Kerala model faces stiff challenge in the face of Central policies

Kerala’s ability to sustain its alternative development model in the face of adverse policies pushed by the BJP-led Union government sparked concern at a seminar on ‘Economic alternatives for the future’ organised as part of the Keraleeyam 2023 celebrations of the State government.

Speakers including economist and Professor Emeritus, Jawaharlal Nehru University, Prabhat Patnaik, and Communist Party of India (Marxist) [CPI(M)] Polit Bureau member Prakash Karat noted the need for drawing upon the Kerala experience for building a national-level alternative, but they worried how far Kerala can sustain its alternative development path in the present environment.

Noting that the neoliberal economic model has come to “a virtual dead end,” Prof. Patnaik observed that the essence of the Kerala Model is something that now needs to be “generalised” in the country as a whole. But for it to happen, the Kerala Model has to survive the “onslaught” the Centre has mounted on it, he said.

Social sector growth

Prof. Patnaik, who attended the event online, urged the State to continue on its trajectory of developing the social sector with its focus on health and education. On the agriculture front, an emphasis on food crops as opposed to cash crops is absolutely essential, he added.

Mr. Karat expressed concern over Kerala’s continued ability to pursue its alternative model in a scenario where a “communal corporate regime” at the Centre, which is fuelling authoritarianism and a high degree of “ultra centralisation,” has unleashed a “triple attack” on democracy, secularism and federalism. Unless these attacks are halted and the regime is replaced, it will not be possible for Kerala to carry on with this alternative path of development, Mr. Karat said. “If Kerala and other States have to carry on with their economic policies and paths of development, it will not be possible under the neoliberal, communal, corporate path that is being imposed on the whole country,” he said.

Human development

Reserve Bank of India (RBI) former Governor C. Rangarajan, who joined online, said economic growth and human development should go hand in hand. Growth does not automatically lead to equity or welfare. Policies of growth should be supported by an agenda for improving the basic requirements of human development, Dr. Rangarajan said. “These are the two legs on which the country or a State must walk. Any strategy or development which ignores any one of the two legs will only see the country limping along,” he said.

Corporate tax cut

Venkatesh Athreya, economist and Adjunct Professor, Asian College of Journalism, also warned that Kerala will find it increasingly difficult to pursue its  development model in the face of Central government policies. He also noted that the Union government’s unilateral reduction of corporate tax rates directly affects the revenues of the States. This is because it lowers the divisible pool from which the State gets their share.

Vice Chairman of the State Planning Board V.K. Ramachandran chaired the session. CPI(M) Politburo member S. Ramachandran Pillai; C. Veeramani, Director, Centre for Development Studies (CDS), Thiruvananthapuram; and Puneet Kumar, Additional Chief Secretary (Planning and Economic Affairs); also spoke.

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