In his 2005 book The World Is Flat, Thomas Friedman joined a chorus of
economists who touted India as the latest development success story, despite
overwhelming evidence to the contrary. While India has for the first time in
recent history developed a middle class with disposable income, such growth has
not been accompanied by meaningful poverty reduction.
According to the United Nations Development Program's Human Development Index,
which measures human development through a variety of indicators, including
life expectancy, literacy rates and infant mortality rates, India has
consistently been placed between 124 and 128 in the ranking of about 175
countries since 1998. While its absolute development grade has been going up,
these
marginal gains are not what one would expect to see in a "development success
story".
A quick scan of the Human Development Index rankings shows a number of other
countries outpacing India's sluggish progress. These include big countries with
similar sets of challenges, such as China (81), Brazil (70), and South Africa
(121). It also includes smaller countries such as Cuba (51), which has done
well despite a hugely damaging economic blockade orchestrated by the world's
only superpower, and Guatemala (118), which has improved dramatically only a
decade after the end of a 36-year-long civil war.
Despite the poor numbers, one Indian state has done remarkably well. The
southern state of Kerala boasts nearly universal literacy - 91% as opposed to
the Indian national average of 65%. It's also one of the fastest growing states
in India, second only to the tourism-rich state of Goa.
What is it about Kerala that makes it look - from the standpoint of its
development indicators - like an entirely different country? And why does that
model seem so difficult to follow for other Indian states, let alone other
countries in Asia, Africa and Latin America? At a time when the world is
looking for alternatives to market fundamentalism, Kerala may hold the secret
to sustainable growth and development.
Understanding failure
The situation in India is far worse than the Human Development Index suggests.
According to economist Amartya Sen, who won the Nobel Prize for his work on
hunger, India has fared worse than any other country in the world at preventing
recurring hunger. While India hasn't been prone to the seasonal famines that
plague many countries in sub-Saharan Africa, chronic hunger is rampant in India
and just as deadly.
Building on Sen's work, Utsa Patnaik claims that caloric intake - a good way to
measure hunger - has actually gone down in many states that are investing in
high-tech industry. In other words, as call centers and software subsidiaries
have proliferated in the cities, rural hunger has been on the rise. While
Patnaik's work focuses on Madhya Pradesh, a large state in central India, the
pattern holds for other Indian states as well. As governments prioritize the
development of an urban economy based on the services industry, they transfer
government funds to improving urban infrastructure. Village infrastructure and
social services merit considerably lower priority, and chronic hunger is one
manifestation of that neglect.
Chronic hunger and hunger-related deaths aren't the only serious development
failures in India. Rural electrification more or less stalled for the last
decade, while primary education never really provided a decent standard of
education for the masses, despite government investment. According to the
United Nations Children's Fund, health indicators such as life expectancy and
infant and maternal mortality rates show only marginal improvements over the
past 10 years. The rate of HIV infection also increased. Despite some
improvements, for example in the mortality rate for children under the age of
five, the overall situation seems poor, given India's GDP growth rate of over
8% for the last four years and a cumulative growth rate of over 4% since 1990.
Given India's particularly stark situation, those states that do well look
twice as good as they might otherwise. In such a gloomy environment, Kerala
stands out like the moon against the night sky.
In addition to its tremendous literacy rate, Kerala boasts one of the nation's
finest healthcare systems, even for those who can't afford to pay user fees and
therefore depend on government hospitals. Kerala's infant mortality rate is
about 16 deaths per 1,000 births, or half the national average of 32 deaths per
1,000 births.
Aside from the social development indicators, Kerala's growth rate in the last
few years averaged between 6-10%, not only keeping pace with the national
average but at times ranking among the fastest growing states in the country.
The sectors that are doing well are largely those that are thriving across
India - information technology, services and tourism - but agricultural
production and small-scale manufacturing are also succeeding.
Development experts have debated for years about whether or not a "Kerala
model" exists and, if so, whether that model can be exported to other countries
or even other Indian states. Whether or not Kerala's development experience can
be categorized and replicated, a few things stand out about its political and
economic history.
