Sunday, November 20, 2011

Where is Kerala going?

http://www.mathrubhumi.com/english/story.php?id=116880
Posted on: 21 Nov 2011

John Samuel




Context of Socio-economic Development of Kerala

Kerala is at a critical juncture of its history, political process and economy. Over the last fifty years, Kerala achieved significant achievements in the area of social development, democratisation and, to some extent, economic growth.

Over the last 100 years, many factors, including a relatively healthy political party process, robust mass media, deeper influence of social reform movement and better access to education, played an important role in achieving better social development indicators. This has created a relatively empowered middle class society (in comparison to other states of India) with better social and political consciousness. The progressive policy consensus among key political parties, with better investment in social sector, from 1957 onward served its purpose. However, the older policy framework is now more or less saturated and not good enough to help us to develop pathways to the future. Though it is important to have a sense of history, it is time not to get too much preoccupied with any past model so that we can look forward to the challenges and opportunities in the next fifty
years. Hence, it is important to have forward looking new political and policy consensus towards building the future of Kerala.

The relatively better performance of Kerala in social development and democratisation is a result of the cumulative process of social reform movements from the early 20th century, relatively better outreach of education and health facilities (initiated by the missionary and church network and later on by other community network organisations), the development of the mass media, the political process in the backdrop of freedom struggle and progressive movements and the relatively better cosmopolitan fabric of the society. The social democratic political and policy process from the 1950s also enabled to create conducive governance environment for achieving universal primary education, highest literacy rate, relatively better health care, and development and gender indicators. The investment in education and health in the 1950s to 1980s created a competent and skilled labour force that could negotiate in the global market. Kerala is one of the first and most successful states in India
in globalising its relatively skilled or semiskilled labour force, with waves of migrant workers to Gulf countries and other parts of the world. The economic boom in the Gulf States, due to the hike in the oil price also created demand for skilled labour force for the modernisation and socio-economic development of the oil producing countries. The skilled labour force from Kerala contributed significantly towards the socio-economic growth of India and the Gulf States. The export of labour force towards the development of secondary and tertiary sector to different parts of the world and the consequent expatriated income of migrant labours created a new wave of economic growth in Kerala from the late 1980s and early 1990s.

While the growth in expatriated income created new demands in service sector, it also paradoxically contributed to the decline of primary sector- particularly that of agriculture. The cost of land and labour increased very significantly and the hyper-unionisation and party politicisation also created less conducive atmosphere for the development of manufacturing and secondary sector. In spite very significant growth in service sector (particularly consumer, health, education, housing, transport,
travel and allied areas), there was no corollary growth in the capacity of infrastructure. The migration of skilled force also contributed towards cumulative bran-drain from all sectors, including that of political process. This has created the paradox of the development of Kerala: higher socio-economic development, high per-capita income, less infrastructural facilities, conservative social values, better gender indicators along with less women's empowerment, and a civil society divided on the basis of party political affiliation and community organisations.

Kerala society jumped from Semi- feudalism to Consumerism via Communist aspirations - all within a span of sixty years. Hence, our own social and political culture became a strange and confusing mix of feudal- left- and consumerist and conservative- all in one! We also jumped from a predominantly agriculture - (primary sector economy) - to service sector (Tertiary sector) economy within  40 years. We have moved rather fast from a rural based joint-family or networked-family social settings to nuclear and post-nuclear settings. A very significant section of our people moved from lower-middle class subsistence economy culture to a surplus bank balance - fueled by expatriated income

