Brave moves, heavy odds

C. GOURIDASAN NAIR

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AS they say, percentages don’t always tell the complete story. Perhaps for no other state in India is this truer than Kerala. Hailed as a ‘model’ of human development, Kerala has been pushing at the frontiers of decentralized governance, innovative developmental planning and political experimentation over the last several decades. Its averages and percentages on most ‘positive’ counts are impressive and comparable to the best in the West. But it is also a state which has entered the new millennium with daunting developmental, social and political challenges. Kerala is in several ways at a critical juncture in its social and political history and economic development.

First, some of the positives: Kerala showed the highest rate of growth of Gross State Domestic Product (GSDP) during every year of the 11th five year plan and has topped even the GDP growth rate at the national level. At 90 plus per cent, Kerala’s literacy is comparable to the most advanced regions in the world. It ranks in second position in the state-wise hunger index in the country, next only to Punjab, indicating a relatively low prevalence of hunger in the state. Life expectancy at birth is the highest in Kerala at 76.3 years for females and 71.4 years for males and infant mortality rate (IMR) at 13 per 1,000 live births for both males and females is way below the national average. The state has the deepest and, perhaps, the most empowered democratic governance system in place with a bottom-up planning process that places people at its centre. Its experimentation in coalition politics with its turbulent vicissitudes is almost the stuff of political folklore.

And now, a few glimpses of the negatives: Kerala is probably worst-hit among Indian states by every increase in food prices. The area under paddy, the staple food of the three crore plus population, has been dwindling over the last few decades and continues to be a source of concern despite recent efforts to arrest the fall and to bring fallow lands under cultivation. Kerala agriculture is now predominantly focused on non-food commodity production targeted at the national and international markets and is, therefore, highly sensitive to the vagaries of the global market. When the prices crash in the international market, the impact is immediately felt in the state, but when the prices rise, they do not necessarily get translated into higher income for the actual producers of these commodities. The character of the Kerala economy is determined by the income from non-food commodity production and remittances sent in by expatriate workers, especially from the Gulf countries.

 

The flow of remittances from the migrant workers has begun to show signs of fatigue, but is still reasonably steady. And, currently, there is a spike in the international prices of Kerala’s non-food commodities. Thanks to the income that reaches Kerala’s shores through these two sources, the state is currently on a spending spree, buying up everything in sight and earning, in the process, the sobriquet the ‘test market’ of India. It is as if each Malayali is riding a tiger of consumerism, a journey with fatal consequences.

Although the level of abject poverty in the state is low, sharp disparities in income are beginning to show. Equally disturbing is the nutritional status of the people. Going by the estimates of the National Sample Survey Organization, the per capita calorie intake in Kerala is well below the national average, lower than even states such as Bihar, Orissa, Rajasthan and Uttar Pradesh. And, despite its impressive achievements in education and healthcare, the second generation challenges in both these spheres are proving to be quite gargantuan. Between these two extremes lies the reality of Kerala.

 

Kerala’s political terrain has undergone some fundamental changes over the years. If the first two decades after the state’s formation were marked by somewhat of an uncompromisingly adversarial relationship between the left and centrist forces, the compulsions of the new era have changed all that. The differences that separated the political divide have largely imploded, almost erasing the sharp differences that demarcated one from the other. Although known as one of the left bastions, Kerala’s politics is largely social democratic and the two dominant political formations – the CPI(M)-led Left Democratic Front (LDF) and the Congress-led United Democratic Front (UDF) – which between them have shared power for the last three decades, have increasingly begun to show convergence in policy and practice. Given the restricted leeway available under an over-arching neo-liberal policy regime, it appears that there is little either of the political formations can do to alter the state’s social, political or economic fundamentals.

But traditionally, it is the left which has shown greater sensitivity to the emerging challenges and gone in for policies and programmes that attempt to alter, if not the very foundations of the economy, at least the state’s growth and developmental trajectory. Thus, over the last one decade and more, the left has attempted a near-total overhaul of the system of local governance and, over the last five years, placed a renewed emphasis on social welfare and security, strengthening of the public distribution system, revival of agriculture, particularly paddy cultivation, and reforming the state public sector enterprises besides some much-needed removal of infrastructural bottlenecks that the state has been confronted with for a long time.