In the first place, the state had a matrilineal and even a matriarchal society,
with a line of forward-looking queens that still ruled much of Kerala in the
early days of the British Empire. The queen of Trivandrum, for instance, issued
a royal decree in 1817 declaring that "the state should defray the entire cost
of the education of its people in order that there might be no backwardness in
the spread of enlightenment". Not until the latter part of the 19th century
would countries like Britain and the United States provide such services for
their own populations.
A single party, the Communist Party of India (Marxist) or CPI(M), has ruled
Kerala for much of the past 50 years. The CPI(M) successfully pushed for three
major reforms in the 1960s and 1970s. The first and most important was land
reform. While nearly everyone looks on land reform as a huge success in Kerala,
the policy was controversial when it was first proposed in 1959. Land reform,
after all, is an attack on one of capitalism's founding principles - the right
to property. The central government intervened and effectively blocked the
implementation of land reform for 10 years. But planners and unions in Kerala
understood that building a more egalitarian economy required attacking the old
feudal system at its roots, and small farmers weren't going to stand for
anything less.
Secondly, the CPI(M) deliberately and methodically invested in education,
setting goals so popular with the electorate that even when the communists lost
power, new governments did not dare modify education policies.
Lastly, Kerala invested heavily in government-financed healthcare. The state
now boasts 160 patient beds per 100,000 people, the highest rate in the
country.
When considered in its component pieces - state-sponsored land reform,
education, infrastructure and social services initiatives - the "Kerala model"
is not particularly revolutionary. Even the International Monetary Fund (IMF)
uses land reform (though it uses the phrase "market-based land reform" to
justify a different kind of redistribution).
So why haven't other Indian states - or even many other developing countries -
been able to use the Kerala model as a path to development? The answer may lie
in when Kerala chose to follow this path. The 1960s and 1970s were before
structural adjustment programs and free-market principles dominated the
discourse of development economics. Kerala borrowed heavily - and still borrows
- to finance its social investments. While other countries have made similar
investments, IMF-backed austerity measures have rolled back those investments
before they could bear fruit. Now that the age of Milton Friedman appears to be
nearing its end, the world would do well to give Kerala another look.
Kerala and the present crisis
Any honest assessment of the past 25 years in global development is bound to
conclude that the period has been a dismal failure. In countries around the
world, hunger rates have either remained stagnant or only improved at a snail's
pace. While other development indicators such as maternal and infant mortality,
literacy rates, and life expectancy show some improvements, those improvements
are far from what a society as advanced as our own should expect.
Those countries in which "free-market" oriented institutions such as the IMF
have a lot of power - for example in sub-Saharan Africa - tend to do worse than
those that have more options in their fiscal policies. In that region, only
Botswana has significantly improved its development indicators, and that
country has had very little to do with the IMF.
The bursting of the housing bubble and the subsequent collapse of the US
financial industry - with much of the world's productive industry likely to
follow suit - should put an end once and for all to a development model largely
based on boosting US over-consumption. Under the guise of development, the IMF
ensured that most of the world remained chronically underdeveloped. It insisted
that countries use their comparative advantage to provide raw goods for the
global market, while simultaneously selling off state assets and spending less
and less on social services. State planners from Alexander Hamilton to John
Maynard Keynes would have been shocked.
With the end of this ideology, Kerala represents a real alternative. Investing
in people - whether through breaking the oligarchy of big landlords (or perhaps
investment bankers) or providing social services including universal education
- will ultimately lead to the development of a meaningful middle class. Taking
this path may involve some sacrifices. Income distribution is more equal in
Kerala, so it is home to fewer rich people than other parts of India. But if
the goal isn't just wealth creation, but ensuring basic human rights and human
dignity for all, the Kerala model is worth considering.
Shirin Shirin is a freelance journalist, activist and analyst for Foreign
Policy In Focus. Her work includes using popular education to campaign against
religious violence and promote the rights of women, workers, minorities and
dalits throughout South Asia.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