From the 1990s, there was also significant deficit in the quality of youth leadership both in political and social process of Kerala. The expatriated income, the tremendous growth of consumer market and the decline of the quality of higher education contributed towards a new vulgarisation of politics, society and culture. While Kerala successfully became a part of the globalisation of labour force in the 1970s and 1980s, Kerala has failed to negotiate with other aspects of economic and social
globalisation.
Though Kerala was well positioned to get the best possible opportunity out of the growth of IT sector in 1980s, the state missed the opportunity due to the lack of initiative to capture a significant opportunity to create at least a million more employment in the IT Sector. The lack of appreciation about the future potential of the sector and anti-entrepreneurial minds-set contributed towards the failure of the state to reap the benefits of the tremendous economic growth in the new sectors in the 1990s. The hyper-party politicisation of the development debate, the lack of long term vision in policy process and a deficit of creative imagination within the civil society led to a new stagnation of politics, society and economy of Kerala.
Though there is dynamism of pseudo- debates and discussion in the political process and seeming economic growth- propelled by consumer market and expatriated income, there is stagnation at the core of the society and politics in Kerala. There is in an increasingly trend of a rather cynical discussion and debates around the middle-class and even the quick rhetorical debates on the 24X 7 TV Channel tend to replace the substantive political discussions based on research, information and public discussions and debates. The term 'public' or 'civil society' or 'pothu-samooham' is increasingly substituted by the 'reality' show of predictable speakers, 'invited' audience and celebrity anchors. The Politics of TV Performance or street protest in front of TV Cameras unwittingly eclipsed and consequently eroded substantive political discussions and educations in the society.

This lack of real searches, dialogues and discussions between the real stakeholders and active organisations in requires serious exploration and discussion among all key stakeholders of the society to imagine a New Kerala: a Kerala that can help to nurture ideas, leadership, and innovation that can transform the state, India and the World. A more confident,optimistic and vibrant Kerala can make wonders in the society and the world itself.

More than ten percent of the people of Kerala now live and work outside the state. The migration culture of Malayalies in the last seventy years and the money and ideas they brought back to Kerala played a very key role in influencing the society and politics more ways than what is being generally being acknowledged. From the nineties onward, Kerala society is more in a post-nuclear family mode-where the members of a family are dispersed far and wide- and often virtually connected- or networked: rather than sharing a life or space. This also means a society of lots of elderly people and young people and nothing in between.

During the last ten years, there have been significant social and political churning in Kerala, resulting in new kinds of identity based assertions, increasing criminalization and violence in society and party-politicisation of issues to do with economic development of Kerala. There are many symptoms of a larger issue of social, cultural and political transition of Kerala in the context of new consumer materialism and neoconservative values and sectarianism - that came to define our society, culture
and politics in multiple ways.

Hence, the most important challenge for the political and policy leadership of Kerala is to challenge the stagnation that is settling in at the core of our society and to have a new movement for renewing the creative energies, recharging our potential and crating a passionate vision for the future of Kerala. Such a passionate vision and new creative movement for Kerala should create conditions for the renaissance of Kerala in 21st century. This means it is important re-imagine a new Kerala- with a long
term vision of the next fifty years, medium term vision for next 20 years and clear short-term policy and programme framework for the next five years.

Emerging Issues
Kerala is in the midst of a profound transition. It is important to understand the emerging issues that
will have a relevance to the people and governance of the state. It is important to consider few important issues and to develop viable and practical approach to those issues.

There are nine key issues that need to be addressed with a sense of urgency and clear plan of action.

1) Huge number of educated unemployed.

There are around 4.2 million registered unemployed in the state. This means around 12% of population of Kerala are unemployed or underemployed. The issue of unemployment in Kerala was addressed through the migration of skilled and semi-skilled and professional workers from Kerala to the rest of India and the world. Kerala has one of the highest rates of suicides in India and world. And one of the main reasons for high number of suicides is the lack of employment opportunities and the social pressure from a highly consumerist and conservative society.

As the labour market is getting increasingly saturated in many parts of India and the world, the biggest challenge is Kerala would be to create millions of new employment opportunities in a mission mode.

Issue of inequality and poverty can only be addressed if the causes and consequences of unemployment are addressed in a sustainable way.

2) Corruption in Governance and government
There is a wide spread discontent against corruption at various levels. The various allegations against government departments and ministers of this government and previous government created an
atmosphere of cynicism and anger among the common people of Kerala. There are various kinds of corruption- including the most obvious forms in appointment of teachers in the 'aided' schools and colleges, controlled by community-cast- networks across the state. Hence addressing corruption through pro-active policy framework and action programmes would be crucial to influence a larger cross section of people in Kerala.