 

Kerala has attempted all this amidst the global economic recession. According to the State Planning Board’s Economic Review 2010, the impact of the economic downturn on the state was lighter than what was expected. The growth of the state domestic economy by 14.57% during the period proved a cushion, helping to moderate the anticipated increase in revenue and fiscal deficits as a ratio of the GSDP. There was bad news from the revenue deficit front, the deficit increasing by roughly 35 per cent from the previous year to Rs 5,022.97 crore in 2009-10. Similarly, there was a 24 per cent increase in fiscal deficit to Rs 7,871.60 crore in 2009-10.

As a result, the fiscal deficit to GSDP ratio, which had declined from 3.48% in 2007-08 to 3.16% in 2008-09, increased to 3.42% in 2009-10. The quality of fiscal deficit also deteriorated. While 58% of this was utilized for financing the revenue deficit in 2008-09, the share increased to 63% in 2009-10. Central transfers to the state have also been volatile over the last two decades, Kerala being placed at the lowest rung (2.39%) in states’ share in central transfers. If Kerala could hold its ground amidst this generally bleak scenario, it is only because the state’s own tax revenue has been growing at a healthy rate over the last several years.

 

What goes to the credit of the state is that, despite these constraints, it did not opt for expenditure compression or subject itself to the fiscal deficit ceiling imposed on it by the new national fiscal order. Nor did it cut down on its welfare commitments. Instead of slashing or deferring its welfare payments, the state under LDF rule chose to clear all welfare payment dues and raise pensions across the board with the promise of further hikes in future. In the 2011-12 state budget, the government even proposed to deposit Rs 10,000 for every child born to Below Poverty Line (BPL) families and half that amount for children born to Above Poverty Line (APL) families as an endowment, redeemable with interest once the child clears ‘plus two’ to get bank loan linked support for higher studies or skill development or self-employment.

It also announced extension of the Rs two-a-kilo ration rice scheme to all ration cardholders in the state, numbering in excess of 65 lakh. Coming as it did on election-eve, it has been dubbed a gimmick, but the track record of the LDF government tells a different story. Despite being a consumer state that is subject to the vagaries of the national commodities market, the government has been able to prevent price escalation by making all essential commodities available through the extensive public distribution network, this notwithstanding the heavy subsidy bill over the last five years.

Another interesting feature of the state finances over the last half-a-decade has been the relatively rapid growth in capital expenditure, from a mere Rs 681.75 crore in 2004-05 to Rs 2,936.06 crore in 2009-10. Despite increased commitments on interest payments, salaries and pensions – the three constituted 75.83% of the revenue expenditure in 2009-10 – prudent fiscal management and reasonably successful efforts at revenue augmentation have helped avoid any overdraft or treasury payment crisis over the last few years. The state is now eagerly looking forward to the rollout of the Goods and Services Tax (GST) which, it is estimated, would put more money in the hands of future finance managers to meet rising demand for all kinds of infrastructural facilities and services.

The impressive manner in which a majority of the state public sector enterprises, numbering around 40, have been nursed back to health is yet another interesting development in Kerala over the last five years. Barely five years ago, almost every second state public sector enterprise was ailing. Some of these were considered irredeemable and a few others were up for sale. However, over the last five years, the LDF government has succeeded in breathing life into them, helping nearly 30 of them earn working profits and launching nine new ancillary and independent public sector units. One major strategy adopted by the state government was to ‘marry’ state PSUs to their central counterparts engaged in similar line of operation.

