(This is a little longer post based on a talk given at the Centre for Development Studies, Trivandrum). 

Kerala is known for its achievements in basic education and healthcare for all. Its people participate in economic activities not only within the state but also nationally and globally. This participation generates income and it is used for consumption of goods and services. Some of these are non-tradable and hence these are produced within Kerala and contribute to state’s economic growth. Moreover certain attributes of the state (certain natural features) sustain activities like tourism which attract buyers from outside the state and this is another driver of its economy. However tax resources that are available to the state government is inadequate to meet its current public expenditure. Hence it is borrowing to meet even revenue expenditure and does not have enough money for infrastructure development. 

Basic educational and healthcare outcomes may sustain or improve even if the government is not able to spend significantly more money, since people may increase their private expenditure for these purposes. The status of healthcare in the state is not only due to public expenditure but also due to a higher competition between public and private players. (I am not saying that an increase in private expenditure is desirable). Regarding education, inadequate investments may not be the main constraint for further improvement in quality. If we take higher education, the not so good quality is more of an institutional or cultural or even a political issue.  

My sense is that the participation in economic activities may also continue more or less around the same pace even if the government is not able to increase its public expenditure. This participation and consequent income may generate demand for non-tradable services and it may continue to be a driver of the state’s economy. A similar pattern may prevail due to the consumption by outsiders (say through tourism). Hence I don’t see an immediate danger to Kerala economy. However there are other social, political and environmental challenges in addition to economic ones. 

The first lesson from Kerala’s economic growth is that we should not overestimate the role of the state in its economy (though it has played an important role in providing education and healthcare, and a not-so enabling role in terms of material production historically.) Politicians should not think that  they can bring in huge investments and accelerate Kerala’s economic growth further. There are structural constraints for certain activities like mass manufacturing; and a deviation from its current path of economic development may not happen that easily. For example, even if there is a development of local manufacturing, outsiders may have to come as workers. However this overestimation of politicians is leading to not so desirable outcomes.

Keralites are economically and socially close to the middle-eastern countries. Non-Resident Keralites in the middle-east are an important source of money for political parties. We should understand the nature of middle-eastern polity and economy. These are obviously not democracies. These are also models of cronyism wherein there is little difference between the ruling class and economic elites. Indian/Kerala capitalists who made their money in the middle-east were also working closely (and non-transparently) with this crony capital. Cronyism is common in many other Indian states too. For all these reasons, politicians in Kerala too think that such a cronyism which can help creating visible edifices or symbols of development is good governance. Possibilities of making a little money for personal gains are an added attraction. Of course, this cronyism is bad in itself. But there are practical challenges too. 

First, there is a mismatch between the intensively competitive democracy of Kerala and aspirations of crony developmentalism. Though no political party or leader is in principle against such cronyism, the collusion between one leader and capitalists may lead to allegations of corruption. These allegations in a state with active media and middle-class may lead to a stagnation of development plans. Secondly, aspirations of crony developmentalism encourage leaders to focus on visible mega projects like a new metro or railway line, but neglect crucial small or regular activities. The maintenance of roads, the collection and disposal of solid wastes, improving existing transport infrastructure, etc. may be neglected in this process. Thirdly, at least one coalition in Kerala is led by a party which does not have an intrinsic commitment towards democracy, and this may encourage the rise of unquestionable leaders. This tendency along with crony developmentalism can be a major challenge. 

Kerala is yet to address serious distributional or social issues. In fact, Kerala’s distinction in terms of transfer of money or kind to poor people is disappearing. Due to the emergence of competitive populism, other states are catching up, and Kerala may not be able to compete  with them in this regard due to the lack of enough public resources. 

Society still considers marriage as the main mode of personal, social and financial security for girls, and this discourages girls from taking up different kinds of work and in different locations where these are available. They may be interested in taking up work a few years after marriage but when they come back to the labour market, the kind of work that is available is less remunerative. Hence they may be compelled to work for 10-12 hours for 5000 or 6000 Rupees. 

Though upper and middle-caste Malayalees have benefitted from national and international economies, the gains for Dalits are limited.   They suffer from the lack of not only financial capital but also social capital and networks that enable migration. Hence they may not gain much from a remittance-driven income growth (though they too may gain indirectly through the wage growth in non-tradable services). Their gains from government jobs are also limited mainly due to the lack of reservation in aided schools. 

One area that I have some direct experience mainly through the work of Azim Premji University is the case of tribal communities. Historical and contemporary reasons that make their life difficult are well known. The passing of the so called Forest Rights Act is a major legal intervention that has the potential to improve the quality of their life. However it is surprising that there is very little political support for the effective implementation of FRA even within Kerala and even among left parties. 

Then there are challenges to natural environment. However there are some positive changes in this regard. There is an improvement in the protection of forests (and that is also causing frequent wildlife attacks) within the state. There is a certain reduction in the dependence on land for livelihood. But there needs to be a lot more effective actions including the resettlement of people who live on high slopes which are prone to landslides, effective collection of solid wastes, development sewerage facilities, and so on. 

When we think about Kerala, it is incorrect to discuss its challenges without discussing the role of society or ordinary people. Most problems of Kerala are shaped by the status or socioeconomic locus of its people. What is the difference of Kerala from other states? The median Keralite has gotten out of poverty and has acquired certain affluence (in terms of house, motor vehicle, etc). Though there are more richer people in other states, the median person there is a lot more poorer or vulnerable. There are some qualities of the median person in Kerala in terms of the use of education for their children, health-care, and a certain interest in public affairs. However, this median person is not part of sustained collective actions, not willing to contribute for public goods like clean public spaces, and may free-ride on occasions. (I am using the pronoun `he’ here intentionally.) He may have a decent house, a motor car or bike which may be used to dump household waste in public place. He thinks that though girls are to be educated, their ultimate safety net is in marriages. He is more likely from middle/upper castes and is aware of his own rights but not so concerned about the sustainable welfare of Dalits or tribal communities. He knows that corruption is bad but does not think about the need for systematic improvements in governance so that anybody following rules should be able to carry out his activities without having to contact any political leader or minister, and without being troubled by any organised group within or outside the government. He knows the importance of degrees, but does not know the importance of academic environment that is required for good quality education. He is keen to have good relationship with politicians for one or other personal benefit, but not so good at the role of a responsible citizen in doing his job well and reflecting on social ills irrespective of who is in power or not. The challenges that Kerala faces are closely connected to the position of this median Keralite. An Improvement in Kerala’s development may go hand in hand with the transformation of this median Malayalee. 

End Note: The content and opinions expressed are that of the author, and are not necessarily endorsed by/do not necessarily reflect the views of Azim Premji University.