The nondescript office in Chennai’s Egmore area that houses the Guidance Bureau, the single-window investment facilitation office of the Tamil Nadu government, has never seen as much activity since its inception in the early 1990s as it has over the last 26 months. During this period, foreign direct investment worth Rs 25,683 crore has found its way into Tamil Nadu (mostly in and around Chennai). That apart, projects worth Rs 16,000 crore have been finalised and are awaiting official announcements.
Among the big-ticket investments his department has bagged are the Rs 4,500-crore Renault-Nissan car project, the Rs 3,000-crore Daimler-Hero commercial vehicle facility, Hyundai’s Rs 4,000-crore second-phase expansion, Moser Baer’s Rs 2,000-crore photo voltaic manufacturing plant, Apollo Tyres’ Rs 500-crore radial tyre plant and Nokia-Siemens’ Rs 300-crore telecommunications equipment manufacturing facility.But Velmurugan prefers to showcase the state of existing investments to highlight Chennai’s competitive edge. Nokia’s India operations, he says, began in January 2006 with just over 500 employees.
Area: 1,189 sq. km
Population: 7.5 million
Main industries: Information Technology, ITES, Auto, Telecom Hardware
Per capita income: Rs 21,885 per annum
Rents (commercial): RS 60-90 per sq. ft
Peak power demand: 9,267 MW
Peak power supply: 8,800 MW
Power deficit: 467 MW
Power tariffs domestic: Rs 1.85-2.90 per unit
Power tariffs commercial: Rs 5.05-6.00 per unit
Power tariffs industrial: Rs 3.30-4.05 per unit
Total water supply: 950 million litres per day
Per capita water supply (City): 147 litres per day
Public transport: Buses, Suburban Trains, Taxis and Autorickshaws
Similarly, Hyundai, which started with a capacity of 100,000 cars in 1996, has expanded its output to 630,000 cars and has designated its Chennai plant its global small car hub. “These expansions are a clear indicator of the extent of competitiveness Chennai offers to investors,” he says with more than a hint of pride.
Inherent strengthsA strong educational system has been one of Tamil Nadu’s traditional strengths. There are, according to Velmurugan, 333 engineering colleges, 230 polytechnics and over 1,200 industrial training institutes churning out close to 300,000 technically qualified students every year. “Tamil Nadu produces 25 per cent of the country’s engineering graduates.
Moreover, the work culture is very attractive. People here are eager to learn and have a higher sense of loyalty,” says R. Chandrasekaran, Managing Director & President, Cognizant Technology Solutions, which houses about 35 per cent of its 59,000-strong workforce in Chennai.
The flip side of success
The massive inflow of investments and people has, however, begun to take a toll on Chennai’s infrastructure. Power consumption grew 16 per cent in 2007-08. This was accompanied by a fall in hydro-power generated by the Tamil Nadu Electricity Board (TNEB). Result: a shortfall of about 467 MW. In 2008, for the first time in many years, the government announced power cuts for both residents and industries.
The rain gods may have played truant in recent times, but they have been bountiful over the last couple of years. This has allowed the authorities to charge the reservoirs that currently supply 645 million litres of water a day. But experts warn that the situation could deteriorate rapidly if the monsoons fail. “No long-term solution to the city’s water problem has been found. A desalination plant is coming up, but that is a bad remedy. Interlinking rivers is a good option but it is far from being accepted conceptually. In a way, we are going in a blind alley and there are no plans to stop this march,” warns C.S. Kuppuraj, former Chief Engineer, Tamil Nadu Public Works Department.Chennai’s infrastructure is also wilting. Traffic snarls are becoming more common despite the government investing heavily in widening roads and on building flyovers and bypass roads. “Infrastructure will always be a challenge though it is not as bad as in other cities. It will always be in catch-up mode,” points out Cognizant’s Chandrasekaran.
Also, residential rentals have steadily increased at 25 to 30 per cent per annum over the last three years blowing a gaping hole in the monthly budgets of middle class residents and forcing many to relocate to the suburbs.
Time for optimism
Adds S. Muthiah, noted journalist and historian: “The city’s population has grown three times over the last 10 years but we have failed to move the population out of the city. Attempts to build townships closer to industrial clusters such as Gummidipoondi and Maraimalainagar, near Chennai, have failed.”
The ever-increasing population puts enormous stress on roads, schools and the water and power infrastructure. In fact, he has a rather radical solution to decongest the city: move the political capital out of Chennai and turn the city into a business hub.
But despite this, it is clear that Chennai’s infrastructure is starting to feel the pressure. Is there any danger, then, of the city going the Bangalore way? This is a genuine concern in the minds of many in Tamil Nadu. But people like Muthiah feel otherwise. “We are clearly heading that (Bangalore’s) way, but we may not actually get there as the state government is aware of the impending crisis. It has already initiated road, public transport and power projects to ensure that Chennai’s infrastructure at least keeps pace with requirements,” he says.
Given the projects on the ground and the stated aims of both the major political parties in the state, some of his optimism is, indeed, warranted.
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