August - 2000 - issue > Cover

With the onset of the breezy southwest monsoon, fresh winds of change are blowing across Karnataka, the land of coffee and computer chips. Somanhalli Mallaiah Krishna, the 69-year-old Chief Minister of Karnataka has kick-started the government’s effort to regain Bangalore’s position as the technology hub of the country. He organized the Global Investors’ Meet (GIM) in order to attract foreign and domestic investments into the resource-strapped state, pulling all stops to showcase Karnataka as a promising land with plenty of natural and human resources beckoning investors.

Krishna’s efforts to resurrect the image of a battered city comes at a time when the city has witnessed some flight of capital in the last few years as neighboring Hyderabad, Chennai and Pune attracted more companies with better infrastructure facilities.

Krishna spoke to siliconindia during the GIM, which helped raise Rs. 80 billion in fresh investments to the state. Excerpts:


Q: What motivated you to organize this Global Investors’ Meet?

A: The urgency of making up for lost time over the last couple of years when the state had slipped from its eminent position of being a favorite destination of investors all along. A survey by the Centre of Monitoring Indian Economy (CMIE) had revealed that Karnataka was lagging behind even a state like Orissa in the race to attract investments, be it foreign or domestic. With neighboring states like Tamil Nadu and Andhra Pradesh catching up with Maharashtra and Gujarat in the ranks, I cannot sit back and passively watch Karnataka falling behind, or even failing to make up for the lost ground or lost time.

Soon after I assumed office, we had organized the second edition of the BangaloreIT.com ’99 in November last to demonstrate the strength of the city in the field of knowledge-based industry, and reaffirm the eminence of Bangalore as the IT capital of India. The feedback from the IT show and subsequent developments had given me enough food for thought to think of organizing a global investors meet to showcase the potential and benefits of coming to Karnataka — especially in infrastructure, where the state is in the crying need of massive funds as we lag behind in power generation, better roads and highways, sea and airports, and a state-of-the-art communication network.

When I had the privilege of taking part in the annual meeting of the World Economic Forum at Davos early this year, I was astounded at the kind of inquiries and response I got from global investors, including Fortune 500 companies on what Karnataka has to offer, and how it could attract funds for its developments.


Q: What do Karnataka and Bangalore have to offer these investors?

A: Everything they want or look for. A pro-active government, investor-friendly climate, safety and security in terms of law and order, good labor relations, highly skilled professionals and abundant natural resources in diverse areas.

More than anything else, Bangalore has a weather that is unique. Its sobriquet of being the only air-conditioned city in the country is known the world over. Other cities can boast of having so many things or advantages, but none can equal the salubrious climate of the garden city round the year. The atmosphere in other parts of the state is equally conducive for any investor.

These apart, the lasting reputation of Bangalore also being the science city or space city with finest educational, research and defense institutions gives a measure of its intellectual and scientific capital. Even in higher education, the state is on the forefront of generating a pool of talent with the largest number of engineers and IT professionals churning out every year.

Q: What about the infrastructure in the city and the state?

A: Yes. That is the area of concern for us, and it is on the top of my government’s agenda. Lack of any notable progress on that front during the last few years has put the :state back on the development front. While inadequate power, bad roads and poor transportation are the burden of the state, tardy progress in other areas of infrastructure such as modern communication networks, broad highways, and absence of airports which fall under the Center’s jurisdiction have all aggravated the situation, leading to the present state.

Be that as it may, we have lost neither heart nor hope. I want to send a loud and clear signal across the world that Karnataka means business and that the prospective investors will find everything going their way. It is in the growth and infrastructure areas that the government is looking for massive investments from global as well as domestic or private players, as the state is no longer in a position to fund such huge projects because of its equally important commitments in priority areas such as irrigation, healthcare, education and rural development.

Resource constraint is a national phenomenon. It is the same situation with other state governments, and even in the case of the Center as most of the budgets are spent in meeting salaries, developmental works, debt servicing and non-plan expenditure. While all-out efforts are being made to contain the latter, there is not much leeway in pruning on other fronts due to excess staff, higher interest burden and allocation in priority areas.

Q: How much impact has the two-day conference made, and what kind of response or hope you have managed to generate from it?

A: To say that it was overwhelming would be an understatement. The kind of enthusiasm and “feel good” atmosphere it has created must be seen to be believed. Though we have to wait till the month-end for the final outcome, the spontaneous response of the investors from overseas and domestic players is beyond our expectations. My officials had not set any initial target, at least for the duration of the meet, but proving the prophecies of doom wrong, on the very first day of the meet, as many as five Memorandum of Understandings (MoUs) were signed for investments worth Rs. 35 billion in diverse areas.