3) The crisis of food production and agriculture

The migration of skilled and semiskilled labours to the gulf and other countries impacted the economy and agriculture of Kerala in a significant way. While this has created new employment opportunities in the construction sector and service sector, it also created deficit of labour in the agriculture sector. And the rapid shift to cash crops such as Rubber paradoxically increased the income of a section of middle class and at the same time adversely affected the food production in Kerala. Due to the
migration of semi-skilled labours to others states and gulf, and due to new employment opportunities in the construction sector, rubber plantations, and service sector, there has been an acute shortage in the agriculture and farm sector. This has increased the cost of labour very significantly, making the cost of agriculture production very high. As a result, Kerala is dependent on Tamil Nadu and other states for food. This has significantly increased the cost of food in Kerala. Such a situation along with
the inflation and fluctuating price of diesel and petrol created a steep price in the food price. This has created a new sense of discontent among the poor, lower middle class and government employees of Kerala.

4) Increasing criminalisation within the society.

The most evident form of criminalisation in Kerala is through the emergence of 'quotation-gangs'. These are group of young people living in a consumer society – with an urge to make quick money to meet the 'demands' of the market. They are primarily used by group vested interests with the covert support of local political leaders. They are involved in a) real estate mafia b) Illegal sand mining c) getting and selling spurious alcohol from other states and d) using force to get back loans or capture assets of those who defaulted on loans to the banks. They are also involved in planned and targeted murder, extortion and threatening. This has increased tremendously in the last five years- resulting in high profile murders, planned attack etc. Hence, addressing this issue would be crucial in the context of Kerala.

5) Rights, Safety, Security of women.

In spite of good gender-development Indicators, when it comes to women's rights, space and empowerment the track record of Kerala is not encouraging at all. In spite of the relatively high educational achievement of women, there are less number of women in political leadership and there is less spaces for women to assert their rights and space. This situation needs to change.

Recent attack against a young woman of twenty three in the train and her consequent death created a sense of anger among all cross section of society in Kerala. There is an increasing tendency of harassment of women in public as well as private spaces. Hence it is important to have concrete measures to address this issue in a proactive manner – with a sense of mission.

6) Environment degradation and vulnerability to natural disaster.

Due to the over exploitation of rivers (though illegal sand mining) and also the tendency to fill in the marshy- land (used for paddy cultivation) for construction purpose has created acute shortage of water in a state with relatively high rain fall. The new wave of urbanisation and the lack of clear programme of sanitation polluted the water sources. In the context of new urbanisation, based on the apartment-culture, scarcity of water will be an important issue. The pollution of water, lack of adequate sanitation, and breeding of mosquitoes everywhere, induced new communicable disease, killing so many people. The unprecedented pollution of rivers and water bodies lead to an environmental crisis, resulting in floods and other natural disasters. There is hardly any well planned programme or process to address the issue of environmental degradation, pollution,
scarcity of water and natural disaster.

7) Less quality of infrastructure

While Kerala has large quantity of roads and almost universal electrification, the bad condition of roads and regular power-cut created a sense of frustration among the people. The lack of regular maintenance of roads, along with rapid increase in the number of vehicles have created enabling environment for huge increase in road accidents in Kerala. The lack of good roads and the constant power-cuts have adversely affected the potential of the tourism sector in Kerala. This also proved to be a hindrance for creating new employment opportunities in Kerala.

8) The issues of marginalisation and Poverty

In spite of relatively better social development indicators, there are many communities and people still at the receiving end of poverty and marginalisation. A very significant number of people from Adivasies, dalits and fisher folks are still at the receiving end of poverty and marginalisation. Lack of land, productive resources and sustainable employment and income create seasonal as well as entrenched poverty among a section of the society. Hence it is important to have special focus to
address the causes and consequences of poverty and marginalisation in Kerala.

9) The vulnerability of Elderly People:

Due to intense migration of professional and skilled labour to different parts of India and the world, there is a real issue of the new vulnerability of elderly people, particularly those who have crossed seventy years. Many of them stay alone, and a large number of them do not have any health or psycho-social care. And Kerala will have very large number of elderly people and addressing their issue of health, security and developing support system would be crucial in the context of Kerala.

Kerala: Pathways to Future
It is important to have a paradigm shift in the socio-economic growth model of Kerala. The key challenge is how to build on the existing strengths of Kerala and at the same time going beyond the old policy paradigm to a transformative paradigm of socio-economic- and cultural renewal and renaissance of Kerala. On the one hand we need to address issues of poverty, marginalisation, and environmental degradation and on the other hand it is important to envision a socio-economic
paradigm appropriate for the making of a just, equitable, sustainable and prosperous Kerala.

