The Keralan remittance and tourist economy is rather like many Pacific Island ones.

Listener: 19 February, 2011

Keywords: Political Economy & History;

The huge South Asian peninsula has a larger population than Europe and about six times the population density. Both have suffered a high degree of political fragmentation. Even under the British Raj, a myriad of South Asian entities existed before independence in 1947; today there is but India, Bangladesh, Pakistan and Sri Lanka. Even so, India’s 28 individual states show considerable diversity, just like European nations.

Tucked on the southwest of the Deccan peninsula, facing the Indian Ocean, is the state of Kerala, with 32 million people in an area a seventh the size of New Zealand. Its income is below India’s average; a person living in Kerala typically earns less in a year than we earn in a fortnight.

What distinguishes Kerala is its unusually high human development. Its literacy rate is 95%, its life expectation 76 years (New Zealand’s is 80, but the Maori rate is 73). Not only are these figures well above the Indian averages, but they are above the Chinese ones, too. On other health measures, such as infant mortality and low body weight, Kerala also does well. It is the only Indian state rated “high” on the human development index, which combines income with health and educational attainment.

How well women are doing is often a good test of developmental success. The women of Kerala have (slightly) higher literacy than men, and this is the only Indian state with more women than men, indicating good women’s health and limited pre-selection of gender via abortion and infanticide. (China has a similar female deficit to India.) Kerala’s fertility ratio is close to the replacement level, indicative of modern attitudes. (But its divorce rate seems about triple the Indian average; perhaps men find it difficult to adjust to “developed” women.)

Since women tend to drive their children’s education, their success gets passed on to the next generation. In 1817, the area’s young female ruler, Rani Gouri Parvathi Bai, called for a universal free state education system for boys and girls, saying, “There should be no backwardness in the spread of enlightenment” – this was well before the English Education Act of 1870 (and ours of 1877).

Kerala’s success has come about because its government has cared. It had the first Communist party in the world to be democratically elected to office – and more importantly, the first to give up office following an election loss. It implemented the reforms mandated by the government of India’s first prime minister, Jawaharal Nehru: universal free schooling, limitations on the size of land holdings, redistribution of the surplus land to the landless, guarantees for the rights of tenant cultivators, rural development schemes and collectivisation. In other states, the forces of reaction and privilege resisted such changes.

Yet successful human development has not generated high economic performance, for the state has been unsuccessful in attracting the industries that lead India’s economic development. Perhaps this is because Kerala is out of the way, the roads are terrible after the monsoon or it’s prone to industrial unrest.

Aside from the subsistence sector, the largest economic activity is tourism. Even bigger, though, are the remittances from Keralans who work in the Middle East (and elsewhere in India), thereby capitalising on their education and health.

This is the modernising sector in Kerala’s traditional economy. Despite being mainly offshore, it puts pressure on the state’s political economy, as the funds are used for conspicuous consumption, especially housing that makes Auckland’s Paritai Drive seem modest.

Sadly, little seems to be invested in Keralan industry, so any trickle-down effects (or “linkages” as economists are wont to call them) are weak. (Allow central government transfers instead of aid, and the Keralan remittance and tourist economy is rather like many Pacific Island ones.)

The signs around Kerala say “God’s Own Country”. If so, God is more interested in human development than %material output.

This is the second of a series on India, made possible by a travel grant from the Asia New Zealand Foundation.