Caught between State and Central

I live in Tamil Nadu, famous for its temples, culinary delights, classical art forms, political drama… and industries. The state is dotted with small and large industrial clusters, with every district having it’s own specializations. Step into one of these industries, you will see migrant labourers from other states. Most of the workers in Tamil Nadu’s industries are from other states like Bihar and Assam.

Tamil Nadu has a long history of intolerance towards the hindi  language. But industries here rely on migrant Hindi speaking labourers. Number of local workers are fast decreasing. Why has this happened? Is it because Tamil Nadu has no working population left?

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No… it is because local workers in Tamil Nadu do not take up  regular jobs. They prefer vocational jobs that give them the luxury of working when they need money and staying at home when they prefer.

Daily life in Tamil Nadu is made easy by government welfare schemes. Government run schools, hospitals, hotels, liquor shops, purified bottled water, free groceries, free rice, free electricity, free grinder, free mixie blenders, financial assistance for building houses, etc etc has made it possible to live without a full time job.

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The central government funded NREGA scheme ensures free salary for most families in villages. There is no work needed or done by NREGA members here. Yet, families enrolled in this scheme get a regular income.

But, the state also depends heavily on economically backward families for money. Government run alcohol shops generate a huge income for the state government, and daily wage earners are the main customers for these shops. Alcohol shops are crowded from dawn to dusk.

Government has taken little notice of the increasing number of jobless local population or their social problems. Present generation of politicians in the state turn a blind eye to the enterprising spirit of the state, and the woes of its industrial sector.

In addition, Central government’s recent slew of well intended measures have had their impact on these industries.

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Micro and small scale industries are the backbone for states like Tamil Nadu and Kerala. Majority of the industries here operate at low margins, beat competition by earning a good reputation, increase profits by increasing production numbers. There is very less scope to hoard black money or do unaccounted transactions. Black money here is synonymous with real estate, politicians, wealthy landlords etc.

Measures like demonetization and high tax rates under GST have hit the manufacturing sector adversely. Post demonetization, cash strapped industries fought to pay daily wage migrant labourers. Daily operations came to a stop as the supply chain froze and banks were overloaded with delays and money shortage.

Things were slowly returning back to normalcy, when it was time for GST. High tax rates, sudden increase in working capital, confusions and technical problems in filing returns are now taking a toll.

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In western states where money flow comes from wealthy traders, demonetization and GST will have a positive impact. There is scope for success as it may return back money to the government’s coffers. But in southern states where money flow comes from cottage industries and small scale manufacturers, these measures have a negative impact. Industries are fighting for survival due to these measures.

It is high time the central government understands the difference between wealthy hoarders and middle class industry owners. Policies and schemes that consider people as wealth hoarding cheaters should also have the means to protect industries operating at marginal profit.

In short, the state government of Tamil Nadu is driving workers away from jobs, making it difficult for industries to survive. In addition, Central government brings out schemes that confuse and penalize industries.

Caught between these two governments, survival is difficult for small industries. We wait hoping to see light at one or both ends of the long dark tunnel.

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