Kerala 'model' of development revisited: a sixty-year assessment of successes and failures

ABSTRACT

This paper is about revisiting the famed Kerala "Model" of Development. It covers a period of six decades, from 1960 to 2020. The remarkable achievements of the State of Kerala in India in basic human development indicators despite a very low per capita income had attracted the attention of development economists and other social scientists interested in the development of poor economies. However, it was often referred to as a case of "high human development with low per capita income". This paper traces the trajectory of high human development that ultimately resulted in high economic growth in terms of two phases of growth. It measures that the early demographic transition, that is a result of high human development, itself contributed to a high per capita income growth in the second phase. The sustaining of the high growth was also a direct result of human development through large scale emigration of adult males to the Gulf countries for employment resulting in a long-term trend in remittances to the Kerala economy. The role of favourable initial conditions and a vibrant public sphere has been highlighted to emphasize the role of public action in demanding the delivery of human development services from the sub-national state. In this otherwise positive scenario, the paper notes the highly skewed nature of the high growth process with a diminishing role for the commodity-producing sectors of agriculture and industry. It has adversely affected employment generation to the increasing working age population. Official measurement of unemployment has been argued as inadequate and in its place the concept of under-utilization of labour has been highlighted. The problem of high unemployment (those seeking work) and under-utilization of labour (both seeking and not seeking work) has been shown to be considerably higher for women than men. This has resulted in the under-utilization of the labour of a significant share of educated women in the working age population. This problem has been termed as a "spectacular failure" on the part of the state. The failure is rooted in the inability of the state to manage public finance as well as public investments. Three examples of these "state failures" are (a) a declining revenue collection efficiency, (b) persisting loss of the public sector enterprises, and (c) waste of public resources due to time and cost overruns in public investments in basic infrastructure. The outbreak of Covid-19 pandemic in 2020 in the background of the massive floods of August 2018 is portrayed as the beginning of a new challenge for Kerala's development trajectory.