Government Funded Mafia, or a brief history of SIDCO

SIDCO, or Kerala Small Industries Development Corporation, was set up around 40 years ago to make life hell and completely quash entreprenuerial spirit in Kerala. Their website however says the following:

"This Corporation is rendering assistance to SSI's in the State, like providing Infrastructure facilities, distribution of essential raw materials, marketing of the SSI products,undertaking Civil and Electrical works etc. Moreover Kerala SIDCO is supplying Bitumen to Local Bodies as Nodal Agency and Paraffin Wax to small scale industries."

They also have text scrolling through the top of the screen saying "We serve small scale Industry on a Large Scale". Someone must be really proud of that line.

Even if this were true, this doesn't seem like much to accomplish over 40 years. Their performance figures give a slightly clearer picture. Comparing the two years given, you can clearly see the performance getting even worse. For example, out of the 135 idling units, they have rehabilitated all of 6 units in the first year, and none out of the 160 units the next year. On closer inspection you will find that even the 6 units "revived" in the first year, were given a total of only Rs. 2.2 lakhs, and that too from state government funds, and not from SIDCOs own funds. This my friends, is just the beginning of the dark and devious story of a modern day Lochness Monster.

My father, oh no actually my grandfather "purchased" land from SIDCO in the mid '60s. They had just been given a lot of funds from the Central Government, part of some misdirected scheme to help Small Scale Industries (SSIs). We were allotted the land and sheds back then, under a "Hire-Purchase Scheme" where we paid the rent every month, and a portion of the rent paid would be adjusted against the final value of the land as assessed by the time the paper work got done, and SIDCO got the title deeds for the property from the government which they would then transfer to us.

We started paying rent from 1965 or something, and whenever we enquired, the paper work was still getting done, and we continued without the title deeds to our factory. We were lucky, being a fairly well to do family, and we could raise some funds from other sources to run the business. The vast majority of the other "owners'" of the sheds in our Industrial Estate were genuine really small scale entrepreneurs. No bank would finance them without collateral (there's definitely a series of postings coming on banking to explain that and a lot more). Whats more, no bank would accept an allotment certificate from SIDCO as a realizable security. The banks were way smarter than the entrepreneurs in that case. Many people had to pledge their houses to get bank loans, which was of course the worst way to encourage an entrepreneur. SIDCO has ruined the lives of people who's business went down. They wait or travel all day from office to office, visiting bureaucrats, politicians, lawyers and anybody else who might perhaps be able to do something, anything at all.

In 1994, SIDCO came out with a final offer for "outright sale" of the factory and sheds. They fixed a new (considerably high) value for the sheds and said they would consider 75% of the rent paid as part of the purchase price. We took the offer up immediately, and somehow raised the funds to pay the balance amount. Out of the 46 odd units in the Estate, only 3 managed to raise enough money or initiative to "buy" the land and factories. With that SIDCO gave as allotment certificate allowing us to pledge the property to any financial institution, and gave us more assurances that the title deed would be given soon.

At this point, one may question, quite rightly, whether these SIDCO guys were part of some masochistic cult or just plain inefficient. The answer is neither. See, once the Central Government gave funds to SIDCO to "promote" industry, SIDCO just sat on their asses and didn't really do anything. They built a few hap hazard industrial estates and parks. However, anyone who was aware of SIDCOs practices would stay away from their Estates, and in fact, from Kerala itself. So SIDCO has like lots of employees, tons of them, and what do they do? Well pretty much nothing, if tea and lunch breaks don't get credits. Who pays them to do nothing? Well, SIDCO does, from the rent it charges. Once entrepreneurs get their title deeds, they'll stop paying rent, and SIDCO will go defunct. So, the employees union is actually objecting to giving the title deeds to the rightful owners.

Unfortunately, SIDCO employees unions were very strong and we are still waiting for the deeds. The Hindu on April 28th, 2005 reported the Chief Minister's statement that SIDCO estates property is going to be sold. They also report the CPI Leader Mr. E. K. Ismail's defense of the decision in his press conference on June 1st, 2005.

He said there were 621 small industrial units functioning from 17 industrial estates of SIDCO. The State Government did not have to spend any funds to start these industrial estates since were built way back in the 1950s entirely with Central Government grant, he said.

SIDCO too had made no investments in these industrial estates, though it had collected more than Rs. 5.27 crores from the entrepreneurs since 1975. The Government could have allotted the land and buildings in these estates to the entrepreneurs under the rules governing the subject, but that too did not happen all these years despite several requests from the entrepreneurs. They could not even borrow funds from the banks since they do not have the title deeds on the properties.

The people who run units in these estates could not be called big industrialists. Though the units are all small ones, they employ thousands of workers. The Government, through its decision to issue title deeds on the properties to the entrepreneurs, had done only what it should have done years ago.

Its more than a year now, and nothing seems to have happened. If all this above, didn't really give them the Mafia feel, they came out with a new regulation that to transfer the property, (which is rightfully ours, which they should have given us years ago, which they haven't spent one paisa on maintaining) the seller has to pay SIDCO 25% of the value they have assessed for the plot. If this isn't extortion....