The election results in Kerala will have a major bearing on the path of development that the State would take in the coming years and thus can alter Kerala model of development.
Q. What is Kerala model of development?
The Kerala model of development refers to the practices adopted in Kerala, which is characterized by strong social indicators such as high literacy, improved access to healthcare, high life expectancy, low infant mortality and low birth rate, often at levels comparable to developed countries despite having a lower per capita income.
These achievements along with the factors responsible for such achievements have been considered characteristic results of the Kerala model.
Q. What are the features of Kerala model of development?
A set of high material quality-of-life indicators coinciding with low per-capita incomes, both distributed across nearly the entire population of Kerala.
A set of wealth and resource redistribution programmes that have largely brought about the high material quality-of-life indicators.
High levels of political participation and activism among ordinary people along with substantial numbers of dedicated leaders at all levels. Kerala's mass activism and committed cadre were able to function within a largely democratic structure, which their activism has served to reinforce.
Q. What is its background?
After facing Economic stagnation in the 1970s and 1980s, a fundamental change occurred by the late 1980s — Kerala’s economic growth picked up.
Growth in agricultural incomes and in remittances provided the spur for a ‘long boom’ in the subsequent decades. While services grew the fastest, the secondary sector (which includes manufacturing, construction, etc.) also experienced significant growth; the proportion of the workforce engaged in the secondary sector, which was 20% in 1987-88, grew to 32% in 2018-19.
While Kerala’s per capita income was almost 10% lower than the all-India figure in 1989-90, it was 65% higher than the all-India figure in 2019-20.
During this period, Kerala’s education and health indicators continued to improve, and its social security programmes continued to expand.
But public schools and public hospitals often fell into disrepair, with inadequate facilities forcing many people to turn towards private service providers. The number of students enrolled in public schools fell steeply.
Q. What is the recent trend?
The last five years have seen major investments to build up infrastructure in public schools and public hospitals.
These efforts have had a major impact: the number of students in public schools began to increase from 2018-19 onwards. This was taking place for the first time in more than 25 years. Similar infrastructural upgrades have been made in the case of public hospitals too, which was an important factor that allowed Kerala to fight the novel coronavirus pandemic relatively well.
Investments that came in through the Kerala Infrastructure Investment Fund Board (KIIFB) provided the most crucial element which made these investments possible. Apart from schools and hospitals, KIIFB funding is being used to build economic infrastructure such as roads, bridges, industrial parks, the massive public sector Internet project K-FON, or the Kerala Fibre Optic Network, and TransGrid 2.0 — a project to improve the power transmission network in the State.
Q. What are the risks associated?
Concerns have been raised whether Kerala is taking on unsustainable levels of debt. The KIIFB loans are not part of public debt, and even if they are included, they would make only a marginal difference to the stock of outstanding debt.
Data show that there have been several years during the past three decades when the ratio of Kerala’s outstanding debt to gross State domestic product (GSDP) was higher than it is today (36%). Those years followed a period in the late 1990s when there were serious setbacks to the commodity-producing sectors of the economy (prices of major cash crops had crashed).
The current period is also similar, with the State having had to endure severe floods in 2018 and 2019, and the pandemic-induced worldwide recession. These led to huge unforeseen expenses, even as economic growth and tax revenue growth suffered.
Rather than debt, therefore, the real risks are likely to be associated with shocks to the economy — such as natural disasters, job losses in the West Asian countries where a lot of Keralites work, or contractionary fiscal policy by the central government — which could adversely impact economic growth.
