Brutal murder of Maruti Udyog Ltd’s HR official is a grim reminder of short sightedness of our ruling class that has made the cardinal mistake of submitting to people’s diktats instead of doing their job of leading them. My geography teacher at senior secondary school use to say it’s not the intelligence but integrity that matters in the game of life. Four years later when I was in the last year of bachelors degree course in geography, I learnt what he was talking about was geographical thought that was a key component in understanding the rise and fall of nations and societies. I realized he wasn’t talking anything new but the sense of urgency his voice expressed was unmistakable. Almost 24 years have elapsed and his words still echo in my mind as I see a “beginning of the end” unfolding in Gurgaon-Manesar region just for the reason he mentioned a quarter century ago.
For most part of the last one and a half decade an economic miracle unfolded at the doorsteps of Delhi in a once unknown and dusty hamlet of Gurgaon. Within no time property prices soared, townships with distinctly American names mushroomed and a sliver of land 10 km long and just a km and a half deep on both sides of Jaipur-Delhi highway rose to become what Indians proudly called “Second Singapore”.
This glowing chimera was powered by BPOs and KPOs. The entire economy was geared to meet the needs of cyber coolies who wanted to eat, drink and live in high rises and work in their chic, silent, well lit cubicles. However, the dream run that began with construction boom in 1995 started showing signs of fatigue by 2007.
Rising power outages meant the information age needed diesel fuel to power itself. Crime was knocking at the doorsteps, shimmering glass and steel buildings were opening in front of roads where pot holes were competing with moon craters in their size and depths. Lack of infrastructure and cultural collision with the locals have made it clear that the haphazard effort of builder-politico nexus to suddenly transplant an information technology dream in the heart of agricultural reality was turning into a traumatic experience for both.
Still the success story endured but when the Maruti Ugyog Ltd found itself facing labour unrest in Manesar, aided and abetted by local politicians, it was a wakeup call for everyone. They could not turn a blind eye to the elephant in the room anymore.
Suzuki entered in a partnership with Indian government to produce Maruti in early 1980s and immediately put Gurgaon on the global automotive map. The company became an icon that powered the later influx of capital in an around this town. However, sustained labour unrest and declining productivity in last few months threatens its premier position among car manufacturers in India as well as the investment friendly image.
The everything-on-my-terms-or-nothing-at-all policy of local political and labour union leaders is at the core of present malaise. All the leaders in Haryana as in every part of the country are exceptionally intelligent and capable individuals, however, blinded by the constraints of five year term in office they are disinclined to undertake long term planning initiatives. Their calculations hover around familiar axis of personal aggrandizement and ensuring victory in the next election. As both the aspirations need money and votes all the actions are based keeping these two considerations as supreme. So a development scheme would be initiated in a certain village that has lent its support with votes and the contract would be given to those developers who helped with funds.
The definition of development is also very limited. It means turning agricultural land into non-agricultural land and then developing real estate for big businesses to move in. In case of Gurgaon and later Manesar huge spaces were made available at dirt cheap prices to lure a host of big business houses to move their operations from Delhi where lack of space and rising rents were escalating the cost of operations. These arrivals can be categorized into three levels – Corporate head quarters, IT firms in the form of KPO and BPOs and manufacturing units. It is the latter two that brought in money in the local economy along with much needed employment.
However, after initial euphoria cracks started emerging in the perfect success story when untrained locals started bullying business houses and their employers. For politicians the choice was clear – they would side with locals as they were the voters while business houses and their employees were eternal outsiders who didn’t matter in the electoral scheme of things.
This tyranny of poll-to-poll thinking led to the mess in Maruti plant at Manesar and has a bearing on Gurgaon too. The company management’s idea of moving to Gujarat at the beginning of the crisis may just have be a ploy to pressurize the government to act against the errant workers but it seems latest actions will force them have a serious rethink on the issue of continuing here. Seeds of doubt have been sown even among the most determined and long term investors like the Japanese. It will have a bearing on the others who are planning to invest in Haryana. Corporate team at Maruti knows that beyond a point even the politicians wouldn’t be able to do anything as they are bound by their own compulsions. As Maruti’s Chairman Mr. RC Bhargava said last year, “…these workers are militants and unless this belt improves their ways not only investments from Japan but other countries will suffer.”
He may be dismissed as an alarmist and an affected party reacting angrily but history proves he is not way off the mark. When the Communist government took charge in Kolkata way back in 1977 it used to be the hub of manufacturing and capital market. Within a short span of eight years the city was deserted by business houses and capital flew to Dalal Street, Mumbai. Now it will take years if not decades for Kolkata to regain its former glory if at all it can.
In Hindu pantheon of gods and goddesses, the goddess of capital is Laxmi and is known to be mercurial and finicky. She needs to be wooed, worshiped and handled with utmost respect and care otherwise it moves to some other destination. Similarly capital is an unusually coy customer. It operates on whims and sentiments.
More than Gurgaon-Manesar administration, its Haryana politicians who should keep this example in mind. It would serve them well to remember another example of long range thinking and huge earning. Pudong, a suburb of Shanghai, China’s financial capital, started its industrial journey almost at the same time as Gurgaon. However, for the first five years the Shanghai administration led by its mayor devoted their time and energy in developing basic infrastructure and ensuring uninterrupted power supply. The city opened for business in the 21st century and by 2009 Pudong’s GDP amounted to an estimated RMB370 billion (US$53.98 billion).
Both the centres are poles apart in their approach towards development and investments they attract.
It’s not that the Chinese administration won’t have corruption issues or their set of problems but what makes them different from their Indian counterparts is their integrity in abiding by certain principles of economics or business. They have promised good infrastructure, educated and disciplined work force and tax holidays to attract foreign capital and have abided by it. While in Gurgaon-Manesar, as in many other parts of India, foreign capital or local business was invited promising them moon but later politicians and administration conveniently forgot about it. They knew once a business person invests huge amount of money he/she is stuck. It would take near calamity to make them wary enough to run away. The calculation was that these cash cows would keep belching out money while the locals would indulge in low intensity industrial attrition. This would keep the industry at home and people happy and the political business-as-usual will go on. In case of Gurgaon-Manesar even the opposition didn’t serve the state’s long term purpose as was evident from Kuldeep Bishnoi’s poll manifesto that insisted on keeping 80 percent locals in any work force in every installation in Haryana. This is a classic case of playing to the gallery at the cost of long term benefit of the state.
However, it is still not too late to salvage the situation. It doesn’t need shimmering intelligence but sticking to the basics by improving integrity and delivering what was earlier promised. Instead of promising 80 percent reservations for the locals in corporate or industrial installations it would be better that the state invests money in education, preparing the society for information technology age moving away from feudal mindset and agricultural skill sets. They would also need to strengthen law and order situation and improve infrastructure if they want the town to grow and prosper.
Gurgaon-Manesar were dusty towns and can return to dust if the integrity is not adhered to by the political class. The labour unrest may come to an end but the discontent, mutual mistrust and fear of another labour unrest will keep unsettling the manufacturers, disenchanting businessmen and disrupting capital inflow. If that happens the 16 year long dream run may end up being a tragic nightmare.
(This article was originally published on October 27, 2011 when the labour unrest just began in Maruti’s Manesar and Gurgaon plants. The title was “Is gurgaon going the Kolkata way?”)
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