The Kerala model of development yielded exemplary results for the state in terms of literacy, access to healthcare, sanitation, and more. Among Indian states, Kerala has the highest literacy rate of 93.91 percent, a high life expectancy of 74.9 years, is open defecation free, and more.
But the state is also currently struggling with a higher unemployment rate than the national average, a high suicide rate, poor industrial growth, and is battling a mental health crisis.
“Kerala has done splendidly in the last 70 years, but its infrastructure growth is not keeping up with the rest of the country,” Shamika Ravi, Member, Prime Minister‘s Economic Advisory Council (PMEAC), and Secretary to Government of India told Moneycontrol in an exclusive interview.
An analysis by Ravi and Mudit Kapoor of the Indian Statistical Institute shows that the state’s debt-to-GDP ratio has risen from 25 percent in 2011-12 to 30 percent in 2020-21.
Thus, with lesser funds available for social development, it “…means poorer healthcare, poorer infra, etc., with the state falling behind by the day,’’ added Ravi.
You can watch the full conversation with Shamika Ravi here.
The state has been infamous for having one of the highest unemployment rates in the country. According to Chief Minister Pinarayi Vijayan, Kerala’s unemployment rate is down from 12 to 5 percent.
The state has increased the pension for people below the poverty line from Rs 600 to Rs 1,600 and disbursed Rs 18,997 crore in social pensions. Social pension is a non-contributory pension that is payable from age 60 (in Kerala) until death.
With an ageing population and increased life expectancy, the pension of government employees has become a major political issue. Kerala’s pension outgo is on the higher side compared to other states and union territories. In 2020, it was close to 30 percent of all development expenditure, according to an analysis by Ravi and Kapoor in a paper titled, “State budgets in India – observational time trend analysis from 1990 to 2020.”
States like Himachal Pradesh and Punjab are among the highest spenders in India on this front, spending a whopping 37 and 31 percent, respectively, of their development expenditure on pensions.
“In the ‘90s, in the first 10 years of liberalisation, we saw a rapid escalation in pension payments in every state in the country. But after pension reforms were brought in, every state that implemented it stabilised financially.
"Now we are going back where we were. Punjab has gone back, Himachal has gone back. Pension is a large chunk of their development spend. Where is the money going to come from? It’s going to come from other development projects,” added Ravi.
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