Over the past few days, I flipped through Tirthankar Roy and K. Ravi Raman’s ‘Kerala, 1956 to the Present: India’s Miracle State’. The book is part of Cambridge University Press’s Economic Histories of Indian States series. The next volume expected to be published in a month is on West Bengal.
The central argument of the authors is that the famed Kerala Model of Development, popularized by Amartya Sen and Jean Drèze, which celebrated Kerala’s achievement of high levels of human development despite relatively low levels of economic growth, fails to explain the rapid economic growth that Kerala has experienced over the last three to four decades.
In the 1980s, Kerala’s per capita income was roughly a third below the national average. Today, it’s among India’s wealthier states, with a per capita income 50–60% above the national average. Roy and Raman argue that HDI alone doesn’t quite cut it. The conventional ‘Kerala Model’ focused almost exclusively on government welfare policies, redistributive strategies, decentralization and public spending, while ignoring market-driven transformations, capital accumulation, and the role of private enterprise in transforming the economy. Had this model been accurate, Kerala should have grown much faster in the 70s and the 80s when its lead on social indicators was substantial compared to the other states. The other critical pieces of the puzzle, according to them, were the Left’s shift to pro-market capitalism, Gulf remittances, private capital, technical skilling etc.
The chapter on Agriculture was the most interesting one for me. Land and labour reforms, coupled with militant trade unionism, pushed rural agricultural wages to nearly twice those in Tamil Nadu at one point. This led to a paradox of high rural wages co-existing with high rural unemployment. Yet this paradox did not immediately translate to rural distress thanks to the phenomenon called the Gulf Malayalee. NRI remittances ensured that laid-off farm labourers could be absorbed by the construction and consumption boom that gripped the state since the 80s. While labour-intensive paddy cultivation declined sharply, more capital-intensive activities—including plantation agriculture, aquaculture and shrimp farming—expanded, particularly as liberalization opened new export opportunities.
So what comes next for Kerala?
The Kerala Model is definitely worth studying and emulating. But to expect that the model alone can prepare the state for a fast-changing global economy is lazy thinking. Kerala has always been an outlier and for this reason gets both praised and pilloried. As a Malayalee who regularly engages with the State, I strongly believe that the choices we historically made need drastic course correction. Our sprawling cities, the Malayalee fixation with mansions, resistance to vertical growth, underutilization of the state’s extraordinary natural beauty, haphazard town planning, dismal waste management, and the absence of a major metropolitan centre comparable to Bengaluru or Chennai are all serious constraints. Until these get addressed, the state will always be a retirement home for the aged that pushes off its brightest to foreign shores offering nothing for the men and women during their economically productive years.
Some other tidbits from the book:
1) Since the British took care of its security, Travancore was freed from the need to maintain a standing army which meant greater resources for public spending. And an efficient system of taxation and a larger proportion of cash crops, resulted in a larger resource base. This, coupled with the Church’s presence played a critical role in building the state’s HDI before independence. The Communists further built on this but also ensured a flight of private capital and decimated the industrial base of the state for decades.
2) Kerala never suffered from droughts as compared to most other Indian states in its history. So Human Development never received major setbacks.
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