 

The reasonably healthy state of Kerala’s finances now, the measures taken by the LDF government to curb inflation, and its efforts to provide social security to the largest swathe of people, all have a great bearing on the forthcoming assembly election slated for April 13. Kerala had witnessed wild swings in voter behaviour in all elections over the last one decade. In the 2001 assembly election, the swing went in favour of the UDF, the front securing 99 seats out of 140 plus one seat won by a UDF rebel candidate. In 2006, the political pendulum swung to the other end, enabling the LDF to garner 99 seats. In the 2009 Lok Sabha elections and the 2010 local body elections, it was the turn of the UDF to score thumping wins. What 2011 holds for the rival alliances would indicate whether the initiatives of the LDF over the last five years have altered the coordinates of public sentiment in its favour.

The left in general and the CPI(M) in particular, have much at stake in this election because a set-back in Kerala could prove debilitating for the entire left at the national level. The incumbent CPI(M)-led government has much to its credit, but the raging factionalism in the state CPI(M) has taken the sheen off much of its good work. In 2006, the LDF had romped home riding a wave of support for V.S. Achuthanandan, the senior most CPI(M) leader in the state. Despite having been in power for the last five years and his advanced age, Achuthanandan’s popularity is by and large intact. However, given the state’s record of never allowing a government to come back to power, except after the Emergency, the left is faced with heavy odds in this election.

 

Comparing the two fronts, it does appear that the interregnum between elections has been used better by the left to push reforms in grassroots governance and a deepening of the democratic process, the most striking initiative being the decentralized planning initiative launched in 1996 as a follow-up of the 73rd and 74th amendments to the Constitution. The track record of the Congress and its allies has, in comparison, been tardy and half-hearted.

Starting out on a campaign mode, the left took planning to the grassroots, creating a third tier of political stakeholders. Initially, it was largely a centrally guided mission, with each small step being decided through a method of trial and error, but over time the whole process has stabilized somewhat. The initial promise was that one-third of the budget allocation would go to the local self-government institutions. The state did come close to that target, but the momentum has since decelerated, mainly on account of the low absorptive capacity of the local bodies and continuing institutional constraints. Still, the local self-government institutions are now in robust health, financially and politically, with several of them reflecting a new culture of constructive competition. This has resulted in watershed-based agricultural planning, reconstruction of the crumbling rural infrastructure, greater focus on the educational and healthcare needs of the local communities and attempts at door-delivery of welfare benefits.

Out of the 1,000-odd local self-government institutions in the state, including five municipal corporations and 53 municipalities, a majority were under LDF control till the last elections in 2010 when the majority tilted towards the UDF. However, this has not resulted in any wavering in the state government’s commitment to decentralized governance. If anything, it has been pushing ahead with its efforts to institutionalize the decentralization process, a great impediment to which has all along been the lack of integration between the local self-government institutions and line departments.

 

The flagship scheme of the state and the local self-government institutions for poverty alleviation is the Kudumbashree Poverty Alleviation Mission. Kudumbashree, built around three key components namely, micro-credit, entrepreneurship and empowerment, has helped unleash the organizational and entrepreneurial skills of tens of thousands of women across Kerala. With an official membership of 37 lakh, the Kudumbashree movement has created a new tier of stakeholders in the panchayat and municipal wards. The state has also decided on 50% reservation of elected positions for women in the local bodies which should, ideally, become a launch pad for women to assume new responsibilities in the higher tiers of democratic governance.

 

It is not that the process of decentralization in Kerala is without blemish. Increasing bureaucratization of the political leadership at the grassroots and trivialization of the high concepts of gender and natural resource management at the grassroots are disturbing aspects of decentralization as it happens in Kerala today. Despite all the tall claims, the role that women get to play in decision-making at the grassroots is minimal and, going by the list of candidates of various parties in the fray in the assembly election, including those of the left, there is no sign that women activists from the grassroots have been given the prominence they deserve.

