 has also fielded a bevy of paid observers—recent graduates in social work and retired government officers— who keep a close watch on government executives, sometimes from front desks that are placed next to the offices of bureaucrats. The panchayat’s coffee supply is also a gift from the company.

In another village, perhaps, some of these methods may be seen as intrusive or may have raised questions of propriety, or legality. But in Kizhakkambalam, the refrain is: does any of that really matter?

Since Twenty20 assumed power, government officials and elected representatives have been accused on multiple occasion in the press, and by the opposition, of bending rules to suit Kitex. For example, the company and its chairman have been accused of transferring monthly sums to the elected members of the panchayat, as well as providing other favours and gifts to government executives (supplying their daily lunch, for example).

K.V. Jacob, Twenty20’s second-most important leader who quit recently, is now openly speaking about many of these perceived irregularities. He is a seasoned politician and switched camps to the Communist Party of India from the Congress before becoming a part of Twenty20. But nothing, he says, dismayed him as much as Twenty20. “I’m done with politics. I’m not going to any other party," he told Mint.

According to his account, Twenty20 has become a symbol of officially condoned corruption. Despite an e-tendering system, all construction contracts were given and executed by benamis of Sabu Jacob, he alleges, and properties belonging to the chairman selectively benefitted from road and groundwater projects.

“He had no concern for laws," said K.V. Jacob. “I will give you an example. Some trees had to be cut for a road widening project. In order to cut trees, we officially need permission from a team of forest department officers, village officers, and environmentalists. But Sir will not wait for it. His men just came with a bulldozer and cut down 10-20 trees. The law doesn’t apply to him," he said.

“He would say, you should live by my words," said K.V. Jacob. “He would ask us not to attend the funerals in families he does not like. The benefits of those who raise even mild resistance are immediately cut off, not only the company’s welfare schemes but even the panchayat schemes. Those who speak against Sir are isolated from the social sphere, and personally targeted."

Panchayat secretary Jayachandran Nair added: “It has reached a point where we may face scrutiny and possibly get jailed."


When asked about the allegations, Sabu Jacob occasionally bursts out in anger. “You cannot ask me like a police (sic) you know. Don’t take advantage," he said at one moment.

Sabu Jacob agreed that he was paying all elected members belonging to Twenty20 a monthly sum. But he says there is nothing wrong in it. “A panchayat member is getting (a) very meagre salary, like 5,000-6,000. Why do you think corruption is going on? In a 1 lakh road project, you know, only 40% is invested on the road and 60% is looted by the panchayat members and other big contractors," he said. “Legal or illegal, I want to make a model village here."

He denied allegations that the supermarket was closed because the public did not vote the way he wanted them to. “When someone quits, he will talk all sorts of nonsense. Why should I reply to that," he said, referring to the erstwhile ally, K.V. Jacob. He alleged that corruption and sexual misconduct were the actual reasons behind the “firing" of the politician.

“This is the first time a corporate (entity) has taken the reins of power. So, many people are alleging that it’s like British rule or it is like bourgeois rule. I feel, at the end of the day, (what matters is) whether people benefit or not, whether people are happy. If they don’t like me, they will throw me out," said Sabu Jacob.

The businessman’s bet on the ballot may not be misplaced, said a local journalist who has written about Twenty20’s achievements as well as failures. “See, people have become very clever. They know most of their politicians are crooked. So, they are looking for what’s in it for them. If you promise them something, they’ll stand with you," said the journalist requesting anonymity, as he wanted to be seen as neutral in his reporting.

Beyond the electoral test due later this year, the law is also catching up. Over a dozen cases are pending in the Kerala high court against Twenty20’s practises, and a verdict is expected this year. One of the cases is about the firm’s strategy of handing out monthly payments to public officials.

But after five-long years of the Twenty20 experiment, some have already come to a judgement. “It was an experiment doomed to fail," said D. Dhanuraj, head of Kochi-based think tank Centre for Public Policy Research. A similar case would be Tata group’s running of Jamshedpur as a private township, he said, but it has winded up in the courts as some residents started demanding a municipal government. A similar experiment was also tried in Mysuru a while back, he added, which also failed.

“You cannot replace democracy as a principle with anything else. Even the pretence of democracy will not be sufficient. You can purchase votes by doling out welfare schemes as bribes, but that works only in certain situations and on some occasions," said Dhanuraj. Caught up within these competing world views lies the future of an unusual village on the outskirts of Kochi and its dreams of being India’s No.1.

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Updated: 20 Jan 2020, 05:40 PM IST
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