Thirty Years of Indian Economic Reforms: the Growth and Development of Kerala
- Date and Time: March 10, 2022; 6:00 PM to 8:00 PM IST
- Topic: The Vikasarth Conversations
- Platform: Zoom
- Pulapre Balakrishnan: Economics Professor, Ashoka University
- Bornali Bhandari: Senior Fellow, NCAER
Moderator: Vinod Thomas- Visiting Professor, National University of Singapore
About the event :
The Vikasarth Conversations bring together a small and carefully curated group of “pracademics” engaged in legal, economic, and public policy spheres to deliberate on pressing governance challenges via an interdisciplinary approach.
- Reforms of 1991 have raised questions about fiscal policy and public finance, also about public sector with relevance to Kerala.
- We hardly discuss the issue of fairness in the nature of public expenditure and revenue
- One important question is whether kerala has moved a little too fast in targeting our expenditure towards public goods like health and education.
- Besides, tax revenues are unduly focused on lotteries, petrol and liquor
- Although growth rate accelerated after 1991, it was not because of the reforms, but owing to the revival of the Middle East after the Gulf War and the rebuilding boom which kerala took advantage of.
- However, growth during this period was uneven across sectors: Kerala’s agriculture sector shrank in terms of area, output and yield
- Growth has also had negative consequences on ecological security with extreme weather events frequenting the state through floods, landslides.
- The means to find a solution should be focused on property taxes and land use policies.
- One important challenge that Kerala faces is having almost no line of competitive production.
- We have to shift from export of labour to providing employment here, encouraging production locally.
- In this context, government plays a major role in catalysing generation of competitive lines of production by nudging producers to achieve global standards.
- Another major challenge is posed by regulatory policies whereby public interest is maintained. However, it shouldn’t be at the expense of entrepreneurship. Kerala has not paid much attention in this domain
- It is also not wise to prioritise distribution over production
- Tracing Kerala’s phases of growth, 1956-87 can be considered a period of stagnation, 1987-2002 as a period of moderate growth, and accelerated growth between 2004-11 (7.4% per annum) when we achieved middle income status.
- The main drivers of growth were tourism, expenditure on welfare and social sector, and remittances.
- However, between 2011-19, Kerala fell into a low middle income trap when growth was substantially reduced.
- Health and education, which were excellent developmental outcomes, can be leveraged as engines of growth through means such as medical tourism, health tourism, education tourism etc.
- There is high investment potential for Kerala where labour relations still poses a challenge and hence the failure to improve growth rate, the state of which is now exacerbated by the pandemic.
- Kerala is ahead of other states in terms of social development index, but one domain that needs considerable focus is the mismatch between resources and generating employment.
- Service sector is not homogenous, and there is a need to focus on sub sectors that are more productive.
- The requirement is to move from lower value added activities to higher value added activities
- Any economy has to be adaptive and dynamic in nature, and Identify comparative advantage of the state and leverage them to take the state forward in a sustainable way.
This event report was prepared by Sharon Susan Koshy, Associate, Research at CPPR