Quite another Kerala Model

After assuming power in 1996, the 8216;Chicago boys8217; of the then-ruling CPI M 8212; without consulting the coalition partners 8212; first approached the ADB. However, the actual execution of the contract and the money have now come into the hands of the UDF.

And while accusations and counter-accusations fly, two things are clear: it was at the prompting of the present opposition that the ADB first set foot in 8216;God8217;s Own Country8217;; and neither the LDF nor the UDF has had the clarity of vision to seek a peoples8217; mandate before opting for such a huge loan.

It is not the sheer size of the ADB loan alone that is intimidating; rather it is the 8216;modernising governance8217; that accompanies it. The government loses its right to financial decision making. Now, it cannot independently negotiate with external donors.

Public enterprises would have to assure an annual 8216;net attrition rate of one per cent8217;, the extension of VRS and ESS to all categories, and the accepting of 8216;alternative systems of management including privatisation and disinvestment8217;. In a reversal of the Kerala model of social development, market principles would govern public utilities, manifesting as cesses on education, health, and water, if not outright privatisation. Only a minuscule share of the adjustment cost is earmarked for improving quality of poverty reduction measures.

The PDS, Kerala8217;s pride, would be pared down to a minimum, and the 8216;core functions8217; of the welfare state restricted to policing and labour disciplining. And even as the historically belligerent Malayalis seem to have consented to becoming a semi-sovereign people, the UDF has succeeded in extracting a declaration of praise from the state8217;s governor, Sikander Bakht.

Kerala presents the paradox of a vibrant economy ruled by a 8216;pauper8217; government. With its surfeit of capital, including sizeable Gulf remittances and domestic savings, abundant e-labour, the swelling middle class, an expanding service sector, and above all nature8217;s bounty, it is easy enough to attract a free flow of private capital to the state. Rather than striving for self-sustained development and addressing its genuine issues of unemployment, dying traditional industries, and unfavourable terms of trade, the government seems to have opted for the quickest route to resolving its self-patronised fiscal crisis: an avid marketing of God8217;s Own Country with ADB as the premise, and GIM, as the route.

Various social and intellectual groups have challenged the state8217;s new-found kinship with the ADB and GIM, forcing a withdrawal of an earlier proposal to sell its rivers. Sand-mining projects have also been stayed.

But the Opposition leader, V.S. Achuthanandan, however, has had to content himself with declaring that the LDF would not repay the ADB loan, were it to return to power. His pronunciations, post-GIM, carry a touch of woe, due perhaps to a feeling of being craftily misled by the UDF. Sadly, by its regrettable dalliance with the ADB, the communist-led Opposition has squandered an opportunity for a political liberation struggle, one that would have been a fitting reply to its 1959 ouster.

The writer is an associate fellow, Centre for Development Studies