Seen from a governance perspective, a major cause of worry is the rising tide of corruption at the grassroots. The local bodies also lack the special skills needed to manage institutions and the professionals transferred to them. The local bodies have also displayed a marked reluctance to raise their own resources with the taxation authority vested in them and the people have shown an equally noticeable reluctance to accept such authority of the local bodies. The focus at the local level is on infrastructure and not on human development and it is time the local self-government institutions shifted their focus to social security, environmental sustainability, evidence-based policy-making and data-based planning. If decentralization is about creation of fully empowered citizenship, Kerala still has a long way to go. For this, the local bodies should move from mere administrative functions to management of resources and capabilities, from mere fund utilization to problem solving and from creation of more infrastructural assets to effective public service delivery.

 

Outside the realm of governance, the state has witnessed a significant social and political churning and identity based struggles and assertions which have either been ignored or suppressed by the political mainstream. Adivasis, dalits and women have been striving hard over the last several years to be heard on their own but, in the absence of an independent civil society, have so far had only little success. The social processes that cumulatively contributed to Kerala’s transformation from a feudal to social democratic and consumerist society currently seem bogged down and waiting for a new trigger to move to the next level in social re-engineering.

In the absence of such new initiatives, the state could well see both its democratic foundations and delicate social fabric challenged by sectarian violence and increasing criminalization, mostly driven by income disparities and aspirational spirals. Mafia of diverse kinds – active in the booming real estate market, illegal sand mining and sale of spurious liquor and unauthorized lotteries – are working hand-in-glove with politicians and civil and police authorities to exploit the present fluidity.

Democratic decentralization and frenetic urbanization have changed the matrix of public service delivery and created new challenges for the state and local administrations. One serious issue confronting both of them these days is the management of huge quantities of waste being generated by the urban and quasi-urban clusters of Kerala. All across the state, clashes have erupted between urban local body managers and the populations in the suburban panchayats over dumping of solid waste. This has added a new dimension to the already sharp contestation between the ‘development at any cost’ lobby and those struggling to keep the state’s natural endowments such as its rivers, backwaters, grasslands and marshes unexploited.

 

The quality of education in Kerala has also suffered over the years, reflected in what is widely described as the ‘unemployability’ of the Kerala youth. The youth are largely incapable of meeting the demands of the emerging labour markets within and outside the country. The proliferation of self-financing institutions in the realm of higher and professional education and the growth of the unaided sector at the school level have only added to the problem, one disturbing fallout of this being the neglect of the government sector, with deleterious consequences for the lower income groups in Kerala society. Although some concerted efforts have been made to improve matters, there is still a long way to go. Further, despite Kerala’s high literacy levels, women’s work participation rate, particularly in the public sector, is lower than even the national average.

The Gulf boom, a crucial prong for the Kerala economy, may not have ended and the remittances might still appear stable, but the state economy will soon begin to feel the impact of the economic meltdown. There was a negative growth of 0.36% in non-resident Indian remittances during 2009-10, from Rs 37,019 crore to Rs 36,886 crore. International migration has been in a state of stasis from 2003 to 2007 and now, given the economic crisis which has devastated the economies of several Gulf states, the situation could only have become worse.

The employment scene back home too is bleak. There are as many as 43.28 lakh job seekers on the live rolls of employment exchanges in the state. The pace of employment growth in the state has been low over the years, particularly in the organized sector, though robust economic growth, particularly the growth of the service sector, has somewhat helped ease the pressure. Paradoxically, Kerala is dependent on migrant workers from such far-off places as Bihar, Uttar Pradesh, Orissa and Bengal to get many jobs done. Simultaneously, there has been migration of jobs to destinations outside Kerala with such labour-intensive traditional industries as coir and cashew shifting to the neighbouring states.

Coupled with all this is the problem of ageing, an inevitable consequence of the demographic transition. Currently, those aged between 15 and 59 years constitute the single major component of the population, nevertheless a sharp increase in the proportion of the elderly (those above 60 years) is proving to be a disturbing demographic challenge for Kerala. The number of elderly is expected to exceed 5.4 million, constituting 15% of the population, by 2021.

 

Kerala’s achievements, built on a narrow production base, have been made possible by the proactive thrust given to human development and social security. But, in the framework of the new economic order, will Kerala be able to maintain its welfare commitments and also manage a high growth? That remains its key challenge.

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