Thursday, April 14, 2016

Kerala elections 2016 and the state's economic outlook

The fourteenth legislative assembly elections is on its way to elect  members of the 140 constituencies in Kerala.  In the past elections, with out fail we have seen the political bias of the people of Kerala swinging  between the  Congress led UDF and the Communist led LDF. So this year if we go by the past trend and supported by the plethora of media result predictions,  LDF is likely to rule the state. It is widely predicted that the BJP will create history and may open an account for the first time in Kerala.

This article is not an attempt to go into the merit of electing any particular front, rather it focuses on the current state of affairs of Kerala which lags way behind other states in India and how to make economic progress going forward.

Kerala is known around the world for its beautiful green landscapes, sandy beaches, and sublime backwaters. Kerala is different from any other state of India with comparatively fewer people below poverty line, and a very high human development index. That is not all, though. Kerala has the lowest infant mortality in India, highest life expectancy, and lowest school dropout rate in the country. These are all qualities par with that of a developed country. 

Yet, Kerala has a laggard economy which depends heavily on tourism and the money from the Gulf, sent in by 2 million of Malayalis who work abroad. Lack of job opportunities is a huge concern in the state. There is not much of a manufacturing base to this state thanks to the militant labor unions supported by political parties. So job opportunities in Kerala are far lesser compared to other states like Maharashtra, Andhra Pradesh, Uttar Pradesh, West Bengal, Tripura and Delhi—where there is a lot more manufacturing competitiveness.

People from Kerala are forced to migrate because there are no jobs at home. “Manufacturing in Kerala is a sector which is almost dead. This state is too focused on the service industry, such as tourism.

Some analysts say that the problem starts from the fact that Kerala is an overpoliticized and “over-extended state”. They debate that radical unions, encouraged by successive communist governments, have acted as “pressure groups advancing particular vested interests”. Amartya Sen, Nobel laureate economist says Kerala has to “learn from the world”. Its famed model of development, which is still hyped as the most inclusive one, appears to have hit the buffers. Economists say that the Kerala model is grinding to a halt because the social and political groups having fulfilled their original agenda now have no new agendas. Society has lost its capacity to set collective goals.

Having said that the ASSOCHAM (Associated chambers of commerce and Industry of India) economic research bureau has recently made the following recommendations to propel the economic growth of Kerala which the politicians taking the office need pay attention and set their focus on.

Agro-based and Food Processing

The food processing industry has been recognized as a potential area for development of enterprises in the state. Food processing industry can play a significant role in the Kerala economy. It not only would contribute to the food requirements of the state it has an employment orientation too as it is highly labor intensive.

Textile and Garments

The textile industry undoubtedly is also one of the important segments of the State economy. The need of the hour is to further strengthen this industry, enabling it to fully exploit available opportunities in the domestic & export markets, and realize its full potential.

Rubber Industry

Rubber is another key industry providing employment opportunities for the farming community. The State must act as a facilitator towards their better growth prospects. A few possible ways to help them could be the following:

Given the nature of rubber plantations, institutional credit is scarcely available to rubber plantation sector. As rubber plantation requires large capital in the first year of plantation itself, the growers face lot of hardship in generating their own capital. Greater availability of finance will encourage more farmers to take up rubber plantation, who are otherwise not able to do so due to inability to self-finance the activity.

Rubber prices are subject to wild fluctuations owing to both domestic and international factors. The State government must try to provide some sort of stability to this.

Rubber plantation farmers often do not realize fair selling price. The middlemen marketing chains affect the profitability of small holders. Rising labor costs, volatile fertilizer prices are the two other severe challenges faced by rubber farmers. The price instability is driving the small farmers to indebtedness. Promoting farmer producer societies that function as self help group and empowers the farmers economically needs to be encouraged.

Tourism

Tourism sector plays significant role in the social-economic development of Kerala. As we have seen significant growth has been recorded in terms of tourist arrival and foreign exchange earning of the state. State should ensure upon providing adequate infrastructure facility and encourage private sector participation for the tourism sector development.

In conclusion, a stable and reliable government are key to achieving the above goals. If the incumbent government focuses on the development of the state their primary goal, the result will speak for itself and political stability can be assured. Policies that do work need to be cemented rather than overturned by the next government taking the office. The people of Kerala will thank them and keep them voting back to power.


Politicians need to realize that outdated ideologies or rather bankrupt ideologies have no place in the present scenario.

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