Developing a robust and sustainable local economy that can negotiate with global economy – with high quality products and services- would be crucial for the future socio-economic viability of Kerala.

When there is high economic growth in the service sector, coupled with high unemployment rate, increasing sense of social or economic inequality- with identity connotations, and a new wave of consumerist materialism, there would be more chance for criminalisation, sectarian politics and communal tensions. So today the most important and challenging task is to create enabling policy and infrastructure conditions that can create millions of new jobs in the next ten years. While there will be significant opportunities for high-skilled professionals in the global labour market, there would be less opportunities for millions of semi-skilled and skilled labour force.

There is an estimated bank deposit more than 1.3 lakhs crore of rupees in Kerala and only 55% of this given as loan to be used. And even this is more often used n the consumer sector (like housing) rather than productive sectors. Here too most of the new investments are in the real estate, housing and retail sector. There is less significant investment in manufacturing or new knowledge economy sectors. Instead of inviting foreign investors, there is a very significant opportunity to create a new
entrepreneurial culture – by promoting locally and globally networked small and medium scale enterprises in select areas. It is also important to strengthen some of the traditional manufacturing sectors such as coir, cashew and hand loom- in a way that they are competitive, effective and economically viable. However, this also requires new infrastructure (road, power and water) facility and supportive investment climate. It is possible to create two million jobs in the networked enterprises in knowledge sector( R&D, IT, ) , Service sector( community tourism, health, education, ) and manufacturing sector( agro-industries and food processing,, garments, cosmetics ).

While all these require much detailed analysis, public discussions and master plan for the next ten years, it is also important to highlight few of the policy options in the context of the forthcoming elections in Kerala. It is important to begin to think about possible policy options, within the next five years. What follows is not a comprehensive policy framework, but more of an indicative framework that may help to address some of the issues to a certain extent.

Many of the potentially transformative initiative may not need more money, though it may require inspired, innovative and imaginative ideas and a leadership committed to long term development and renewal of Kerala. It is the present approach that needs to be revisited. It is time to talk about grassroots - and local level initiatives- of scale - to transform Kerala. It can create more than 1.5 million new job opportunities in the next five years. Creating strong and sustainable local economies
and linking with the global is the key. Now we are doing the opposite- linking global economy to the local- without any capacity or culture- and this create a completely false kind of service economy -based on consumerism rather than effective productive capability.

The key is developing productive capacity, vibrant local economies, grassroots entrepreneurial initiatives- public partnership, competitive local market that can negotiate with bigger market with niche comparative advantage. All these need enabling social, cultural, and infrastructural environment. We need a completely new different way of looking at things than the present mode of doing things- either old wine in new bottle or new wine in old bottle. We need to envision a new Kerala. We need a paradigm shift- nothing less than that. We need to renew and re-imagine society, economy and governance to create a sustainable, just, vibrant and peaceful Kerala for the coming generation. It is to time to invest in a new Kerala, laying the foundations for the future- Making Change Happen!!

Erosion of European economy?

The New Age, Dhaka.
19/11/2011 22:50:00
http://newagebd.com/newspaper1/editorial/40572.html

The economic crisis of Europe also needs to be understood in terms of the history of surplus economy created during the colonial era and the character and nature of economic growth and the political development of the region in the post-second world war era. Writes John Samuel



Greece is more than a country. It is a civilization that deeply influenced the culture, society and political process of the western and southern Europe. If the number of people marching on the streets and the increasing discontent of citizens in many countries of Europe is an indication, many of the European countries are getting in to a precarious phase of volatile economy and state. Though the economy of Greece does not make a big chunk of the economy of European Unions, the deeper economic and consequent political crisis of Greece is indicative of the shape of possible trajectories of the economy and politics of many countries in the European Union. In wake of the economic crisis of 2008, Greek economy suffered as the main contributors to the Greek economy, shipping and tourism, suffered, resulting in unemployment and decreased tax revenue of the government. The trouble is that more than five countries, including Ireland, Italy, Spain, Portugal, are dealing with a possible debt trap, and consequent economic recession. In spite of relatively stable economies of Germany, France or Netherlands, there is a likelihood of a more vulnerable Euro and possible economic recessions. This will have wider political and policy implications, in terms of new contestation at the national level and debates over the mutual responsibilities of countries within the European Union. The present financial crisis in Europe will also affect the quantity and quality of the international development aid of many countries, in the context of the new austerity measures.

