Wednesday, November 2, 2016

Kerala @ 60:A Retrospection

On 1st November2016, Kerala has finally joined the league of senior citizens among the Indian states. A land of paradoxes , there are several unique features one can notice in Kerala. Kerala government was the first democratically elected communist government in the world. Kerala is always ranked top among most of the parameters to identify a welfare state- Highest HDI Index, Highest literacy rate, Health etc. to one of the early birds in India to achieve the status of open defecation free state. It is also to be noticed that Kerala is always one of the leading states in implementing central government schemes, be it MGNREGS by UPA or Swachh Bharat by NDA. Government of Kerala (irrespective of left or right) has always played a crucial role as an implementing agency. But it is to be noted that Kerala has the higher percentage of emigrant population. The time has come to think why the people are migrating from such a beautiful state, which has all the basic requirements, to settle in other cities of India and abroad? 

One of the most important factors for the relative development of the state was the higher literacy rate compared to rest of India. While the average literacy rate of India was 16% at the time of Independence, it was 46% in Kerala. This higher literacy rate had always helped Kerala to work more efficiently as an implementing agency for most of the government schemes. Kerala government had also given focus on investments in education and health sector during 1960s and 70s which had also helped in making Kerala a relatively better off state. But one of the most important flaws of the model was that the investment was heavily on non-income generating activities without much focus on revenue generation/job creation. A model can be considered sustainable only when it is able to survive without the support of an external agency. Otherwise it will fail with the closure of external funding source. In other words, most of the schemes in Kerala were implemented with the aid from central government or some international funding agencies with a target driven approach, without giving focus on employment generation (which would have helped in generating more revenue for the state government). This has resulted in creating a generation of educated people who could become an efficient work force but didn’t get a chance to prove their talent in their home state due to lack of opportunities. 

We can also say that most of these investments were with a short term view, more in line with the national trends. But it should be noted that the demands of each state were different. For example, if we look at the investments in health sector most of the investments were designed to handle infectious diseases which spread through various sources like air, water etc. But currently non infectious diseases like Cancer, Heart diseases, Diabetes, Blood pressure etc. are becoming a threat mostly because of food habits and our current hospitals are not equipped to handle those diseases. Similarly if we look at education sector, we can see that engineering had more importance in Kerala where most of the revenue generation sources are from service sector like Banking, Tourism etc. This has resulted in building up a generation of engineers who work in different sectors which has no relation with what they had studied in colleges. Remaining engineers had migrated to rest of the world where engineering still has some importance. In both cases (health and education), Kerala has done statistically well because the parameters for measuring performance was primarily set based on national parameters.

As the literacy rate in Kerala started to increase, people started to look for jobs which give better salary. As a result they started to lose interest in traditional jobs like agriculture, daily labour, construction work etc. which were occupied by migrant workers from other states; earlier by people from Tamil Nadu and currently from East and North East India. On the other side, neither government nor private sector investments had occurred in Kerala which would have given better job opportunities. This resulted in massive migration to gulf, Mumbai (now to Banglore) and other Western countries which today we proudly say as our NRI strength.  Initial migration was to Gulf countries getting citizenship is not very easy. This had helped Kerala to get lot of cash inflow from the gulf countries. However, similar to government, most of the funds were invested for consumption purposes like home, gold etc. and only very few portion was invested for any income generation or job creation purposes. And currently, as migration trend has shifted US and Europe, where tax rate is higher and receiving citizenship is easier, people who migrate tend to invest the money there itself. In fact people who sell all their assets in Kerala and become permanent residents in US and Europe are increasing and after one or two generations they may not have any relation with Kerala. This will further reduce the money available for development of Kerala.

Currently when we look at Kerala’s economic situation, Kerala is struggling to maintain the schools and hospitals set up by the government because of the huge maintenance expenses. However revenue for the government through taxes not grown sufficiently during the same period to match with those expenses and for new development projects.  As a result, fiscal deficit has increased and borrowings have gone up sharply in last two decades. Fiscal liabilities have increased from Rs.33,777 crore in 2002-03 to Rs. 1,41,947 crore in 2014-15. It is also to be noted that the migration from Kerala to West has increased during the same period and one of the districts – Pathanamthitta has shown a negative population growth for the first time in history mainly due to the shifting of people to the western world. 

In other words, while Kerala is becoming a senior citizen, she is also becoming economically weaker and weaker and both politicians and local population is not worried about the same, believing we can always find a heaven in the west. The time has come for government to rethink its strategy and take a new path so that Kerala will have a local population who can survive in the state with a decent income, not like the current old age home where the parents are living in Kerala and their children working outside.