As if this was not enough — or convincing proof of the state’s potentiality or the government’s credentials — the concluding day turned out to be a resounding success with a bonanza of Rs. 40 billion worth investments in the form of MoUs.

The surprise announcement by News Corp of media mogul Robert Murdoch to set up its broadband Internet-cum-digital studio facility in Bangalore at an investment of Rs.10 billion was icing on the cake. If this is the kind of response the meet has generated, I have no doubt about Karnataka turning around and catching up with other states, especially Tamil Nadu, for becoming again the most favored destination of investors. To wit, this is only the beginning. We have a long way to go as the erstwhile government had failed to capitalize on the sound investment climate the state has, relegating its position even behind Orissa, as per CMIE.

The impact of the meet will be not only far-reaching, but also will have a domino effect on the existing investors or entrepreneurs who were dejected a lot over the callous apathy of the previous regime, and were at their wits end about their future, wondering whether it was worth staying back.

Q: Have you set any time frame for the effective implementation of the proposed projects? And what else is in the pipeline?

A: As already spelled out, the government, particularly the officials concerned, are committed to ensuring that there will not be any delay on our part in processing the papers, and would go all out to help them implement their projects within their schedule.

Wherever central clearances are due, the state will step in to expedite the procedures so that there would not be any road blocks holding up their project implementation. I have give an undertaken to all these investors to personally monitor the progress and facilitate their execution in record time.

As I have stated earlier, we have made a beginning — that too on a promising note. By the end of June, we will be able to assess the overall impact the meet has made and the quantum of response in terms of firm proposals. Enquiries, presentations and interactions are going on all the time between the would-be investors in a range of areas spanning manufacturing, processing, services, agro-based industries, infrastructure projects and tourism.

We have set the ball rolling, and the pace will be kept up to maintain the momentum. The government will not rest just on the instant response we got during the first two days nor go complacent by basking in the initial glory. We have to become not only the favored destination, but also remain so to be on par with other states in attracting investments.


Q: Will Bangalore have an international airport at all?

A: Undoubtedly! Ever since the Congress government came back to power, we have relentlessly pursued the matter, and it is only because of our pressure, coupled with the growing expectations of the six million people of this city, that the state could secure in writing all clearances from the Union Government.

The bids have already been called, and the entire administrative exercise at the state level will be completed by October. In fact, I have invited the Prime Minister to visit Bangalore on November 1 to lay the foundation-stone for the new international airport at Devenahalli to be constructed at an estimated cost of Rs. 15 billion in joint collaboration with the state government.

We are quite aware of all that happened in the past, and how the whole thing got jinxed with the Tatas, who clinched the project in the previous bid, pulling out of it, expressing sheer frustration at the inordinate delays in securing a plethora of clearances or approvals from the Center as well as from the state. This time, I am bound to stick to our assurances as Bangalore can no longer afford to remain without such a world-class airport to meet the growing needs of its citizens, especially its thousands of IT professionals, including MNC employees.

In the meanwhile, the existing airport is being upgraded to international status to enable direct flights from the US, Europe and the Asia-Pacific region. Both domestic and international traffic is growing at a tremendous rate. This is a boom time! Even international airlines like United Airlines are keen to start their flights to and from Bangalore. We are pursuing the matter with the Union Civil Aviation Ministry in Delhi. We hope to get a favorable response soon.


Q: Finally, what about the development of the rural economy?

A: Development of Bangalore or the growth of industries in the state are not at the cost of our rural brethren. That is the solemn responsibility of the state government. The goal is to take all the developmental works right up to the village level; that is the ultimate agenda of the reform package with a human face. The proposed investments in the infrastructure projects will have a far-reaching impact on the countryside in the state.

While foreign and private investments will go into high-tech growth areas and into building the core infrastructure, it is the moral responsibility — nay, onus — of the government to only facilitate all-around development in the state, but actually involve itself in rural progress through the local bodies.

The resounding victory of the ruling Congress goes only to show that the rural folks are also with the government and endorse its various development programs and policies.

Unless the economic reforms, be it of the first kind or second generation, percolate down to the village level to improve the lot of the majority populace who still dwell in the countryside, the task of governance will remain incomplete. It is our solemn assurance to the people of the state to ensure equal development for the prosperity of all.

To that extent, during the eight months of my tenure, I have been able to convince the World Bank in granting $3 billion of assistance during the next two to three years to improve the lot of everyone by providing basic amenities and world class infrastructure.