Kerala Model Of Development
nkdat...@my-deja.com
29 May, 2000
The Kerala model of development
By K. V. Joseph
THE KERALA model of development is characterised by achievements in
social indicators such as literacy, life expectancy, infant mortality
and birth rate and by ``striking performance in raising living standards
and in providing access to basic facilities''. The achievements of
Kerala in social indicators are comparable even to those of the advanced
countries.
The exponents of the model maintain that the improvement in living
standards is not primarily due to the results of a few enlightened
policymakers, but because of the redistribution of wealth brought about
by the organised strength and militant activity of the poor people.
According to them, redistribution of wealth and improvement in living
standards constitute an alternative development strategy, ``without
having to wait for large scale economic growth.''
The per capita income in Kerala was much below the all-India level when
those development processes were under way. Only in 1998-99, that too on
the basis of a revised procedure, did the per capita income of Kerala
rise above the national average. This was mainly due to the growth of
the tertiary sector which accounted for 51.9 per cent of the State
Domestic Product (SDP). At the same time, the increase was in no way due
to a better performance of the two basic sectors of the economy -
agriculture and industry - which showed signs of stagnation.
The question is, how could an improvement in the standard of living take
place when the economy was stagnating overall? Indications of prosperity
were discernible in various quarters in Kerala since the 1980s. The
percentage of Keralites living below the poverty line was stated to be
18 in 1987-88 against the all- India level of 29. Significantly, nearly
half the people in Kerala were living below the poverty line in 1977-78.
Similarly, wages of agricultural labourers in Kerala were higher than
those in other States since 1983. Volume of bank deposits is another
indicator of prosperity. Since 1980 there has been a steady increase in
the volume of bank deposits in Kerala. Now, the per capita bank deposits
in Kerala are lower than only Maharashtra and Punjab. Spurt in building
construction is another indicator of affluence. Construction of
buildings has become the second most important activity in Kerala
reckoned in terms of the volume of income generated. It contributes
roughly 10 per cent of the SDP against hardly 6 per cent in the country
as a whole. Furthermore, the proportion of pucca houses is higher in
Kerala than in any other State.
It can be inferred from the aforesaid facts that Kerala was not so poor
even during the Eighties. A fall in the incidence of poverty or an
increase in the wages can to some extent be the result of militant
agitations or the benevolent State policy. But a significant increase in
the volume of bank deposits can in no way be attributed to enlightened
State policies or to the militancy of the weaker sections. Bank deposits
cannot increase without an appreciable increase in the flow of income.
Similarly, the spurt in construction activities cannot be attributed to
any redistribution policy. There has to be sufficient material means
with the people for undertaking any construction activity. All these
point to conditions of prosperity and affluence in the State.
The question is, how can this be if the State is poor in terms of per
capita income. Though Kerala was poor in terms of per capita income, it
was getting remittances from the migrants outside the State. The volume
of remittances became fairly large since the mid-Seventies when large
numbers of workers started to migrate to the Persian Gulf. No accurate
data on the quantum of remittances is available. According to a recent
study, the volume of remittances was Rs. 3,530 crores in 1998. If so it
would be about 10 per cent of the SDP. The figure is much more according
to some other estimates. Some scholars estimate the remittances at about
25 per cent of the SDP. Needless to say, the per capita income accruing
in the State would have been higher than that of the country as a whole
since the onset of the Gulf migration.
It is the remittances which make Kerala an affluent state. As a class,
the migrants are motivated by expansive wants. Naturally, purchase of
sophisticated consumer durables, construction of posh houses etc., have
become the main pattern of expenditure. Many of the migrants purchase
land as a form of permanent investment. A portion of the money thus
being spent, very often in a lavish manner, trickles down to different
sections of society.
The fall in the incidence of poverty, rise in agricultural wages are
concomitant to this spending pattern. Significantly, Kerala society
began to display signs of affluence such as increases in wages, rise in
bank deposits, brisk construction activities, fall in the incidence of
poverty etc., only since 1980, when migration and remittances became
brisk. Remittances provide the means without which such redistribution
and improvement in the standard of living would have been well-nigh
impossible. Militant agitation and redistribution policies have helped
to trickle down the remittances among the weaker sections smoothly and
quickly, and thereby helped to improve their living standards.
The main drawback of the Kerala model of development, which relies on
remittances for its apparent prosperity, is its failure to strengthen
the base of the economy, particularly industry. The registered sector of
the manufacturing industry hardly accounts for seven per cent of the SDP
even in 2000, against 13 per cent in the country as a whole. The key
factor retarding the industrial development appears to be labour
militancy, which was acclaimed as the determining factor in the
redistribution process. On the other hand, insofar as industrial
development is concerned some sort of a reverse working of the
``circular causation'' seems to be evident, in which militancy retards
the other factors from moving forward.
The findings of a research study pinpoint labour unrest as the major
impediment to the diversification of the industrial base during the
Fifties and Sixties. The situation did not improve even during the
Eighties and the Nineties when huge bank deposits which could be used
for investment were available. In the face of the militancy of organised
labour, entrepreneurs seem to be reluctant to invest in industrial
ventures in Kerala. In fact, instances of entrepreneurial migration on
account of labour militancy were reported. Not surprisingly, the average
volume of fixed capital formation in the factory sector of Kerala was
only 1.48 per cent of the total in India even during the beginning of
the Nineties. Though militancy as such has been declining in recent
years, the legacy hangs on - ``the evil that men do lives after them''.
The Kerala model of development which relies on the remittances instead
of a strong economic base for the apparent prosperity is like a castle
built in sand. The whole process of redistribution and social progress
will be jeopardised once the remittances are discontinued. There is no
certainty that the remittances will continue for ever. Timely action
should be taken to make use of the remittances to strengthen the
economic base. The political leaders and policy-makers should strive to
evolve suitable strategies for using the remittances for this purpose
instead of pursuing populist policies and stage-managed development
programmes. Otherwise, the better fut
Sent via Deja.com http://www.deja.com/
Before you buy.