The Manorama Hortus venue on Friday saw a spirited debate on the famed Kerala Model that was first coined by the legendary economist K N Raj in the 70s.
On one side was economic expert Mary George and on the other was Kerala Planning Board member Ravi Varman. They were discussing 'Kerala Model Economy: Reality Check' at Manorama Hortus, a three-day art and literary festival that began on Friday.
Mary George said the Kerala Model, because of its poor agricultural and industrial productivity brought about by labour militancy, had become unsustainable. "We have to remain alert or we might fall headlong into a debt trap," she said.
Ravi Varman countered this, calling Kerala a "miracle state". He admitted that there was a period of "de-industrialisation" but more than counterbalancing this were two turnarounds. The first turnaround happened during the early 80s and this was fuelled by remittance money from the Gulf.
"Now there is a second turnaround. This is a time when social growth, always Kerala's strength, coexisted with unprecedented levels of capital expenditure," Ravi Varman said. "If both the LDF and the UDF could take credit for the first turnaround, the credit for the second one should rest exclusively with the Left," Varman said.
And he called this Left the "New Left". "The 'New Left', unlike the 'Old Left', is open to private capital and has acknowledged the importance of the market. Left politics has been reinvented," he said.
Mary George sought to poke holes in Varman's claims of increased levels of capital expenditure sitting well with high levels of social commitment. She said capital expenditure was made up of social and physical capital. "But Kerala's social capital is woefully poor," she added.
For instance, she said Kerala's capital expenditure on health is just 0.11% of its GSDP. "The National Health Policy states that it should be 8% of a state's GSDP," she said. And she said the investment on education was also a paltry 0.77% of the GSDP.
She then said that 98% of Kerala's revenue expenditure was spent on salaries, pensions and interest payments, undermining Varman's claim that a larger proportion of the state's revenue was utilised for capital expenditure. Ravi Varman said it was high time economists junked what he called the "artificial differentiation" between revenue and development expenditures. "It is the quality of life that matters," he said, suggesting that even revenue expenditure boosts growth.
At this point, moderator and Malayala Manorama's business special correspondent P K Kishore had a poser. "If we had such a great quality of life, why are our students flying abroad?" Mary George added another layer to the argument. She said highly qualified youth were leaving Kerala in search of "care economy" jobs in Europe. "They cannot clean the soiled clothes of their parents and grandparents but are willing to do that for foreigners for a high salary," she said.
She also said that the craze to study abroad was so huge and, eventually so futile, that over Rs 90,000 crore of such student loans have been declared as non-performing asset (NPA) by the RBI.
In defence, Varman said the tendency to leave Kerala was not a new phenomenon. "Kerala has always done this. Equally important, Kerala is not the only state in India from where students are flying abroad for studies," Varman said.
He expressed the hope that Kerala would acquire 'developed nation' status by 2040. "The Prime Minister has said that India would reach 'developed economy' status only in 2047, and mind you, there is a difference between 'developed nation' and 'developed economy' status. The second one does not mean that the country as a whole would reach developed stage but Kerala as a whole would," Varman said.