In a way, the ongoing economic crisis in Europe is the phase two of the financial crisis that began to be evident with the crash of Lehman brothers in 2008. In a largely credit and consumerist driven advanced capitalist system, the greed of speculators in the financial capital market through new derivatives and bonds eventually resulted in to the fall of the speculative finance capitalism, driven by paper money and ‘fictitious’ capital movement on paper. European Banks exposed to the US market also got affected by the crisis. Within Europe, a low rate of interest and easy credit led to the increasing borrowing and consumption, fuelling more demand, which showed relative resilience in the wake of the financial crisis in the US in 2009. However, easy credit also increased the credit at the household and financial sector. The banking sector in Iceland collapsed in the first phase of the financial crisis in 2008. Though many countries such as Spain and Ireland had surplus budgets, the bailing out of the private banks and increasing public expenditure eventually increased the deficits. As the economic crisis began to unfold in many countries, many factories were closed, leading to unemployment and financial hardship at the household level, fuelling further the state expenditure for unemployment benefits and other welfare measures. The increasing instances of unemployment led to the default of the credit card repayment as well as decreasing of the revenue of the state from the tax. So the governments in many countries spent more when the tax receipts decreased significantly. This had a rather catastrophic effect particularly in countries with speculative real estate and property boom, driven by credit. This made the surging of interest rate and the credit rating of many individuals, firms and governments fell down precariously. As the cost of getting new credit increased, many countries including Greece, Ireland, Italy, Spain and Portugal got in to a debt trap of varying degrees.

The ongoing debt crisis in significant number of countries in the European Union will have possibly long term implications for the economy and politics of many countries and the region as a whole. While it is important to understand the present economic crisis in the context of the larger crisis of a credit driven speculative finance capitalism, it is also important to situate the present economic crisis in the larger history of economy, society and culture of Western Europe. It is possible to argue that the cumulative economic, social and cultural factors in the last twenty years led to saturation of market, labour force, resulting in the ongoing economic crisis. The relatively low birth rate, in the context of high individualism and dysfunctional families also resulted in the significant decrease in the younger work force that could fuel innovation, push forward new technology, increase the efficiency of production. The cumulative socio-economic factors also led to the erosion of ‘comparative advantage’ of Europe, particularly in the area of manufacturing, in the world. And in the last ten years, those born out of the baby boom in the post second world war phase got retired, with increasing cost for pension and social welfare. So Europe got in to a peculiar predicament of aging population, less availability of highly skilled work force, more cost of social welfare and less comparative advantage in terms of cost of producing goods and services in a highly competitive global market.

Ageing population with better life expectancy increased cost of social welfare and pension. Less young and inspired work force in many countries of Europe pushed comparative advantage of manufacturing sector and technology sector in favour of those countries with availability of cheaper and higher skilled work force, with more technological innovation. Less availability of high skilled labour can also lead to competition in the labour market, pushing the cost of labour high; pushing the cost of production high, and pushing the cost of living high. All these decreased the global comparative advantage in terms of quality, and price of services and goods, in a highly competitive global market. The importing of the cheap migrant labour created new political and social tension due to the fact most of the migrant labours in Europe happened to be Muslims. In the post 9/11 context of increasing socio-cultural paranoia , the trust between the ‘local’ population and migrant communities eroded and got compromised, resulting in new forms of violence in many countries, including France, UK, Germany, Sweden, Denmark and even in a rather peaceful Norway. The increasing oil price also affected European economy more than US economy. The decrease in younger workforce, the decrees in the average number of working hours and better social security also created an economic complacence in many countries in Europe. The economic crisis of Europe also needs to be understood in terms of the history of surplus economy created during the colonial era and the character and nature of economic growth and the political development of the region in the post-second world war era.


(These are the personal views of the author and do not reflect the views or positions of any of the organisations with which he is associated)