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Thursday, July 19, 2018

The right choice

Kerala CM’s pick as economic adviser marks a departure from CPM dogma.

By: Editorial | Updated: July 26, 2016 12:02:46 am

Kerala Chief Minister Pinarayi Vijayan’s decision to invite Gita Gopinath, a Harvard University economist, as his financial adviser is a smart move and indicates his willingness to look beyond Marxist wisdom to address the economic challenges faced by his state. Gopinath, John Zwaanstra Professor of International Studies and of Economics, studied under Ben Bernanke, former chairman of the US Federal Reserve, and Kenneth Rogoff, a former director of research at IMF, is unlikely to share the economic views of the CPM. Vijayan has reportedly said her knowledge and experience — Gopinath’s roots are in Kannur, the political base of Vijayan — could be useful to the state, which is saddled with a huge fiscal deficit and has limited avenues to raise revenues. With Kerala staring at a possible return of the large migrant workforce in the Gulf, which has kept the state’s finances afloat all these years with remittances, the new CPM-led government could do with some new economic thought. Vijayan has rightly understood that old ideas of state-dependent economic development and the Marxist rhetoric of his party colleagues are unlikely to help the state’s cause in the new situation. In fact, it is a tacit admission that there are no viable socialist models to follow even for a communist party.

During his stint as CPM Kerala secretary, Vijayan revealed his penchant to break free of stale ideas and engage with opportunities provided by the market economy. Under him the party departed from its preferred development model of low budget rural cooperative to build up scale. Kairali TV, perceived as a CPM mouthpiece, was built as a modern media company with a large shareholder base. Similarly, Vismaya Water Theme Park was set up under a party cooperative to enter the tourism sector. He rebuilt the party like a corporate house and made use of every opportunity to expand its capital base.

There appears to be a consensus within the Kerala party that the state needs major infusion of private capital to broadbase its economy. Besides tourism, cash crops and IT, the state needs to build a manufacturing base to provide jobs. The LDF election manifesto and the just-presented state budget indicated that this will be the growth path for future. The Vijayan government’s backing for mega projects like the Vizhinjam transhipment hub, despite opposition from Left circles, indicates commitment to “continuity with change”, the phrase made memorable by Congress Prime Minister Narasimha Rao when economic reforms were launched in the 1990s. Vijayan must stay the course.

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