Monday, August 20, 2012


Emerging Kerala 2012
Prof. Joseph K. Alexander.

Kerala State has high potential for sustained and rapid economic development. Economic development is not mere quantifiable economic growth; but also changes in the production, exchange and distribution processes and the style and structure of the society. Society moves up to higher production levels and more happiness and wellbeing. The high literacy, social awareness and Human Development Index (HDI) can lead the State to speedy economic development and happiness. With the highest literacy rate (93.91 % in 2011: Kerala planning Board), high level of health facilities resulting in longevity and high consumption expenditure, Kerala achieved HDI -0.920, comparable to the highest ranked country Norway.  The messages of social reformers, of Christian missionaries in the 19th century and  the comparatively higher spending of the government in  20th century in primary education, health care and elimination of poverty has made this possible. This is the basic pro-development factor in the Emerging Kerala of 21st Century.

The abundant other pro development ambience of Kerala is:
1. Kerala the “God’s own country”, is the best for human habitation and their development.
2. Its geographical location, nearness to the sea on the west, rich gondavana forest in the Western Ghats (silent valley), salubrious climate, air, rail and cris-crossing road traffic and fertile land await high-tech utilization of its every inch by skilled and motivated human effort. The thousands of gene variety of the flora and fauna of this forest await discovery by scientists for all ills of mankind.
3. The highly intelligent, skilled, technically qualified, literate labour, quickly adaptable to any new technology is available in plenty. The Kerala unemployment level is 9 %, nearly all of them educated and skilled. Therefore they are ready to emigrate to any part of the World. They were and are responsible for the present day achievements of Gulf countries and to an extant of USA. Many Universities and research centers mainly in USA depend on Indian expatriate intelligence. Kerala educated and skilled workers are in great demand all over the World.
4. Large amount of foreign money is transferred into Kerala by our expatriates in Gulf countries. For want of proper investment opportunities all of that is escalating into conspicuous consumption of the Indian relatives. NRI remittance of Kerala Gulf Boom repatriates is around US $ 7 to 8 billion per annum {[ifad report on World Remittances to Home]. (One billion is 100 crores. Therefore Rs .40000 crores come in)} and account about 16 % of the total foreign remittances to India. It is around 25 % of the Kerala State GSDI (Gross State Domestic Income)
5. Consumption expenditure of Keralites is high because of their higher per capita income. It is around 35 % more than National per capita income (Rs. 80366 vs. India’s Rs.53331 at current prices of 2010-2011}. This comes not from production of goods and services, but from the multiplier increase in the income injected into the State by the foreign remittances. One rupee coming into the economy of the State passes through many hands in the production and exchange processes and does the work of many rupees. This is its velocity of circulation. If the average velocity of the rupee in the State is assumed to be a minimum of five per annum, the total money income injected rise to 40000 x 5 =Rs. 200000.
6. The high level of consumption of the Keralites is a great potential market for all consumption goods including durables and sophisticated modern gadgets of entertainment and leisure. Investors have thus a dedicated market for their new products.
7. Kerala is the least corrupt and cleaner State in India says Transparency International (2005).
8. Kerala now is a model for transparency in Governance. Chief Minister’s office and his working are open to the whole World through internet. Digitalization and internet connectivity is permeating into all Departments and activities of the Government. This will make government functions quick and transparent.
9. The “people’s Chief Minister” is  specifically concerned about inclusive growth of the marginalized and carried showers of care to all the needy homes in Kerala through his district-wise 24 hour prolonged grievance solution Melas. His fast-forward showers of care throughout the State made him the most acceptable performing chief minister of the Indian States.
10. Industrial relations in Kerala are the best imaginable with practically no industrial strikes’. Kerala employees of the organized and even unorganized sectors including house maids get comparatively higher wages through legislation and timely interventions by the labour ministry of the State. No wonder that there is considerable migration of unskilled labour into Kerala from other States- Bengal to Tamil Nadu in India. The guess-estimate is a minimum of 2.5 million.

Despite these favorable ambiences for achieving highest income and happiness, Kerala State has a low economic growth and low NSDP (Net State Domestic Product) with limping agricultural and industrial sectors. Yet the per capita income of the State is higher than the National per capita and the HDI the highest in the World. This is the paradox in the development of Kerala - the “Kerala Model of Growth”.  This "Kerala phenomenon" of very high human development and not high economic development results from the strong Tertiary (service) sectors. We cannot belittle rapid growth of service sector. In fact it is a stage that happens in the most developed economies which achieve peak agricultural and industrial growth. When it happens with slow growth of the primary and secondary sectors it is contradictory.

The service sector show phenomenal growth. From 1960 to 2011 Primary sector (agriculture and mining) scaled down from 54 % to 11.5%, secondary sector (industry) went up from 15 to 20.13 % and service sector jumped up from 29 to 68.8 % of the GSDP. This is the pointer to the future development of Kerala. Tertiary services can themselves be turned into high tech industries of primary and secondary sectors (agriculture and small scale industries) like:
1. Tourism of all types showcasing the life and structure of the State (typical example is Singapore: its every inch and every activity, a show piece for the tourists),
2. Health care and super specialty hospitals and Ayurvedic health centers of Global standards,
3. Educational facilities that turn out skilled human resources,
4. Advanced bio-tech research centers in “Silent Valley” flora and fauna gene sciences,
5. High-tech agriculture, green houses and ancillaries, (example Israel) and 
6. Industries that use least land area and lowest number of unskilled labourers (I T area)
These are some of the areas for sustainable economic development of Kerala. More can be added on to this list.

In 2003 Sri A. K Antony UDF chief minister conducted a Global Investor Meet (GIM) on Jan 18. Projects included a 550-kilometre, six-track express highway project, offshore sea sand mining, ecotourism in forest areas, and so on. There was large attendance and Rs.26000 crores worth Memorandum of Understanding (MOUs) for new ventures. As Jairam Ramesh   economic advisor to party leadership forewarned, most of these agreements turned out to be unborn or still birth struggle. The present Kerala scenery and people seems to be more pro investment and growth oriented.

Now the most successful and  popular Chief Minister of Kerala is organizing another GIM    named “Emerging Kerala 2012” on 12-14 Sep 2012 with the Confederation of Indian Industry and NASSCOM as key partners. He has identified investor friendly core sectors and two mega infrastructure of High-speed rail corridor (Rs.45000 cr.) and National Investment & Manufacturing Zone, Kochi – Palghat (Rs.51000 cr.). These mega projects and identified areas of investment are bound to further boost up production, employment and income of the State. Let us hope that the Global Investors and the State negotiators and media will show sagacity in negotiations to utilize the untapped potential of Kerala for breaking its development paradox - of persisting economic backwardness despite remarkable achievements in HDI.
Prof. Joseph K. Alexander, Director, Collegiate Education, Kerala Government Service (Retd.), is an economist. He was formerly, Head of the Dept. of Economics, University College Trivandrum and member of Kerala University Senate and other academic bodies. He was also the Director of the Christian Studies Center of the Kerala University. He is chairman of Kerala Regional Branch of Indian Institute of Public Administration and a former member of its Executive council at Delhi. He has published nine books and 25 research papers.