The new Left Democratic Front government in Kerala wants industry, including multinational companies, to invest in a big way in the state. Chief Minister Pinarayi Vijayan has said that industrial development is a prime concern of his government and promised to develop the necessary infrastructure to facilitate it. A non-doctrinaire approach to economic planning and development could help the new government face the challenges staring at the state.
Foreign remittances and cash crops like rubber have majorly contributed to revenues in the past, enabling successive governments to build a welfare state. This is unlikely to continue: Remittances from West Asia are expected to decline in the coming months as the social churn and economic downturn in that part of the world is predicted to trigger a return of thousands of expatriate workers. The industrial slowdown and falling commodity prices have scarred the state’s plantation economy. The government will need new revenue sources to keep the welfare state intact. Major public investment is needed to revive its flagging health and education sectors. Basic infrastructure like roads and railways also need a major upgrade. With the debt-burdened government in no condition to fund mega projects, private sector participation is essential for both an infrastructure upgrade and employment generation. The Kerala communists, historically, have followed a pragmatic approach to private investment in industry and the service sector. In the 1950s and ‘60s, communist-led governments developed heavy industry with private participation while in the 1980s and ‘90s, the focus was on IT and tourism. Trade union militancy and resource constraints held back the state from developing heavy industries. However, tourism has been a major success story, largely because the government limited its role to facilitation and brand building. The state’s limited success in IT too has been private-sector driven though restricted to the state capital, Thiruvananthapuram, and Kochi. Vijayan has now proposed electronic hubs in the line of IT parks.
A striking feature of Kerala is its tradition of public action, which has helped in the development of a rights-conscious society. This would mean that public policies, especially initiatives that involve acquisition of assets like land or distribution of resources like water, have to be implemented after taking the public into confidence. The Bengal left paid a huge price for pursuing industrialisation in ways that ignored the people’s concerns.